Customs, Excise and Gold Tribunal - Delhi
Steel Authority Of India vs Collector Of Customs on 9 October, 1991
Equivalent citations: 1992(59)ELT623(TRI-DEL)
ORDER
G. Sankaran, President
1. The issue for determination in the present appeal is the classification of Molybdenum Oxide ("Mo O", for short) under the First Schedule to the Customs Tariff Act, 1975, as it stood at the time of import i.e. on or about 25-3-1987. The appellants claimed classification under Heading 2613.10 This was negatived by the lower authorities who upheld the classification originally made under Heading 2825.70. The refund claim on the basis of the claimed classification was rejected by the Assistant Collector and by the Collector (Appeals). Hence the present appeal.
2. We have heard Shri A.N. Haksar, Advocate, for the appellants and Shri M. Jayaraman, DR, for the respondent-Collector.
3. The two competing headings read as follows:-
"26.13 Molybdenum Ores and concentrates
2613.10 - Roasted
28.25 Hydrazine and Hydroxylamine and their inorganic
salts; other inorganic bases; other metal oxides,
hydroxides and peroxides
2825.70 - Molybdenum oxides and hydroxides".
4. The issue had come up before the Tribunal in the case of MMTC v. CC, Calcutta. The Molybdenum content was above 61%. The goods were assessed under Heading 28.01/58(1) negating MMTC's claim for Heading 26.01(1). The department had relied on a Trade Notice issued by the Collector of Customs, Calcutta according to which Mo O containing over 61% Mo would fall under Heading 28.01/58(1) and Mo O with 55% to 61% Mo content under Heading 26.01 as ore concentrate. MMTC's counsel drew the Tribunal's attention to the Madras Collector's notice which classified Mo O without any qualifying remarks under Heading 26.01 The Tribunal took note of the statutory Chapter Note 2 to Chapter 26 and Note 1(a) to Chapter 28 and remanded the matter of classification to the Collector (Appeals). It observed that the use of the goods for nonmetallurgical purposes i.e. not in the extraction of metal (in that case) was not a bar to their classification under Heading 26.01, if they otherwise conformed to the requirements in the said note.
5. The learned Counsel for the appellants submitted that there was no necessity to remand the present matter to the Collector (Appeals). For, he pointed out, the Molybdenum content of the subject goods, as could be seen from the declaration in the bill of entry and the relative invoice, was 59.9%, a fact not disputed by Revenue. If the department wanted to challenge the correctness of this figure, they could, and should, have tested the goods which they did not. Shri Haksar submitted that the goods fell squarely within the prescriptions in the Calcutta Trade Notice for classification under Heading 26.01 and the department should not be allowed to resile from it now.
6. Shri Jayaraman, learned DR, submitted that the Tribunal had, in its order in the MMTC case (supra), questioned the validity of the Trade Notice. Therefore, the Calcutta notice could not now form the basis for any proper order on classification of the subject goods. He further submitted that it was not correct that the Department had accepted the Mo content in the present case as 59.9%. The appellants had declared the classification in the bill of entry as Heading 2825.70 and not 2613.10. Hence, the Department was not obliged to test the goods-for the Molybdenum content. It was too late in the day for the appellants to stake a claim for revision of classification based on the declared Molybdenum content. He urged that the impugned order must be upheld or the matter remanded to the Collector (Appeals) for de novo consideration.
7. We have carefully considered the submissions of both sides and perused the record. The relative bill of entry shows the description of the goods as - "Technical Molybdic Oxide (Molybdenum)-
Molybdenum (Mo) - 59.9%
for manufacture of Ferro Alloys".
and the classification declared by the appellants as 2825.70. It appears that the assessing authority went by the claimed classification since it evidently attracted a higher rate of duty. This case is distinguishable from the case of MMTC, Calcutta v. Collector of Customs, Calcutta disposed of by the Tribunal by Order No.736/90-C dated 16-7-1990. In the MMTC case, the goods were described as Molybdenum Oxide. In the present case, it is seen from the relative Bill of Entry that the goods were described as Technical Molybdic Oxide (Molybdenum) having molybdenum content of 59.9%. The goods are described as Technical Molybdic Oxide (Molybdenum) in the relative invoice also. Heading 26.13 of the Harmonized Commodity Description and C6ding System of Customs Cooperation Council, Brussels reads:-
"26.13 - Molybdenum Ores and concentrates
2613.10 - Roasted
2613.90 - Others"
The Explanatory Notes relating to this heading reads, inter alia, as follows:-
"The heading also covers roasted molybdenite concentrates ("technical molybdic oxide", obtained by merely roasting molybdenite concentrates)".
