Custom, Excise & Service Tax Tribunal
M/S Sandur Manganese & Iron Ores Ltd vs Commissioner Of Customs, Central ... on 16 January, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. I Appeal No. C/1205/2012 (Arising out of Order-in-Original No. Commr/04/2012-13 dated 31.7.2012 passed by the Commissioner of Customs, Central Excise & Service Tax, Goa). For approval and signature: Honble Shri P.R. Chandrasekharan, Member (Technical) Honble Shri Anil Choudhary, Member (Judicial) ======================================================
1. Whether Press Reporters may be allowed to see : No 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 : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== M/s Sandur Manganese & Iron Ores Ltd. Appellant Vs. Commissioner of Customs, Central Excise & Service Tax, Goa Respondent Appearance: Shri V.M. Doiphode, Advocate with Mr. Steven L DSouza, Consultant for Appellant Shri K.S. Mishra, Addl. Commissioner (AR) for Respondent CORAM: SHRI P.R. CHANDRASEKHARAN, MEMBER (TECHNICAL) SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL) Date of Hearing: 16.01.2014 Date of Decision: 16.01.2014 ORDER NO. Per: P.R. Chandrasekharan
The appeal arises from Order-in-Original No. Commr/04/2012-13 dated 31.7.2012 passed by the Commissioner of Customs, Central Excise & Service Tax, Goa. Vide the impugned order, the adjudicating authority has confirmed customs duty demands of Rs.30,89,223/- and Rs.2,01,17,054/- along with interest thereon against the appellant M/s Sandur Manganese Iron Ores Ltd., Bangalore under Section 28 of the Customs Act, 1962 read with Section 28AA ibid by finalizing the Bills of Entry under which the appellants imported Low Ash Metallurgical Coke/ Low Ash Low Phosphorous Coke. Aggrieved of the same, the appellant is before us.
2. The impugned order has been passed in pursuance to this Tribunals order vide Order No. A/485/WZB/2007/CSTB/C-I dated 28.8.2007 wherein the adjudicating authority was directed to furnish to the appellant/assessee, the procedures that were forwarded with regard to sampling and the method that were followed in testing samples and also cross-examination of the Chief Chemist, who had tested the sample.
3. The facts relevant to the case are as follows: -
The appellant imported 1569.63 MTs of Low Ash Metallurgical Coke vide Bill of Entry No. 87 dated 17.7.1990, 4604.625 MTs of Low Ash Low Phosphorous Coke vide Bill of Entry No. 57 dated 12.11.1990 and 8250.0 MTs of Low Ash Low Phosphorous Coke vide Bill of Entry No. 58 dated 12.11.1990. The Bills of Entry were provisionally assessed and the appellant claimed the benefit of duty exemption under Notification No. 35/90-Cus dated 20.3.1990, which provided for a concessional customs duty of 20% ad valorem in respect of coke with phosphorous contents of 0.035% or below. The appellant declared the phosphorous content to be 0.026% in respect of Bill of Entry No. 87 and 0.035% in respect of Bills of Entry No. 57 and 58. The samples of the imported goods were drawn and sent for testing to the Customs Laboratory, Goa and in the initial report, the phosphorous content was found to be less than 0.035% on the basis of colour test comparison method. Accordingly, the Bills of Entry were finally assessed and it was observed that there is no difference between the provisional assessment and the final assessment. The Bill of Entry No. 57 was finally assessed on 16.7.1991 and Bill of Entry No. 87 was finally assessed on 16.7.1992. As regards Bill of Entry No. 58, it is not known when it was finally assessed. After the final assessment, the assessed Bills of Entry were forwarded to Bombay Audit for the post audit and Bombay Audit Team stated that test report does not indicate the phosphorous content and, therefore, the benefit of Notification No. 35/90 could not be extended. Thereafter, the remnant sample available with the Customs was forwarded for retest to the Central Revenue Control Laboratory (CRCL), New Delhi and the said laboratory found the phosphorous content to be 0.058% in respect of Bill of Entry No. 87 and 0.0589% in respect of Bills of Entry Nos. 57 and 58. The samples were tested by the CRCL, New Delhi in October, 1993 even though the samples were sent for retesting in February, 1993. Based on the test report, less charge demand was issued to the appellant on 24.10.1994 in respect of Bills of Entry No. 57 & 58 of 1990 and a show-cause notice dated 9.8.1995 was issued in respect of Bill of Entry No. 87 of 90 invoking the provisions of Section 28 of the Customs Act. These demands were confirmed by the Assistant Commissioner, the assessing officer and the appeals filed by the appellant before the lower appellate authority, were rejected. Aggrieved of the same, the appellant approached this Tribunal and this Tribunal vide order dated 29.10.2001 remanded the matter back to the adjudicating authority with the following directions: -
