Custom, Excise & Service Tax Tribunal
(1)M/S. Naffar Chandra Jute Mills Ltd vs Commissioner Of Customs (Preventive), ... on 30 April, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
EAST ZONAL BENCH: KOLKATA
1-3) CUSTOMS APPEAL NOs.C/A/296 & 318/06 AND 02/07
(ARISING OUT OF ORDER-IN-APPEAL NO. (1)KOL/CUS/CKP/136/2006,(2)KOL/CUS/CKP/184/2006,(3)KOL/CUS/CKP/136/2006 PASSED BY COMMISSIONER OF CUSTOMS(APPEALS),KOLKATA)
FOR APPROVAL AND SIGNATURES OF
DR. D.M.MISRA, HONBLE JUDICIAL MEMBER
DR. I.P.LAL, HONBLE TECHNICAL MEMBER
1. Whether Press Reporters may be allowed to see :
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not ?
3. Whether Their Lordships wish to see the fair copy :
of the Order?
4. Whether Order is to be circulated to the Departmental :
Authorities?
(1)M/S. NAFFAR CHANDRA JUTE MILLS LTD.
(2)M/S. AI CHAMPDANY INDUSTRIES LTD
(3)M/S. GANGES MANFACTURING CO.LTD
APPELLANT (S)
VERSUS
COMMISSIONER OF CUSTOMS (PREVENTIVE), KOLKATA ...RESPONDENT (S)
APPEARANCE:
SHRI J.P.KHAITAN, ADVOCATE FOR THE APPLICANT(S)/APPELLANT(S);
SHRI S.P.PAUL, A.R.(APPRAISER) FOR THE REVENUE.
CORAM:
DR. D.M.MISRA, HONBLE JUDICIAL MEMBER DR. I.P.LAL, HONBLE TECHNICAL MEMBER Date of Hearing :28.11.2013 Date of Decision:30.04.2014 ORDER NO.FO/A/75154-75156/2014 These three Appeals are filed by the above Appellants against aforementioned Orders-in-Appeals passed by Commissioner of Customs(Appeals), Kolkata, involving a common issue, hence, taken up together for disposal.
2. Briefly stated the facts of the case are that the Appellants had imported goods describing it as Raw Jute (BWCB/BTCA) from Bangaldesh and filed Bill of Entry for home consumption declaring the same as classifiable under Chapter Sub-Heading 530310.10 of CTA,1975; also claimed exemption under Notification No.21/02-Cus. dated 01.03.2002,as amended, read with Notification No.105/99-Cus. dated 10.04.1999 as per SAPTA Certificate Reference No.KPB/478 dated 08.10.2005. The said goods were examined and assessed by the Assistant Commissioner of Customs, patrapole observing that the goods imported were Jute Cuttings and classifiable under Chapter Sub-Heading 530390.10, consequently, not eligible to the benefit of the aforesaid exemption Notifications which are applicable to Raw Jute only. On the issue of valuation, the ld. Adjudicating Authority had accepted the Appellants contention that freight upto the place of CWC,Patrapole since not paid separately by the importer and hence not to be included in the assessable value declared.
3. Aggrieved by the said Order, the Appellants had filed Appeals before the ld. Commissioner (Appeals)Customs, who after analyzing the Orders of the Adjudicating Authority held that the goods are correctly classifiable under the Customs Tariff Sub- Heading 53039010 and remanded the matter to the Adjudicating Authority to re-consider the other issues, namely, Whether: (i) freight charges are to be added to the assessable value and (ii) benefit of SAPTA Notification No.105/99-Cus. dated 10.04.1999 be allowed. Aggrieved, the Appellants filed the present Appeal.
4.1 The Ld. Advocate appearing for the Appellants has submitted that the ld. Commissioner (Appeals) has exceeded the scope of the appeals filed before him, in as much as the Appellants had not challenged the inclusion or otherwise of the freight element in the assessable value, and also not disputed the benefit of exemption Notification No.105/99-Cus, as these issues were adjudicated in their favour; the Department has also not challenged the Order of the Adjudicating Authority, therefore, remanding the matter to the Adjudicating Authority to ascertain the above issues afresh which are settled in their favour, is bad in law and hence, liable to be set aside.
