Ranjita Agencies vs Commissioner of Customs (Port), Calcutta>2001(06)LCX0003

2001(06)LCX0003

IN THE CEGAT, EASTERN BENCH, KOLKATA

Shri Lajja Ram, Member (T) and Smt. Archana Wadhwa, Member (J)

RANJITA AGENCIES

Versus

COMMISSIONER OF CUSTOMS (PORT), CALCUTTA

Order No. A-402-KOL/2001, dated 18-6-2001 in Appeal No. C/R-276/99

Cases Quoted

A.G. Daftary v. Commissioner — 1996(11)LCX0139 Eq 1997 (092) ELT 0584 (Tribunal) — Relied on....... [Paras 5(ii), 11]

Displayor of Customs v. Soni Enterprises — 1997(10)LCX0174 Eq 1998 (098) ELT 0579 (S.C.) — Relied on [Paras 5(i), 11]

Hariram Goel & Co. v. Collector — 1993(04)LCX0077 Eq 1994 (069) ELT 0715 (Tribunal) — Relied on [Paras 5(iii), 9, 10]

Hunsur Plywood Works Ltd. v. Collector — 1987(12)LCX0038 Eq 1988 (034) ELT 0393 (Tribunal) — Relied on [Paras 5(iv), 11]

Advocated By : Shri S.K. Bagaria, Advocate, for the Appellant.

Shri V.K. Chaturvedi, SDR, for the Respondent.

[Order per : Archana Wadhwa, Member (J)]. - The dispute in the present appeal relates to the correct classification of the imported wood. Whereas the appellants have claimed that the goods in question were wood in rough/roughly squared (not sawn) or chipped timber classifiable under Heading 44.03, the Revenue has held imported wood was sawn timber classifiable under Heading 44.07. Accordingly by holding so, the goods have been held liable to confiscation. Inasmuch as the goods in question were not available for confiscation, personal penalty of Rs. 5 lac has been imposed upon the appellants. The said order of the Commissioner of Customs, Calcutta is impugned before us. Shri S.K. Bagaria learned Advocate appearing for the appellants submits that all the relevant documents including the invoice, bill of entry and packing list relating to the said import described the goods as “Wood-in-rough/roughly squared (HSN 44.03)”. He also draws our attention to the Phytosanitary Certificate dated 2-1-1998 issued by the Department of Agriculture, Sarawak, Malaysia in accordance with the provisions of Plant Quarantine Regulations, 1981 certifying the goods to be “746 bundles - Wood in rough/roughly squared (HSN 44.03)”. Similarly, in the Certificate of Origin dated 5-1-1998 issued by Kuching Chinese General Chamber of Commerce & Industry the goods were certified to be “Wood-in-rough/roughly squared (HSN 44.03)”. He also submits that before the shipment the goods were also check-graded by M/s. PUSAKA (Sarawak Timber Industry Development Corporation) and were found to be Wood-in-rough/roughly squared as certified in their certificate dated 12-1-1998. He submits that even the Customs Officers duly examined the goods in original and found the same to be as per declaration filed by the appellants. The endorsement on the back of the bill of entry made on 16-1-1998 reads as under :

“Seen in the goods for Appt. Checked declaration and found in order w.r.t. B/L, Invoice, P/L, PQ Cft.. At ‘X’ below”.

Accordingly the bill of entry filed by the appellants was duly assessed under Heading 44.03 and the goods were passed out of the Customs Control on 16-1-1998. The goods were also examined by the officials of the Directorate of Forest, Government of West Bengal wherein it was observed by them that the shape of the wood was not uniform; in most of the cases barks were found; rough areas were found in most of the cases and the wood was not in any finished condition. The same could be used only after sawing, cutting and dressing. Shri Bagaria also submits that the above facts were also deposed by the appellants’ partner as recorded on 20-2-1998. Even when the case was made out against the appellants based upon the examination report of another Government official Shri R.K. Bose, during his cross-examination before the Commissioner, the representative samples drawn by DRI were produced and were found to be ‘wood in rough/roughly squared’. Drawing our attention to the cross-examination of Shri R.K. Bose and Shri J.S. Bhattacharjee by the appellants as held before the Commissioner, he submits that both the said experts very clearly and categorically admitted that the goods in question were wood in rough and not sawn timber. On actual inspection of the representative sample drawn by the DRI officers from the goods in question in presence of the Commissioner it was confirmed by the said experts that the same is having sap wood and that bark was also there which has automatically fallen owing to natural drying and that it is merely roughly squared wood and has also got hand sawing marks as well as rough surface.