In the order that the appellant relies upon, the Tribunal was concerned with testing of samples of a consignment of coke for its eligibility to the same benefit as this now under our consideration. The Bench noted the requirements contained in IS:436 of 1965. This specification provides detailed parameters of collecting the samples of coke to be tested to ensure that it is representative. It noted the requirements contained in IS: 1350 (Part V) of 1979, Indian Standard Method of Test for Coal and Coke. This provides that samples shall be as in specification IS: 436. It provides for receipt of samples in sealed containers. It noted that in the case before it, the report of the National Test House was not based upon procedures that were in conformity with those laid down in these specifications and held that the balance of convenience was in favour of the importer. In the case before us, we therefore find good reason for not confirming the order impugned before us. The passage of three years, and the corresponding variation in ambient, the effect of the moisture content of the coke and the percentage of the phosphorous in it could have a bearing on the ultimate rest result. Unless it is possible to ensure that the moisture content was offset by samples which ought to have tested were air drying both the contents require moisture, it is not possible to accept the validity of the Chief Chemists report. At the same time, it is evident that there has really been not statistical accounts determination valuation of the phosphorous contents before the consignment was cleared. The colour comparison method is nothing other than the visual estimation of approximate contents and is not a quantitative determination. We are therefore of the view that the department should make available to the appellant the procedures that were followed with regard to sampling and the method that were followed is testing samples, so that it can be determined whether the two Indian Standard Specifications in question have been complied with, and that the appellant should, if it considers necessary, be permitted to question the methodology of sampling and testing. However, this direction was not followed and the matter came back again and this Tribunal vide order dated 28.8.2007 once again remanded the matter back to the adjudicating authority for complying with the directions contained in order dated 29.10.2001 and in pursuance thereof, the impugned order has been passed.
4. The learned Counsel for the appellant submits that in the present case, the adjudicating authority has not complied with the direction of this Tribunal wherein specific directions were issued to the adjudicating authority to furnish to the appellant the procedures adopted for drawal of sample and the method of testing. Despite the specific direction, the adjudicating authority refused to provide to the appellant the procedure adopted for sampling by recording a finding that the appellants demand for providing the procedure cannot be accepted, inasmuch as they had not objected to the procedure of drawing of sample initially.
4.1 The learned Counsel further submits that at the time of import, the appellant had produced test reports of recognized testing agency such as SGS (India) Pvt. Ltd., Mitra S.B. Pvt. Ltd., Goa and China Inspection Bureau wherein the phosphorous contents were found to be less than 0.035%. However, no credence has been given by the Commissioner to these test reports. Similarly, at the time of exportation from China, the appellant had contracted International Inspection & Consultancy, Cargo Surveyors, Samples & Consultants, Tokyo to give the test report and the said agent had certified that the phosphorous conent is 0.026% after drawing 80 incremental samples at the time of loading of cargo. Similarly, after receipt of the goods in India, the appellant had drawn and tested the sample through SGS (India) Pvt. Ltd., which is one of the approved testing agency and the said agency had found the phosphorous content to be 0.029%. However, no credence has been given to these test reports by the adjudicating authority.
4.2 The learned Counsel further submits that it is an admitted position that the Bills of Entry were finally assessed and thereafter they were forwarded to Bombay Custom House for post audit. Once the Bills of Entry is finally assessed and there is no allegation of any suppression on the part of the appellant, the demand notices issued in 1995 much after the finalization of assessments are not sustainable in law.