4.2 It is his submission that the Raw Jute which they imported, cannot be considered as jute cuttings, as confirmed by the authorities below. The said Raw Jute in common Trade Parliance is not known as jute cuttings, as contended by the Department.
4.3 The Ld. Advocate further submitted that the goods imported by the Appellant are of raw jute as known and understood in common parlance. Referring to the invoice of Bangladesh Suppliers, he has submitted that the goods were sold to them as raw jute cutting grade. It is his submission that the literature submitted by the Revenue also shows that the goods imported by them are of raw jute cutting grade. Further, he has submitted that jute cutting is a part/portion of jute fibre segregated from the whole fibre. The whole fibre after retting is simply cut and a portion so obtained was sold at different grades. The jute fibre after retting is not subjected to any processing and it is only simply cut and sold at different grades. The authorities below had proceeded on an erroneous assumption that the cutting grade is qualitatively superior and costlier, and the adjudicating authority had wrongly recorded the Appellants submission that the goods in question were the best portion of the jute plant. It is his submission that they have brought to the notice of the ld. Commissioner(Appeals) the price range of different grades of raw jute fibre, which would show that the cutting grade was a lower quality and therefore, cheaper.
4.4 Further, he has submitted that under the arrangement relating to the eight digit classification, jute fibre, raw or retted, falls under sub heading 53031010 of CTA,1975. Hence, as long as any goods answer the description of jute fibre, raw or retted, the same are classifiable under CTH 53031010. Further, he contends that since 53031010 is the specific entry for jute fibre, raw or retted, the goods in question, being cuttings grades of raw jute fibre, ought to be classified under the said Tariff Item and not under the residuary sub-heading 53039010, which relates to jute cuttings or waste obtained after carrying out the processes on the raw jute and cannot apply to raw jute itself. It is his submission that HSN only mentions cuttings which are butt ends of fibres and not jute cuttings, as appearing in CTH 530390.90 of CTA,1975 . The goods imported by the Appellant are raw jute and cuttings grade so described in the purchase invoices and not to be considered as jute cutting, within the meaning of Tariff Item 53039010 of CTA,1975.
4.4 . The ld. Advocate further submitted that under the six-digit code, raw Jute, was classified under Customs Tariff Heading 5303.10, whereas the CTH 5303.90 was the residuary sub-heading and was made applicable to others. Under the old classification, the raw jute enjoyed an exemption under notification 21/2002 cus. Dt. 01.03.2002 at serial number 170 of the said notification along with SAPTA notification number 105/99-cus dated 10 August 1999. It is his submission that eight-digit Customs Classification Code introduced with effect from 1st February, 2003 had replaced the existing six digit Classification Code, which was in force since 1986. Consequently, a Notification was issued bearing No.16/03-Cus. dated 24.01.2003, it was made clear in the said Notification that even after the introduction of the 8 digit classification code there would be no change in the duty structure and the notifications issued during the currency of the six digit code would continue to apply to the goods mentioned therein except that the classification would be as per under new eight digit Code. He has contended that the object of issuing the said Notification No.16/03-Cus. was to ensure that the duty-structure remained the same and the benefit of exemptions earlier available should not be denied. He has submitted that even with the introduction of the eight digit Code, at Serial No.170 of exemption Notification No.21/02-Cus, the description of Raw Jute has not been, in any manner, changed. Only by Notification No.26/03-Cus. Dated 1st March, 2003, Serial No.171 was omitted, whereas sr. no. 170 has remained unchanged. It is his submission that by virtue of Notification No.16/03-Cus. the exemption earlier granted to Raw Jute under Chapter Sub-Heading 5303.10 would continue to be applicable to jute fibre, raw or ratted, mentioned in the Eight-Digit Code under Tariff Item 530310.10. It is his submission that even after three years from the date of introduction of the new tariff, the Department has never raised any objection to the classification of Raw Jute of cutting grade under restructured tariff subheading 5303.10.10. Hence, the dispute of classification under the said tariff heading in the year 2006 without any valid ground, is unjustifiable and bad in law.