2. Shri Bagaria also made the following submissions based upon cross-examinations of Shri R.K. Bose and Shri J.S. Bhattacharjee, Officers of the Divisional Forest Office :

(i) On examination of the representative sample of the goods in question by the DRI officials, the said officers clearly admitted in the presence of the Commissioner that it was having sap wood and bark and that it was not sawn to any accurate dimension and that it was roughly squarerd wood.

(ii) It was also specifically found on inspection of the representative sample during the cross-examination that no power sawing machine was used for sawing the same and that the said roughly squared wood was made only by using hand saw. Hand saw marks were also actually found on the representative sample.

(iii) It was also found specifically that the representative sample had the rough surfaces and that the surfaces were neither straight nor to accurate dimension.

(iv) It was specifically stated by the officers that their first report dated 27-1-1998 relating to the goods in question was correct and that the said report was given after inspection of the goods and that they stand by the same.

(v) In case of sawn wood, the wood is sawn to an accurate dimension whereas in case of wood roughly squared, the wood is not sawn to an accurate dimension but is only roughly sawn or chopped. Sawn wood is sawn by use of sawing machine to accurate dimensions and straight grains. Depending on the size of the log, the wood-in-rough can be made into more than one piece.

3. He submits that in the show cause notice only the relied upon report dated 5-2-1998 given by Shri R.K. Bose who during cross-examination has admitted that his first report dated 27-1-1998 was correct and was given after inspection of the goods. The contradiction between the two reports was also explained by the officers. He submits that even if the two reports are contradictory the same have to be ignored in which goods there was no other report available to support the Revenue’s case.

4. Shri Bagaria further submits that inasmuch as the goods were subjected to coarse sawing to form wood of roughly rectangular cross section or roughly squared and the presence of rough areas, sap wood bark traces was also found in the said goods, the goods have to be treated as correctly classifiable under Heading 44.03 in terms of the explanatory notes in HSN. He submits that the said roughly squared wood prepared by coarse sawing has been specifically excluded from Heading No. 44.07. He submits that the condition precedent for classification under Heading No. 44.07 is that the goods must be ‘wood sawn or chipped lengthwise, sliced or peeled’. The essential characteristics of the said goods have been described in the Explanatory Notes in HSN below Heading No. 44.07. Such sawing or chipping must be along the general direction of the grain. Such goods are obtained by use of chipping machines and the same are chipped to extremely accurate dimensions and such a process renders subsequent planning unnecessary. These essential characteristics for classification of goods under Heading No. 44.07 were not at all satisfied in the present case. If the goods are wood in rough/roughly squared and are only subjected to hand-sawing by means of axe or adze and have not been sawn to accurate dimensions and have got rough surface, bark traces etc., these can never be classified under Heading No. 44.07. Exclusion from Heading No. 44.03 in HSN is of wood cut into the form of planks, beams, etc. Such ‘cutting’ has to be by sawing machine along the general direction of the grain and it has to be of ‘extremely accurate dimensions’. Such sawn timber is covered by Heading No. 44.07 and it includes ‘sawn beams, planks etc.’ as specifically mentioned below Heading No. 44.07 in the Explanatory Notes in HSN. The said Heading No. 44.07 as mentioned in the said explanatory notes themselves, excludes wood roughly squared by coarse sawing which is covered only by Heading No. 44.03. Thus wood-in-rough/roughly squarerd, even though roughly resembling the form of a beam, can only be covered by Heading No. 44.03 and not by Heading No. 44.07. As per the said explanatory notes in HSN what is excluded from Heading No. 44.03 is only ‘Sawn beams or planks’ and in respect of such goods the description and characteristics of sawn timber falling under Heading No. 44.07 must be satisfied. When the goods are wood-in-rough/roughly squared, the same are specifically covered by Heading No. 44.03 and have to be classified thereunder and this position is clear from the said explanatory notes in HSN itself both below Heading No. 44.03 and 44.07. Classification of wood-in-rough/roughly squared under Heading No. 44.07 will be contrary to the specific description of Heading No. 44.03. There is no restriction or condition in Heading No. 44.03 save and except that the goods in question must be wood-in-rough/roughly squared. Such wood-in-rough/roughly squared, even though roughly resembling the shape of a beam, can never be treated or regarded as ‘sawn beams’ and the question of their classification under Heading No. 44.07 obviously does not and cannot arise. In so far as ‘beams’ are concerned, these are totally different products. Wood-in-rough/roughly squared having bark traces, sap wood, hand-sawing marks etc. can never be treated as regarded as ‘sawn beams’, simply because such wood is in the form of long pieces. Even from ISI Publication named, ‘Handbook on Timber Engineering’, it would be clearly evident that beams are designed and manufactured with full exactitude and precision and by taking into account several considerations including, inter alia the following :