4.3 The ld. Counsel further points out that the phosphorous content in the sample can vary depending upon the condition of the material at the time of testing. In the present case, there is no evidence that the samples which were drawn were kept in airtight containers and were forwarded to the CRCL, New Delhi in such containers. Further, there is no evidence that samples drawn were representative inasmuch as the procedure prescribed under ISI 436 for sampling has not been followed. In the absence of a proper drawal of sample and keeping the same in airtight containers, subsequent test report obtained in 1993, almost three years after the import of the goods, cannot be relied upon. During the cross- examination, the Chief Chemist, who had tested the samples, could not confirm that the samples which he had received were sealed in airtight containers. In these circumstances, the reliance placed by the adjudicating authority on the test report of Chief Chemist, CRCL cannot be relied upon. He also relies on the decision of this Tribunal in the case of Rajkot Engineering Association 2000 (123) ELT 978 (Tri), wherein it was held that if the samples are not drawn as per the procedure prescribed by the ISI standards, reliance cannot be placed on such test reports. Reliance is also placed on the decision of this Tribunal in the case of Adani Exports Ltd. 2010 (249) ELT 93, wherein the samples were sent belatedly for testing and proper procedure was not followed in drawal of samples. In those circumstances, this Tribunal held that reliance on test reports of CRCL is not permissible.
In view of the above, he pleads for setting aside the impugned order and allowing the appeal.
5. The learned Addl. Commissioner (AR) appearing for the Revenue, on the other hand, submits that in the present case, though the Bills of Entry were assessed finally in 1991, the provisional duty assessment bond had not been discharged and, therefore, so long as the bond is not discharged, the duty demands can be made in terms of the bond. He also relies on the decision of the Tribunal in the case of Tata Chemicals Ltd. 2004 (177) ELT 1038 (Tri-Mum), wherein it was held that if the appellant did not object to the method of test at the relevant time and cleared the goods provisionally, they are estopped from claiming at a later stage that samples should have been tested as per ISI standards. Accordingly, he pleads that the impugned order is sustainable in law and, therefore, the same decision to be upheld and the appeal dismissed.
6. We have carefully considered the rival submissions.
6.1 From the records of the case, it is seen that the goods were imported in July, 1990 and November, 1990. As per the test report furnished by the Chinese supplier and the Testing Agency in Japan, who conducted the test at the behest of the importer, the phosphorous content was found much lower than the 0.035%. The goods were again tested by the Customs laboratory in Goa at the time of importation and as per the Colour Text Comparison method, the phosphorous content was found to be less than 0.035% and the goods were provisionally cleared. After clearance by the customs, the assessee once again got the goods tested by M/s SGS (India) Pvt. Ltd., who also found the samples to be contain phosphorous less than 0.035%. As against the test reports by various agencies, Revenue wants to rely on the test report of the CRCL, which conducted the test in 1993 almost two years after the samples were drawn. There is nothing on record to show that the samples, which were drawn, were kept in airtight containers or the samples were drawn in accordance with IS 436 prescribed for drawal and testing of the samples. In other words, there is no evidence adduced by the Revenue to show that the samples were representative and the sample could not have deteriorated with the passage of time. The Chief Chemist who was cross-examined had also accepted that only the samples kept in airtight containers would not deteriorate. However, there is no evidence forthcoming in this regard adduced by the Revenue.
6.2 The decision of the Tribunal in the case of Rajkot Engineering Association (supra) clearly supports the appellants case. In the said case, it was held that if the samples were not drawn as per the prescribed procedure and were not kept in airtight containers, the result of such samples can be mis-leading and cannot be accepted. The same view was taken by this Tribunal in the case of Adani Exports Ltd. (supra).
6.3 As regards the reliance placed by the Revenue on the Tata Chemicals case, the facts are distinguishable. In that case, there was no evidence led by the respondent therein that phosphorous content was less than the prescribed limits. In the present case, the appellant importer has given three test reports, two by international agencies and the third one by an approved Indian agency wherein the samples were tested before export from China and immediately after the goods were imported into India and all these test reports, confirmed the phosphorous content to be less than 0.035 % by weight.
6.4 In view of the foregoing position, the benefit of doubt has to go to the appellant as the Revenue has failed to discharge the burden cast on it to show that the appellants are not eligible for the benefit of exemption Notification No. 35/90-Cus.
6.5 We also notice that the demand of customs duty has been confirmed by the adjudicating authority under Section 28 of the Customs Act which is incorrect. If the contention of the department is that the goods were assessed provisionally earlier and they are being finally assessed now, then the duty demand should have been confirmed under Section 18 of the Customs Act and not under Section 28.
7. In view of the above factual and legal analysis, we are of the considered view that the impugned order is not sustainable in law. Accordingly, we set aside the same and allow the appeal.
(Operative part of the order pronounced in Court)
(Anil Choudhary) (P.R. Chandrasekharan)
Member (Judicial) Member (Technical)
Sinha
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