1996(11)LCX0074
IN THE CEGAT, COURT NO. II, NEW DELHI
S/Shri S.L. Peeran, Member (J) and Shiben K. Dhar, Member (T)
C.L. GUPTA AND SONS
Versus
COLLECTOR OF CUSTOMS, NEW DELHI
Final Order No. C/1189/96-B, dated 4-11-1996 in Appeal No. C/376/89-B
Cases Quoted
N.J. International v. Collector — 1995(06)LCX0069 Eq 1995 (079) ELT 0665 (Tribunal) [Para 6]
Premier Brass Metal Works v. Collector — 1990(02)LCX0029 Eq 1990 (048) ELT 0098 (Tribunal) [Para 6]
E.S. Metal Corporation. v. Collector — 1986(10)LCX0031 Eq 1987 (028) ELT 0172 (Tribunal) [Para 6]
Advocated By : Shri J.S. Agarwal, Advocate, for the Appellant.
Shri K.K. Jha, SDR, for the Respondents.
[Order per : S.L. Peeran, Member (J)]. - This appeal arises from the order-in-original dated 15-12-1988 passed by the Additional Collector of Customs, New Delhi, who held the imported item declared in the Bill of Entry as “Brass Residue” to be ‘Brass scrap/waste’ and hence classifiable under Chapter 74 of CTA being dutiable at 100% (Basic) + 40% (Aux.) and CVD equivalent to Rs. 3300/-PMT. The learned Additional Collector held that the imported item had resorted to mis-declaration and attempted to evade customs duty and hence held them liable to penalty of Rs. 15,000/- under Section 112(a) of the Customs Act, 1962.
2. The Department examined the goods imported in 56 drums, which was found to be metal forgings, being basically different from “Brass Residue”. The learned Additional Collector also held that the goods were liable to confiscate under Section 111(m) of the Customs Act, 1962.
3. The learned Additional Collector has based his findings on the basis of the test report obtained from CRCL, Pusa Road, New Delhi, which stated that the same is in the form of metallic powder of five sharings and drillings. It is an alloy of copper and zinc together with nickel. Copper content of the sample was found to be 75.2% as against the declared percentage of 40% in the importers copy of test report from Holland. The goods were also found to be free from acids, and silicious matter. On the basis of the test result, the learned Additional Collector held that it clearly indicated that the imported item is other Brass Residue. He further held that going by importers own reason and contention that Residue normally consists of high amounts of impurities and for the same reason it cannot be melted directly, the goods imported do not satisfy the parameters of “Residue”. It is held that the item does not contain high impurities and has also got a very high content of copper and that it is also free from acids and silicious matter.
4. We have heard Shri J.S. Agarwal, the learned Advocate for the Appellants and Shri K.K. Jha, the learned DR for the Revenue.
5. It is the contention of the learned Advocate that the item is Brass Residue only and it is required to be classified under Chapter 29 of CTA, 1962 along with the benefit of Notification No. 172/86, dated 1-3-1986. The item cannot be considered as Brass Scrap. In this regard the test report of the supplier is relied. It was further contended that in Customs Tariff, there is no definition of Brass Residue and in Chapter 74 it has been indicated that “Brass waste and Scrap” does not include slag, Dross, scaling, Ash or other enprious residues. As the item contains ash, mud etc. it cannot be classified as waste and scrap. The learned Advocate further pleaded that no mala fide could be attributed to the appellants on the face of all the documents of the supplier, as it clearly establishes that the item is only Brass Residue. He also submitted that two drums weighing 1858.991 kgs. involving duty amount of Rs. 32,859.45 was lost by theft prior to clearance, and the authority was bound to have given the deduction which they failed to do so.
6. The learned DR pointed out that the Test Report has not been challenged by the appellants. The Test report clearly indicates that the item is not Brass Residue in view of being in the nature of sharings and drillings and it was composed nickel, copper and these percentages were found to be 75.2% as against declared percentage of 40%. The sample being free from acids and silicious matter, it cannot be Brass Residue and hence classification under Chapter 26 is ruled out. It is his submission that for classification under Chapter 26, the item should not arise from the mechanical working of metals. He also referred to page 210 of Explanatory notes under HSN. The learned DR relied on the following rulings :
(i) N.J. International v. Collector of Customs, Kandla - 1995 (079) ELT 665.
(ii) Premier Brass & Metal Works v. Collector of Customs - 1990 (048) ELT 98.