Therefore, based on the declared description of the goods which is supported by the relative invoice and which has been accepted by the Customs authorities, the goods are Technical Molybdic Oxide which, according to the aforesaid Explanatory Notes, is roasted molybdenite concentrates. It is therefore that the goods are covered by sub-heading 2613.10 of the First Schedule to the Customs Tariff Act, 1975. In this view of the matter, the percentage of Molybdenum does not appear to be quite relevant to the determination of the present dispute. Even assuming it is relevant, the declared percentage, which is 59.9%, falls within the specification in the Trade Notice issued by the Collector of Customs, Calcutta. Thus, in any view of the matter, the goods fall under sub-heading 2613.10.
8. The appeal is allowed with consequential relief to the appellants
9. S.L. Peeran, Member (J)
I have gone through the draft order of the learned President. I could not persuade myself to agree to it. With respect, my views are as follows -
10. The Importer declared the goods in the Bill of Entry filed on 25-2-1987 as Technical Molybdic Oxide (Molybdenum or Mo content 59.90%) for manufacture of Ferro Alloys. They sought classification under Customs Tariff Heading 2825.70 and claimed exemption under Notification No. 105/77 and No. 314/86 at the rate of 55% + 25% Ay duty + 15% CV duty. The Department assessed it accordingly and cleared the goods. Later the importer filed the refund application on 8-9-1987 seeking assessment under Heading 2603.10 read with Notification No. 78/36-Cus., dated 17-2-1986 and No. 92/86 for duty at the rate of 40% + 40% + nil CV duty. They have submitted that the Molybdic Oxide imported is concentrate of Molybdenum ore as evidenced by the invoice and the analysis report.
11. They have also relied on the Departmental clarification issued by the Madras Customs House in the form of Public Notice No. 211/87 dated 17-7-1987 stating that Molybdenum Oxide is classifiable under Heading 26.01 of Customs Tariff Act, 1975. Hence, excess duty of Rs. 2,87,062.61 P. is sought to be refunded to them. The Assistant Collector in the order-in-original dated 19-11-1987 has noted that the supplier's analysis report confirms that the item in question is free from any slag and non-metallic residue and indicates clearly a processed one to arrive at technical grade. Accordingly, the Assistant Collector has held that Chapter 26 of Customs Tariff deals with ores, slag and ashes and does not cover the subject item which is in the nature of inorganic chemicals.
12. The Collector (Appeals) in the impugned order has recorded that Molybdenum oxide containing 5 to 11% impurities are sold as Technical Molybdenum oxide. Pure form of Molybdenum oxide of purity 99.975% is obtained by heating the Technical Molybdenum oxide in a furnace at high temperature. The Collector has held that the question whether technical molybdenum oxide would be classifiable under Chapter 26 or 28 depends on the extent of impurities it contained. He has observed that as per instructions issued by the Customs House Tariff Public Notice No. 67/81 molybdenum oxide containing over 61% of molybdenum would cease to be considered as concentrated ore classifiable under Chapter 26 and would be considered as appropriately classifiable under Chapter 28 of the Tariff. He has rejected the refund application on the ground that the goods were not tested in Customs House Laboratory. It was assessed at higher rate on the basis of documents submitted by the appellants in terms of Section 17(4) of the Act. He has observed that as the importer did not claim the lower rate nor executed a test bond and also as they did not ask for provisional assessment subject to drawal of sample for test, the goods having been cleared, there will be no scope to challenge the assessment at this stage.
13. The appellants in this appeal have urged that the goods are mineral products and classifiable as ore under Chapter 26 and that they are not chemicals to be classified under Chapter 28 which covers inorganic chemicals. They have relied upon Public Notice No. 67/81 which states that Molybdenum oxide containing over 61% molybdenum would cease to be considered as concentrated ore classifiable under Chapter 26 and should be classified under Chapter 28. They have contended that the goods are used as raw material for producing alloy steel (high speed steel) in Alloy Steel Plant, Durgapur which is a metallurgical plant and not chemical plant. They have referred to the Explanatory Notes on harmonised tariff which states that Technical Molybdic oxide is obtained by merely roasting Molybdenite concentrates and the same is assessable as Molybdenite concentrates under Heading 26.13.