(i) For, size and shape of the flexural member;

(ii) Benging stresses or extreme fibre stress

(iii) Preventioin of later buckling;

(iv) Shear stresses;

(v) Deflections;

(vi) Bearing at supports or under load points.

Not only this, the beams have to satisfy various tests and have got various ‘form factors’ for different cross-sections. From the said publication of ISI, it was absolutely clear that such roughly squared wood sawn by hand and having traces of sap wood, bark etc. and having rough areas is not and can never be treated or regarded as a beam. There was also no evidence whatsoever that any of the tests or parameters relating to beams as laid down in the said publication was satisfied in respect of the said roughly squared wood. In spite of this and on a complete non-application of mind and in a most arbitrary and illegal manner the Commissioner has purported to observe as if the appellant had not disputed that the required parameters for beams were satisfied in respect of the goods in question or were not violated. The purported finding of the Commissioner that the goods in question which were admittedly roughly squared wood were ‘beams’ classifiable under Heading No. 44.07, is totally perverse, arbitrary, baseless and incorrect. As a matter of fact similar allegation about the wood in question being ‘in the shape of beam’ was also made by the Department in the mater decided by the Hon’ble Tribunal in the case of Hariram Goel & Co. v. C.C. 1994 (069) ELT 715. Since the goods in question were only roughly squared wood, in spite of the shape thereof resembling a beam, Tribunal was pleased to hold that the classification thereof could only be under SH 4403.99.

5. In support of his above submissions he places reliance on the following decisions :

(i) 1997(10)LCX0174 Eq 1998 (098) ELT 0579 (Displayor of Customs v. Soni Enterprises (S.C.).

(ii) 1996(11)LCX0139 Eq 1997 (092) ELT 0584 (A.G. Daftary v. C.C.), CEGAT.

(iii) 1993(04)LCX0077 Eq 1994 (069) ELT 0715 (Hariram Goel & Co. v. C.C.), CEGAT.

(iv) 1987(12)LCX0038 Eq 1988 (034) ELT 0393 (Hunsur Plywood Works Ltd. v. C.C.), CEGAT.

6. He also argues that if the Revenue wants to change the classification of the goods the burden is upon the Revenue, which has not been discharged in the present case. Accordingly, he submits that there was no occasion for the Revenue to confiscate the goods and impose personal penalty upon the appellants.