(iii) E.S. Metal Corpn. v. Collector of Customs - 1987 (028) ELT 172
7. Countering the arguments, the learned Advocate submitted that the item had not arise from the chemical working of metals and hence it cannot be classified as ‘waste and scrap’ and further the item is not known in the trade as ‘waste and scrap’.
8. We have carefully considered the submissions made by both the sides and have perused the records.
9. The appellant/importer have declared the item in the Bill of Entry as “Brass Residue”. The samples were drawn and sent for test. On test, Chemical Examiner has given the findings as follows :
“The samples is in the form of yellowish metallic powder of fine sharings and drillings. It is an alloy of copper and zinc together with nickel, copper content of the sample is 75.2%. It is free from acids and silicious matter. It is other than `Brass Residue’.”
10. The appellant has not challenged this report by asking for retest or by cross-examining the chemical examiner.
11. The importer contended that they had ordered from M/s. British Metal Corporation for supply of “Brass Residue” at the rate of US $ 35 cents per Ib CIF Bombay. It is stated that at the time of physical examination, Mr. Juneja, Commercial Manager of British Metal Corporation (I) Pvt. Ltd. was present, wherein the impression created that goods were Brass Scrap and not Brass Residue was refuted by Shri Juneja. Hence the appellant contend that there is no deliberate misdeclaration. They further state that they paid the duty also. It also stated that there is no publication of customs which specifies the definition of “Brass Residue”. Relying on Chapter 74 of Tariff, they contended that the “Brass waste and scrap” does not include slag, dross, scaling, ash or other cupreous residues and hence they plead that the matter would not fall under Brass waste and scrap for classification under Chapter Heading 7402.00 and it is required to be classified under Heading 2620.30. Chapter 26.20 of the Tariff deals with :
“Ash and residues (other than from the manufacture of iron or steel), containing metals or metallic compounds”.
12. Sub-heading 2620.30 reads :
“containing mainly copper”
13. Chapter note 1 of Chapter 26 states the products not covered in the Chapter Note 3 which reads :
“Heading No. 26.20 applies only to ash and residues of a kind used in industry either for the extraction of metals or as a basis for manufacture of chemical compounds of metals”.
14. Thus, it is clear from this Note 3 that the Heading No. 26.20 the material claimed to be “Brass Residue” should of a kind used in industry either for extraction of metals or as a basis for manufacture of chemical compounds of metals. The appellants nowhere have indicated the purpose and use for which the item is put to. Even presuming that the item is of a kind used in industry for extraction of metals or as a basis for manufacture of chemical compounds of metal, but, it has to keen as to whether the item is an “ash and residues containing metals or metallic compounds mainly of copper”. The test result, clearly indicates that the item is in the nature of yellowish metallic powder of fine sharings and drillings. Sharings and drillings arise out of metallic working of metals and it is not an ‘Ash or a residue’ hence, it clearly goes out of the Chapter 26.20. Further the item does not ‘contain mainly copper’ but it is an alloy of copper and zinc together with nickel and hence the finding of the chemical examiner that the item is not “Brass Residue” is required to be confirmed. Hence sub-heading 2620.30 is clearly ruled out.
15. The Department has classified the item under Heading 7402, which reads “unrefined copper, and copper anodes for electrical refining”. Note 1(a) of Chapter 74 defines “Refined copper” to mean metal containing at least 99.85% by weight of copper or metal containing .at least 97.5% by weight of copper, provided the content by weight of any other element does not exceed the limit specified in the Table given thereunder. Hence, the classification as refined copper is ruled out. But can the classification under Chapter 7402 be confirmed in the light of the test result that the item is “an alloy of copper and zinc together with nickel”. The answer is a definite no, in view of heading for “copper alloys (7403.21 etc.), as were for ‘copper waste and scrap (74.04), copper powder and flakes under 74.06. The Chapter notes defines all the terms. The learned Additional Collector has not t applied his mind on this aspect of the matter and also on the claim of deduction of the lost of goods short received by the appellant due to theft. Hence, the matter is required to be readjudicated de novo on these aspects of the matter.
16. As regards penalty of Rs. 15,000/- the misdeclaration being obvious, the same is maintainable and hence we confirm it.
17. Thus, the matter is remanded for considering correct classification under Chapter 74 to the original authority.
_______
Equivalent 1997 (90) ELT 124 (Tribunal)