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3. When the goods were examined on 4.7.2001 there arouse a doubt whether the item can be considered as waste/defective as declared by the importer. The matter was referred to National Metallurgical Laboratory (NML), Chennai, for their expert opinion. The NML vide their letter No. NM/MC/04/031/2001-02 dated 16.7.2001 stated that the entire consignment covered under Bill of entry No. 017169 in 9 containers at SICAL CFS (MAC) was inspected by them on 5.7.2001, 7.7.2001 and 11.7.2001. They reported that the consignment consisted of packages of TFS Sheets free from any significant visual defects and within each package the sheets were of uniform size and finish. However, the entire consignment consists of packages, which were of different dimensions and finish. Based on the visual observation of the TFS consignment, they confirmed that it cannot be considered as waste and they were confirmed to be TFS by Chemical Analysis of the sheets drawn from these packages. As regards tin plated sheets they reported that the consignment consisted of a few packages of sheets with defects like pin holes, abrasive roll marks, scrolled and rusted parts. However, many of the packages were free from any significant visual defects. Based on the visual examination, they opined that about 30% of the tin plated sheets can be considered as waste and the remaining cannot be considered as waste.

10. This report was examined by the Scientist at NML who explained that when they stated that tin-free sheets did not have visual surface defects, they meant that they were suitable for lacquering and printing. They confirmed that on opening 13 packages of tin-free sheets, they could not find any surface defect and, therefore, based on mere scratches or wrinkles on afew sheets, the entire material cannot be declared as seconds. They stated the definition of the prime grade tin-free steel in IS 12591-1988 was that at the time of dispatch, it was free from defects readily visible to the unaided eye. Mere presence of a few minor handling marks in a large consignment caused during the transit and handling, which can be easily removed did not affect the suitability for lacquering and printing over the entire surface on the sheets and cannot render the goods as a lower grade. When they mentioned 'no visual defects', they implied only insignificant defects were present which would not affect the suitability of goods to lacquering and printing. As regards tin-plates, the NML stated that one 'consignment' should be a quantity of tin-plate of the same dimension and quality made available for dispatch at the same time. In other words, in a large consignment there may be material of varying sizes and properties and qualities. In a large consignment cleared under one bill of entry, there could be varying sizes due to such differences in individual packages. The entire goods cannot be treated as assorted waste-waste. The NML stated that as per IS specification, one consignment is one homogeneous lot. According to them since the present 229.4 MTs comprise of tin-plate and tin-free steels cannot be considered as one consignment as it comprised of various dimensions and quality but in each package, the sheets were of uniform size and quality. According to them, the entire quantity of tin-free sheets can be classified into 18 homogeneous lots, Therefore, the entire tin-free steel which did not have any visual defects cannot be considered as waste-waste despite the differences in the dimensions and quality in different packages. As regards tin-plates, the material can be classified into consignments of uniform size, quality and finish. All packages contain sheets of uniform dimensions, quality and finish. However, in the case of tin plates, minor surface defects were observed in some of the sheets in selected packages and hence 30% of the tin plates were classified as waste-waste. Merely because different packages have different dimensions and quality the goods will not qualify to be considered as waste-waste.

14. In respect to the tin plated sheets, NML in their first report pointed out that there were some defective sheets and, therefore, they considered about 30% can be considered as Waste. The present report of Dr. Prasad Rao does mention about wrinkles, etc. without mentioning the exact package numbers. Assuming that such defects are noticed in a few packages the finding of the NML that roughly 30% of the consignment can be considered as waste should take care of these defects in the tin sheets. Therefore, I find that there is considerable common ground between the finding of Dr. Prasad Rao during his inspection and the findings of NML in their initial inspection as far as tin sheets are concerned. Treating 30% as defective would take care of the pin holes, wrinkles, etc. noticed by Dr. Prasad Rao.

These opinions obtained by the importers were forwarded to National Metallurgical Laboratory who confirmed their initial opinion that the entire quantity of Tin Free Sheets was not waste and 39% of the Tin Plate Sheets can be considered as waste and balance quantity was not waste. This opinion was given by the Scientist of the NML without any basis and without any authoritative book. Ld. Consultant invited our attention to page 63 & 64 of the report of the scientist and submitted that the dimensions in mm of each package is different from the other package and, therefore, there is no doubt that their stock lots are having defects and even some of them are having rusted spots and are not prime quality product since the stock lot value is declared by them and have to be accepted. He also submitted that out of 11 packages 7 packages were found with defective goods and 4 packages found with defects but not of much significance. He also invited our attention to Page 43 and the finding of the examination of the goods done by the team of experts and the report indicates that TFS consisted of assorted sizes and mixed sizes. There were surface defects such as roll marks, pin holes, wrinkles and dents are noticed in a number of places. They also pointed out and invited our attention to the defects and observation made by the scientist with regard to TFS which consists of packages with different sizes, different thickness and with different surface finishes. The TFS were found to be of mixed sizes, mixed tempers, mixed thickness and mixture of bright, matte finishing. Ld. Consultant also invited our attention to the finding given by the experts Dr. K. Prasad Rao, Department of Metallurgical Engineering, NT, Madras, Chennai vide his report dated 1.8.2001 and the affidavit dated 1.8.2001 from Dr. N. Krishnaraj and Dr. V. Mohan dated 4.8.2001. All these reports are favourable to the assessee. Even the report from the scientists of NML which is at page 63 & 64 of the paper book are also favourable to them. He also invited our attention to the defects of waste-waste in para 2.5.6 at page 74. He therefore argued that there need not be significant defect in the material once their defect is categorised as waste as per the Indian Standard and they had to be categorised was waste-waste. Even NML has certified them to be of 3r grade quality.