7. Shri V.K. Chaturvedi, learned SDR appeared for the Revenue.

8. We have heard the submissions of both sides and have also gone through the impugned order-in-original. The first question required to be decided is as to whether the wood in question was sawn wood so as to classify the same under Heading 44.07 or the same was wood in rough so as to fall under Heading 44.03. The evidence relied upon by the Revenue in the show cause notice for holding that the wood in question was ‘wood sawn’ was the report dated 5-2-1998 of Shri R.K. Bose, Range Officer. However, as in contra distinction of the said report there was an earlier report of the Forest Officer which is to the effect that the wood in question was wood sawn, Shri R.K. Bose was cross-examined. During the cross-examination the reference was made to the first report of Shri R.K. Bose given on 27-1-1998 where it was mentioned that bark was present in most of the case. Shri Bose during his cross-examination admitted that the said report was of Shri J.S. Bhattacharjee, Deputy Range Officer, who has given the same after verification of the goods and he also examined the representative sample produced by the DRI in the presence of the Commissioner and observed that the sample was having sap wood and bark was also there which has automatically fallen owing to natural drying. He further observed that the sample of ‘wood’ would require further cutting and shape as it was not sawn to an accurate dimension. According to him it was roughly squared wood and confirmed that the sample was having trace of rough surface. On the basis of the above cross-examination, the Commissioner has observed that there was contradiction in the report of Shri Bose and the same cannot be relied upon. Though we find that the earlier report given on 27-1-1998 and the report made during the course of cross-examination or physical examination the samples in the presence of the Commissioner are in accordance with the stand taken by the Appellants, the Commissioner by referring to the subsequent report of Shri Bose has held that his views cannot be accepted. If that be so and, both the reports of Shri Bose are excluded from the consideration, there is no other evidence available to arrive at a finding that wood in question was ‘roughly squared’. As contrary to this, the appellants have referred to a number of documentary evidence including the invoice and country origin and other certificate given by various undertaking of the country of the supplier of material to show that the wood in question was wood in rough/roughly squared. As such by appreciating the overall evidence available on record we hold that the goods in question were wood in rough/roughly properly classifiable under Heading 44.03.

9. We may also refer to the Commissioner’s finding that inasmuch as admittedly the goods are in the shape of a beam the same would be classifiable under Heading 44.07, as per the explanatory notes to HSN. However, we find that said question arose before the Tribunal in the case of M/s Hariram Goel & Co. v. C.C., Visakhapatnam and it was held that the wood with bark and the presence of sap wood which stand confirm, would be as “wood in rough”. Para 19 of the said judgment is reproduced below for better appreciation :

“19. As can be seen from the above description, sap wood is outer, live wood of the trees. The said sap wood unless treated, it gets decayed and for the purpose of transportation of the wood logs to the saw mills, the sap wood and the outer chips are removed either by sawing by means of axe or adze, or by coarse sawing to form wood of roughly rectangular (including square, cross section). The HSN Explanatory Notes further state that roughly squared wood is characterised by the presence of rough areas or bark traces. While the explanatory notes for wood sawn under sub-heading 44.07 as noted above, has clearly stated that the wood and timber falling under this heading would have been sawn or chipped along with the general direction of the grain or cut by slicing or peeling. The wood is obtained by the use of chipping machines and which has been chipped to extremely accurate dimensions - a process which results in a surface better than that obtained by sawing and thereby renders subsequent planning unnecessary. Therefore, it has to be seen whether the impugned goods have fulfilled the specified criteria laid down under the HSN Explanatory Notes for sawn wood which has got the persuassive value for the purpose of classification.”

10. It is seen that the shape of the wood in the case of Hariram Goel & Co. was that of a beam and the sap was visible only on one side of the logs. As such by applying ratio of the above decision which is a very detailed decision, we hold that the goods in question are wood in rough/roughly under Heading 4403.99.

11. We also find an identical issue was decided in the case of Hunsur Plywood Works Limited v. C.C., Bangalore reported in 1987(12)LCX0038 Eq 1988 (034) ELT 0393 (T) and in the case of Soni Enterprises decision of the Supreme Court as reported in 1998 (098) ELT 579. Similarly, the Tribunal in the case of A.G. Daftary v. C.C., Bombay - 1996(11)LCX0139 Eq 1997 (092) ELT 0584 (T) has held that wood logs sawned on two sides and untouched on the rest of the sides being same as wood roughly squared wood but not further manufactured, classifiable under sub-heading 4403.99 of the Customs Tariff Act, 1975.

12. By applying the ratio of the above decisions to the facts and circumstances of the present case and by taking into consideration the overall evidence on record it has to be held that the imported wood was wood-in-rough/roughly squared, which is properly classifiable under sub-heading 4403.99. The impugned order is accordingly set aside and the appeal is allowed with consequential relief to the appellant(s).

Equivalent 2001 (133) ELT 0388 (Tri. - Kolkata)