5.1 Per contra, ld. AR for the Revenue submitted that in the respective Bill of entry, the imported goods were declared as raw jute(BWCA) and in the respective invoices, the goods were described as jute cuttings (BWCA) in relation to the Appeal filed by M/s Nafar Chandra Jute Mills. In the other two Appeals in the respective Bill of Entry the declaration was Raw Jute(BTCA) and in the invoices as Raw Jute Bangal Tossa CuttingsA(BTCA). It is his submission that under six digit Tariff Classification, there were only two sub-headings viz. 5303.10 (jute and other textile bast fibre, raw or retted) and 5303.90 (Other). Accordingly, the impugned goods were classified under Customs Tariff Heading 5303.10, as there was no specific entry for jute cuttings. He has contended that after introduction of eight digit classification code, jute cuttings had been specifically classified under Customs Tariff Heading 53039010 as per the description of the impugned goods in the Bill of entry as well as in the invoices. The goods imported by the Appellant were physically examined in the presence of the representative of the appellant and on examination, the imported goods were found to be jute cuttings, hence, classified under the Customs Tariff Heading 53039010.
5.2 He has further referred to the meaning of cuttings mentioned in HSN as butt ends of the fibre, which are cut off and marketed separately. He submits that in the trade parlance, as is evident from the website and from other jute customers and traders, jute cuttings (BWCA), stands for raw jute cutting of Bangla White Cutting Grade A, which could have cutting range upto 10 ; Jute cuttings are low in quality but have commercial value for the paper carded yarn and other fibre processing industry. The lower part is hard fibre, which is called jute cuttings in Bangladesh and India. Regarding the exemption claimed by the Appellant, he submits that the classification cannot be decided by virtue of the exemption Notification. It is his plea that when there is a specific entry for classification for the jute cuttings under the new eight digit code, the classification cannot be made taking recourse to earlier Tariff Heading 5303.10 under six digit code of classification. Regarding the issue of determination of assessable value and benefit of exemption Notification No.105/99-Cus. dated 10.08.99, the ld. Commissioner has rightly remanded the matter for re-verification to the Adjudicating Authority, has he has power to modify/annul the Order of the lower authority in the manner he likes.
6.1 Heard both sides and perused the records. The principal question for determination is: whether the imported goods described as raw jute (BWCB/BTCA) in the respective Bills of entry are classifiable under chapter subheading 530310.10 or under chapter subheading 530390.10 of the Customs Tariff Act, 1975 and consequently eligible to the benefit of Notification 21/02-Cus dated 01.03.2002 read with SAPTA Notification no. 105/99 Cus dated 08.10.2005.
6.2 It is not in dispute that after import of the said goods through patrapole land Customs station, the Department has raised objection on its classification under the Sub-heading as 530310.10, as declared in the respect bills of entry; the appellants herein had replied to the said objection submitting that the goods imported by them were raw jute of cutting grade. The appellant submitted that earlier they had been importing such raw jute of cutting grade which were classified under chapter sub-heading 5309.10 and not under the residuary entry 5309.90 of CTA,1975, which was applicable to goods other than raw jute, that is, resultants of processed jute.
6.3 The customs department, consequently, examined the said consignment of imported goods, in the presence of the representative of the appellants and recorded the result of examination in the respective Bills of entry. For instance, in respect of Bill of Entry No.000939 dt.25.02.2006 filed by M/s Nafar Chandra Jute Mills Ltd. for clearance of 833 bales collectively weighing 149.11 MT, it was recorded as follows:
opened and examined 20 bales. The goods examined w.r.t party classification letter dated 28.2.06 and find the goods are jute cuttings correctly classifiable U.T.N 53090010(not covered N/F no.21/02Cus).. 6.4 Similar examination reports were recorded on the respective Bills of Entry filed by the other two appellants. On the basis of said physical examination, the adjudicating authority, concluded that the imported goods were jute cuttings and correctly classifiable under the new tariff sub-heading 530390.10 of CTA,1975. Advancing reasons, the adjudicating authority had observed that jute plant is of 2 meter or more in height; the fibre is stripped off after retting the plant and the whole fibre so collected, is the raw jute bast fibre. It is not continuous throughout length either content wise or quality wise. The lower portion is stronger and contains more fibre. The fibre contents both qualitatively and quantitatively becomes less towards top, hence, the lower portion is costly and more in demand for better commercial use. Further, referring to the meaning of cuttings in the HSN he has observed that cuttings is defined as the butt ends of the fibre which are cut off and marketed separately. And in the present case the imported goods are described as cuttings and the value is admittedly at higher side in comparison to normal jute fibres.
