2002(02)LCX0045

IN THE CEGAT, COURT NO. I, NEW DELHI

Justice K.K. Usha, President and Shri K.K. Bhatia, Member (T)

GLOBAL SHIPTRADE (P) LTD.

Versus

COMMISSIONER OF CUSTOMS, KANDLA

Final Order No. 77/2002-A, dated 21-2-2002 in Appeal No. C/574/2001-A

Advocated By :   Shri R.S. Dinkar, Advocate, for the Appellant.

Shri M.M. Dubey, JDR, for the Respondent.

[Order per : Justice K.K. Usha, President]. - Order-in-Original dated 25-9-2001 passed by the Commissioner of Customs, Kandla is under challenge in this appeal. The appellant who claims to have been engaged in the trade of ship-breaking materials imported a consignment of Heavy Melting Scrap weighing 271.140 MTs under two Bills of Entry dated 22-8-2001 and 5-9-2001. The assessable value in the Bills of Entry were declared at the rate of US $ 105 PMT and US $ 108 PMT respectively. The Customs Authorities took the view that out of the total quantity of 271.140 MTs, a quantity of 12 MT was melting scrap and the remaining quantity was cut pieces of ‘old/used serviceable welded pipes’ ranging between 2’ to 10’ in length. It was proposed to classify the cut pieces of pipes under Customs Tariff Heading 7306.50 and not under 7204.99 as claimed by the appellant. Since the import of old/used goods are restricted under Para 5.3 of the current import policy, it was proposed that the goods are liable to confiscation under Section 111(d) of the Customs Act.

2. The appellant, it is submitted, had already entered into a sale/purchase contract with the actual user, namely, M/s. Inducto Ispat Alloys Ltd. where the goods are to be used in the furnace for the purpose of melting. Since the goods were required to be cleared urgently, the appellants waived the service of show cause notice and requested for personal hearing. After such personal hearing the impugned order was passed by the Commissioner rejecting the contention raised by the appellant that the goods are liable to be treated as ‘waste and scrap’. The impugned order took the view that the pipes of length of 6’ and above are serviceable and the remaining were treated as unserviceable. Commissioner therefore ordered confiscation of 259.14 MTs of imported goods under Sections 111(d) and 111(m) of the Customs Act. He gave an option to the appellant to redeem the same on payment of fine of Rs. 1,50,000. A penalty to the extent of Rs. 10,000 was also imposed. Apart from the above, the Commissioner enhanced the assessable value to Rs. 8 per Kg. for pipes upto 6’ and Rs. 10 per Kg. for pipes of length from 6’ to 10’. Aggrieved by the above order the importer has come up in appeal.

3. The main contention raised before us by the learned Counsel for the assessee is that the Commissioner has erred in coming to the conclusion that 259.140 MTs of old and used pipes are serviceable pipes and not ‘scrap’ coming under Heading 7204.99. It is contended that after accepting the case of the appellant that the cut pieces of pipes imported were ‘old and rusty’ there was no justification for entering a finding that they were serviceable. Learned Departmental Representative points out that the report of examination of the goods does not show that they are rusty but ‘only old and used serviceable welded pipes’. The report as such is not available before us. It is true that where the report is quoted in the order it does not mention that the pipes are rusty. But, after hearing the party in person in the order the Commissioner has stated as follows :

“Their only plea was that the goods in question are rusty and cut pieces of various sizes of Iron and Steel welded pipes ranging between 9’ to 10’ length. The Department did not deny the same................... In spite of the fact that the goods are rusty and old and used the fact remains that they are serviceable pipes. The nature of the goods remains as pipes even though their value may be less than that of the new pipes.”

We are not able to agree with the view taken by the Commissioner. The goods may remain as pipe even if they are rusty, old and used but it will not be serviceable pipes if they are rusty and old. There are no materials made available in this case to show on what basis the remark was made in the examination report that they are ‘serviceable’. Since the Department itself has not disputed that the pipes are rusty and old, we are of the view that the pipes cannot be treated as serviceable pipes. The circumstances under which the import is made and the fact that it was sold to M/s. Inducto Ispat Alloys Ltd. for the purpose of melting would persuade us to accept the case of the appellant that the goods are to be classified under Tariff Heading 7204.99. In the light of the view we are taking regarding classification of the goods, it may not be necessary for us to go into the other issues raised in this appeal, namely, rejection of the transaction value shown by the appellant and enhancement of the assessable value on the basis of certain market enquiry made by the Commissioner. The assessable value has been enhanced on the basis that the goods imported are serviceable old and used pipes and not ‘scrap’.

4. In the light of the above, we set aside the order impugned and allow the appeal.

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Equivalent 2002 (142) ELT 152 (Tri. - Del.)

Equivalent 2002 (050) RLT 0635