14. Shri A.N. Haksar, learned Advocate, arguing for the appellants, submitted that the goods were mineral products falling under Chapter 26 and not a chemically defined compound to fall under Chapter 28. It is his contention that the Department should have drawn the samples and sent them for test. As the Department has not disputed the contents of the goods mentioned in the bill of entry, it cannot be put to proof. More so, when the responsibility to have the goods tested lies on the Department as per Section 17(4) of the Customs Act. He submitted that the earlier order of the Bench was rendered in the case of MMTC as rendered in the Order No. 736/90 dated 16-7-1990. He further submitted that the Trade Notice is binding and in this connection, he relied on the rulings rendered in the case of Star Chemicals (Bombay) Ltd. (supra) and in the case of Navgujarat Paper Industries (supra). He relied on the CCCN Tariff Entry and as it is identical under Customs Tariff, he submitted that it has persuasive value.
15. Shri M. Jayaraman, learned S.D.R. submitted that the importer had declared the goods under Bill of Entry as falling under Chapter 28 and as there is specific entry for such item, the Department accepted the said declaration without subjecting it to the procedure under Section 17 of the Act. The Importer having cleared the goods at his own bidding, cannot now hold the Department responsible for not having got the goods tested. He submitted that it would be impossible for the Department to function if every declared entry under the Bill of Entry is disputed and put to test, as the Department trusts the importer for the true and correct declaration made by them in the Bill of Entry. Hence, the importer having got the goods cleared now cannot hold the Department responsible for not testing the goods as such a situation did not arise in the facts and circumstances of this case. The Importer had also not placed sufficient material to uphold their contention. As it is the goods being described as Technical Molybdic Oxide and the goods having been obtained by roasting Molybdenite concentrates and same being directly used in the production of alloy steel (high speed steel) without subjecting the goods for further purification clearly suggests that it is no longer in crude ore form to be classified under Chapter 26. It is described as Technical Molybdic Oxide and not molybdenum ore. Technical Molybdic oxide is a specifically defined compound with definite formula of Molybdenum ore and hence it is a chemically defined compound falling under Chapter 28. The Collector has not decided the issue only on the basis that the goods have not been tested but has given sufficient reasons as well. He sought for remand for reconsideration of the matter.
16. The question that arises for consideration is as to whether the goods having undergone several processes and are imported as pallets and described in the invoice as Technical Molybdic Oxide (Molybdenum) does it continue to be Molybdenum ores and concentrates classifiable under Chapter 26 or does it fall under Chapter 2825.70 as Molybdicuoxides and hydroxides.
17. Admittedly, the goods have undergone roasting and other processes. The Collector has observed in this order that he had ascertained from Importer that the Molybdic oxide containing about 5 to 11% impurities are sold as Technical Molybdenum Oxide and pure form of molybdenum oxide of purity of 99.975% is obtained by heating this Technical Molybdenum oxide in a furnace at high temperature. Therefore, to say against this admission of Importer that the goods are still Molybdenum ores and concentrates would be incorrect in absence of any technical literature. The goods are admittedly not Molybdenum ores and concentrates. After several processes before shipment, the goods have become marketable and in trade parlance, they are known as Technical Molybdenum oxide with a specific chemical defined compound. The Importer has not placed any evidence of trade parlance and usage as well as technical literature regarding the various processes done to form the Technical Molybdenum oxide and how it is different from Molybdenum ores and concentrates.
18. Chapter 28.25 classifies Other Metal oxides also while Chapter 2825.70 deals with Molybdenum oxides. The goods have been described as Technical Molybdenum oxide suggestive of classification in this heading also. The Department cannot be faulted for having accepted the Importer's declaration, as there is specific entry for these goods, the need for getting them tested did not arise. Therefore, the reliance placed by the learned Advocate on the ratio of C.C.E. v. Muzzafarnagar Steels (supra) may not apply to Customs clearance. If they were called upon to subject all the goods for test in every bill of entry presented, then a situation may arise when it would become very difficult for both the Department and the Importer to function smoothly. As the Department places trust on the declarations submitted in bill of entry and as there is a specific entry available for classifying the goods and for accepting the declaration, hence the Department cannot be faulted for this.