6.5 The Ld. Commissioner(appeals) has endorsed the aforesaid reasoning and concluded that the imported goods are rightly classifiable under CTH 53039010 and not under 53031010 CTA,1975.
6.6 Before entering into the discussion on the correct classification of the imported raw jute, under the new eight digit tariff entry, it is necessary for a better understanding, to compare the old and new tariff entry. The old Tariff entry reads as below:
Heading Sub-heading Description of article Rate of duty
Standard Preferential Areas
53.03 Jute and other textile bast
Fibres (excluding flax, true
Hemp and ramie), raw or
Processed but not spun ; tow
and waste of these fibres
(including yarn waste and
Garneted stock)
5303.10 Jute and other textile bast fibres,
raw or retted 30% ------
5303.90 Other 30% ------
6.6 The changed new eight digit tariff entry introduced with effect from 18.5.2003 reads as follows:
Tariff Item Description of goods Unit Rate of
duty
5303 Jute and other textile bast fibres (excluding flax,
True hemp and raraic), processed but not spun ;
Tow and waste of these fibres (including yarn
Waste and garneted stock)
5303 10 Jute and other textile bast fibres, raw
or retted
5303 10 10 Jute, raw or retted Kg. 15%
5303 10 90 Other Kg. 15%
5303 90 Other
5303 90 10 Jute cutting Kg. 15%
5303 90 90 Other Kg. 15%
6.7 On a preliminary analysis of the old tariff entry, it is clear that, the Heading 5303, in its domain include jute and other textile bast fibres raw or processed but not Spun; tow and waste of these fibres(including yarn waste and garneted stock). This heading was divided into two sub-headings. Under Subheading 5303.10 jute and other textile bast fibres, raw or retted were specified, whereas, the second subheading 5303.90 was meant for other.
6.8 it is the claim of the appellant that the subheading 5303.10 includes only raw jute and other textile bast fibres, and not the processed ones. The processed fibres and wastes were correctly classifiable under the subheading 5303.90. It is their submission that when the raw jute is cut into different length, it cannot be considered as processed one, but continues to remain as raw jute only, but of cutting grade. It is their further contention that the jute cuttings which emerge during the course of processing of raw jute, are covered under this residuary entry.
6.9 We find that the claim on the classification of the goods by the appellant under the old tariff entry is not disputed by the revenue. The revenues contention is that after restructuring of the said tariff entry under the new 8 digit code, the subheading 5303.10 is further divided into two, namely, 53031010, which covered jute, raw or retted and entry 53031090 for other. Similarly, the residuary entry 5303.90 has also been divided into two, namely, 53039010 jute cutting and 53039090 for other. In other words, the contention of the revenue is that when there is a specific entry for jute cutting, irrespective of processed or raw, the same should be classifiable under the specific heading 5303 9010.
6.10 Thus, the moot point , precisely in this case is, whether, after the introduction of 8 digit classification, the raw jute of cutting grade, imported earlier by the appellant, assesses under chapter subheading 5309.10, would continue to be classifiable under the restructured comparable entry, namely, 5303 1010 or be shifted to the new entry 5303 9010.
6.11 To advance their argument, the Ld. A.R for the revenue, heavily relied upon the meaning of cuttings explained in the HSN. The explanation under Chapter heading 53.03 reads as:
The Heading covers :
(I) Raw fibrous materials (in stalks, not yet retted or stripped) : retted fibres ; stripped fibres (extracted by machine), i.e. the fibres, sometime 2 m or more in length, as extracted from the plant by retting and stripping : cutting (the butt ends of the fibres which are cut off and marketed separately). However, vegetable materials, which when raw or in certain forms fall in Chapter 14 (for example, stalks of broom), are classified here only when they have undergone treatment indicating their use as textile materials (e.g. when they have been crushed, carded or combed in preparation for spinning).
(II) Fibres carded or combed or otherwise prepared for spinning, usually in the form of slivers.
(III) Fibrous tow and waste obtained mainly during the carding or combing of bast fibres ; bast fibre yarn waste left during spinning, weaving etc. and garneted stock obtained from rags or scrap rope or cordage. Tow and waste are classified here whether suitable for spinning into yarns (whether or not in the form of slivers) or suitable only for use as caulking materials, padding or stuffing or in felt-making, paper-making etc. Bleaching or dyeing does not affect the classification of the products covered by this Heading.
6.12. We find that the sub-heading 53.03 of CTA,1975 broadly enumerates the items, that is, jute and other textile based fibers in raw stage or processed ones; also the waste generated. To explain the said heading, the Explanatory Notes under the HSN are also designed accordingly, mentioning the items that are covered under the said heading. Under the Ist category, of the quoted explanation different types of raw fibers are considered, under category II the processed goods are covered and under category III, waste materials of the fibers have been included. The meaning of cuttings appears under category I and it is referred in the contest while explaining different types of raw fibers that are covered under the said sub-heading. It is explained to mean the butt-ends of the fibers which are cut off and marketed separately.
6.13 This meaning of cuttings mentioned under the category of raw fibers, in our opinion, has been misunderstood by the authorities below. The authorities had observed that on adopting the meaning of cuttings, to the raw jute of cutting grade imported by the Appellant, the same are classifiable under Chapter Heading 53039010 of restructured eight digit tariff entry. During the course of arguments, the ld. AR for the Revenue while referring to the information contained in the websites submitted that varieties of raw jute are available in the market including the jute cuttings that are bought and sold in the market, hence the items imported by the Appellant are classifiable as jute cuttings under CSH 53039010 being the specific entry.
6.14 On going through the said literature, we find that it has been mentioned that jute cuttings are lower in quality, but have commercial value for the paper, carded yarn, and other fiber processing industries; the lower part is hard fiber which is called jute cuttings in Bangladesh and India (commonly called jute butts or jute tops elsewhere). It further mentions that available raw jute cutting grades are as follows:-
Bangla Tossa BTCA Bangla Tossa Cuttings A BTB Bangla Tossa Cuttings B Bangla White BWCA Bangla White Cuttings A BWCB Bangla White Cuttings B 6.15 Therefore, it is clear from the above that the raw jute cuttings are of different grades and are available in the market. It supports the contention of the Appellant that what they have imported are raw jute cuttings of different grades. No contrary evidence has been produced by the Revenue to establish that what the Appellant had imported, were not raw jute of cutting grades, but processed jute cuttings.
6.16 In view of above, we have no hesitation to arrive at the conclusion, keeping in view the legislative history and practice of assessment under the old tariff entry, that under the re-structured eight digit new tariff entry, the raw jute of cutting grades are not classifiable under CSH 53039010, as the jute cuttings mentioned in the said entry does not refer to raw jute of cutting grade. On the other hand, in view of the items covered under the broad heading 53.03, along with the explanation of inclusion of various items covered under the said heading as mentioned in the HSN, undoubtedly, the inference goes in favour of the assessee that what they had imported, were raw jute of cutting grade and correctly classifiable under sub-heading 53031010 of CTA, 1975.
6.17 Regarding the other argument of the Appellants that they were enjoying the benefit of exemption Notification No.21/02-Cus. dated 01.03.2002 under Serial No.170, being applicable to raw jute under the six digit code of classification and the same should not be denied to them under the new eight digit code of classfication by virtue of Notification No.16/03-Cus. dated 24.01.2003, we find force in the contention of the assessee. However, since we have observed that the goods imported by the Appellant, be considered as raw jute of cutting grade, therefore the benefit of the said Notification automatically flows as it continued to be applicable to raw jute only and we do not see any necessity to delve into this aspect as it would be a mere academic exercise.
6.18 Further it is pleaded on behalf of the Appellant that even though on the issue of valuation and admissibility of Notification No.105/99-Cus dated 10.08.1999, the adjudicating authority had decided the issue in their favour, in absence of a challenge to the said Order either by the Appellant or the Revenue, the Order of the Ld. Commissioner(Appeals) in remanding these issues to adjudicating authority, for deciding the same afresh, is de hors the record/ Appeal filed before him, and hence bad in law. We agree with the contention of the Appellant on this aspect also. In the result, the impugned Orders passed by the Ld. Commissioner (Appeals) are set aside and all the three Appeals are allowed with consequential relief, if any admissible, as per law.
(Pronounced on 30.04.2014) Sd/- Sd/-
(I.P.LAL) (D.M.MISRA) MEMBER(TECHNICAL) MEMBER(JUDICIAL) Dutta/ 14 14