19. As regards the reliance on the Trade Notice No. 67/81 dated 4-8-1981 issued by the Customs House, Calcutta, the observation made at para 5 made by the Bench in the MMTC case in Order No. 736/90 is reproduced below-
"We have carefully considered the submissions before us and perused the record. As earlier noted, the Calcutta Custom House Trade Notice does not give any basis for restricting the classification under Heading 26.01 to Mo O with 55% to 61% Molybdenum. The Madras Custom House Trade Notice, on the other hand, does not contain any such restriction. Both notices have been issued around the same time and, as seen from the Madras notice, were the result of decisions taken by the Conference of Collectors of Customs on Tariff. This difference only shows that even 'the Department was not quite sure of its stand. It is quite legitimate to ask why 61% why not 63%. There should be some rational basis but none has been placed before us. Nor do the orders of the lower authorities contain any rational explanation. The Collector (Appeals) has relied on Statutory Note 1(a) to Chapter 28 which reads as follows-
"1. Except where the context or these Notes otherwise requires or require, this Chapter is to be taken to apply only to -
(a) Separate chemical elements and separate chemically defined compounds, whether or not containing impurities".
He holds that Mo O with molybdenum content more than 91.5% by weight with residual impurities (the goods in the present case) would fall under Chapter 28. This, according to him, would not be unreasonable. But he does not set out the basis for this dividing line which, as is apparent, is again based on the Calcutta Trade Notice."
Hence, much reliance cannot be placed on this Trade Notice No. 67/81 for canvassing the plea that it is binding for deciding the classification in this case. Reliance placed on the rulings in this regard is not helpful in the face of the above observation. Therefore, I am not inclined to accept this plea.
20. In the case of MMTC (supra) the Bench remanded the matter for de novo consideration. In this case, the proper thing to do is also to remand the matter for de novo consideration. The original authority shall consider Trade Parlance and the technical literature so produced by the importer on the nature of the goods imported to determine it as ore and concentrate under Heading 26 or as falling under Chapter 28 of the Customs Tariff.
Ordered accordingly.
(S.L. Peeran) Member (Judicial) The following point of difference having arisen between the two Members comprising the Bench, the matter now needs to be resolved in terms of sub-section (5) of Section 129C of the Customs Act, 1962:-
Whether the goods in question should be reclassified under Heading 26.01 (corresponding to Heading 2613.10 of the Customs Tariff Schedule in force at the material time) and the appeal should be allowed with consequential relief to the appellants OR the matter should be remanded to the original authority for de novo consideration whether the goods will fall under Chapter 26 or under Chapter 28 of the Tariff Schedule?
(S.L. Peeran) (G. Sankaran)
Member (Judicial) President.
11-1-1991
The point of difference between the 2 Members comprising the Bench is referred for hearing in terms of Section 129C(5) of the Customs Act, 1962, to Shri G.P. Agarwal, Member (Judicial).
(G. Sankaran) President 11-1-1991
21. G.P. Agarwal, Member (J) I have heard Shri A.N. Haksar, learned Counsel for the appellants, M/s. Steel Authority of India, Calcutta and Shri S.K. Roy, learned SDR for the respondents.
22. Arguing on behalf of the appellants, Shri A.N. Haksar, learned Counsel, while supporting the order proposed by Hon'ble President Shri G. Sankaran (since retired) submitted that the subject goods, namely, Molybdenum Oxide ("Mo O", for short) be classified under sub-heading 2613.10 reiterated the reasons given by the Hon'ble President for his findings. He further submitted that there is no necessity to remand the matter either to the Collector (Appeals) or to the original authority as proposed by the learned" Judicial Member, Shri S.L. Peeran, in his referable Order for, the Molybdenum content of the subject goods was 59.9% as could be seen from the declaration made in the Bill of Entry by the appellants and the relative Invoice - a fact not disputed by the Revenue according to him. He highlighted that if the Revenue wanted to challenge the correctness of the contents of Molybdenum in the subject goods, as declared by the appellants, the Department could, and should, have tested the goods which admittedly they have not done. He also added that the subject goods fall squarely within the prescriptions given in the Calcutta Trade Notice for classification under Heading 26.01 and the Department should not be allowed to resile from it now. In this premises, his submission in a nutshell was that the subject goods squarely fall under subheading 2613.10 and consequently, the appeal be allowed with consequential relief to the appellants by endorsing the view of the Hon'ble President.
23. In reply, Shri S.K. Roy, learned SDR, submitted that the case be remanded to the original authority for de novo adjudication in the light of the observations made by the learned Judicial Member, Shri S.L. Peeran, in the referable Order.
24. During the course of the hearing before me, it was inter alia argued by the learned Counsel for the appellants that as per the analysis report the goods were free from slag and non-metallic residues and processed into technical grade. It was also stressed that in the Bill of Entry, the contents of the subject goods were declared to be 59.90% and to draw support to his submission, my attention was drawn to the invoice wherein under the description of the goods quantity is also given in pound(s). On this quantity, it was submitted that the percentage would come 59.90%, that is to say, below 61%. However, it was noticed that there was no such analysis report on the record. Accordingly copies of the supplier's analysis report in respect of Technical Molybdic Oxide imported by the appellants were placed on the record and on the strength of the report of "Commercial Testing & Engineering Co. (Minerals and Chemicals Division) - California", it was argued by the learned Counsel for the appellants that as per this report the "raw material imported from USA to Calcutta", it was found on test that Molybdenum (Mo) contents was 59.90%.
25. I have considered the submissions. Admittedly, in the instant case, the subject goods were not tested as the declaration made by the appellants in their Bill of Entry to the effect that the subject goods fall under Chapter 28, was accepted;by the Revenue without subjecting it to the procedure under Section 17 of the Act. The appellants (importer) having cleared the goods at his own bidding, cannot now hold/the Department responsible for not having got the goods tested. In the judgment rendered by this Tribunal in the case of M/s. MMTC, Calcutta v. Collector of Customs, Calcutta, Order No. 736/90-C, dated 16-7-1990, it was observed by the Tribunal that the Trade Notice No. 67/81 issued by the Calcutta Customs House, (on which reliance was placed by the learned Counsel for the appellants before me also) does not give any basis for restricting the classification under Heading 26.01 to Mo O with 55% to 61% Molybdenum. It was also noticed in that case that there is another Trade Notice issued by the Madras Customs House which does not contain any restriction though it appeared that both the said notices were issued around the same time and were the result of decisions taken by the Conference of Collectors of Customs on Tariff. This itself shows that even the Department was not quite sure about its stand. Under these circumstances, I agree with the observations made by the learned Judicial Member in paragraph 19 of the referable Order. From the impugned Order I also find that the goods have undergone roasting and other processes and the Collector had ascertained from the appellants that Molybdenum Oxide containing about 5 to 11% impurities are sold as Technical Molybdenum Oxide, and pure form of Molybdenum Oxide of purity of 99.975% is obtained by heating this Technical Molybdenum Oxide in a furnace at high temperature. This admission on the part of the appellants before the Collector, prima facie contradicts the stand of the appellants that the goods are still Molybdenum Oxide, as there is no technical literature on our record. Under these circumstances, I agree with the learned Judicial Member that it would be proper and expedient in the interest of justice to remand the matter for de novo consideration to the original authority so that the nature of the subject goods may be examined afresh with reference to the Trade Parlance and the technical literature so produced by the appellants for the correct classification of the goods either under Heading 2613.10 as claimed by the appellants or under Heading 2825.70 as earlier declared by the appellants and classified by the Revenue without any objection.
26. In the light of the foregoing, I answer the alternative point referred to me in the affirmative and agree with the learned Judicial Member that "the matter should be remanded to the original authority for de novo consideration whether the goods will fall under Chapter 26 or under Chapter 28 of the Tariff Schedule."
FINAL ORDER
27. In view of the majority decision the matter is remanded to the original authority for de novo consideration whether the goods will fall under Chapter 26 or under Chapter 28 of the Tariff Schedule as indicated in para 20 of the order of Hon'ble Member (Judicial).