Steel Authority of India Ltd. Versus Commissioner of Customs, Kolkata>2007(01)LCX0042

2007(01)LCX0042

IN THE CESTAT, EASTERN BENCH, KOLKATA

S/Shri T.K. Jayaraman, Member (T) and D.N. Panda, Member (J)

Steel Authority of India Ltd.

Versus

Commissioner of Customs, Kolkata

Final Order No. A/12/KOL/2007, dated 15-1-2007 in Appeal No. CDM-213/03

Advocated By -

Shri K.A. Siddique, Authorised Representative, for the Appellant.
Shri A. Hore, JDR, for the Respondent.

[Order per : T.K. Jayaraman, Member (T)]. -

This appeal has been filed against the Order-in-Appeal No. KOL/CUS-90/CKP/2003 dated 11-9-2003 passed by Commissioner of Customs (Appeals), Kolkata. The appellant company imported the spare parts for Sinter Fan Impellers, vide Bill of Entry No. DI-51 dated 3-5-88. They claimed assessment under Heading 98.06 read with subheading 8414.90. But the Department assessed the goods under sub-heading 8414.59 and collected duty @ 45%+45%+15% (CV). The appellant company filed a Refund Claim to assess the goods under Heading 98.06 read with sub-heading 8414.90, claiming benefit of exemption Notification No. 69/87-Cus. by virtue of which the CV Duty would be nil and the duty-structure should have been 45%+45%+CV Nil. The refund amount constitutes Rs. 19,08,883/- (Rupees nineteen lakh eight thousand eight hundred and eighty-three). The claim was filed on 26-10-88. The Assistant Commissioner of Customs, Kolkata, vide his Order No. 218/95(ARS) dated 25-9-95 rejected the refund claim on the ground that the imported goods are not spare parts of Sinter Fan, by observing that the same is a Sinter Fan itself. On appeal the Commissioner (Appeals), vide his Order No. Cal-Cus.-90/96 dated 27-5-96 remanded the case to the adjudicating authority. Further, the adjudicating authority vide his Order No. Adjudication Order No. 42/2003 dated 31-3-2003 maintained that the consignment imported was Sinter Fan itself and not spare parts of Sinter Fan and the assessment was correctly made under sub-heading 8414.59. The appellant company approached the Commissioner (Appeals) who passed the impugned Order upholding the Order of the lower adjudicating authority on 11-9-2003. The appellant company, is highly aggrieved by that decision of the appellate authority. Hence they have come before this Tribunal for relief.

2. We have heard Shri A. Siddique, AGM(F)-T&S/ER of the appellant company and Shri A. Hore, learned J.D.R. for the Revenue. Shri Siddique took us through the entire documentation and urged that right from the beginning, the appellant company had been claiming classification of the item in question, under Heading : 98.06 read with Sub-Heading : 8414.59 as parts and also claiming the benefit of exemption Notification No. 69/87-Cus. The Customs Authorities did not agree to that claim. However, since the goods were urgently required by the appellant company, they cleared the same on payment of higher duty. Later, they filed the refund claim. But the lower authority did not appreciate the facts properly in arriving at the conclusion that the impugned goods are Sinter Fan itself, and not spare parts of the Sinter Fan. At this stage, Shri Siddique took us through the documents like bill of entry and purchase order. He produced a drawing of the impugned item. He pointed out that the price in respect of the goods manufactured and sold by M/s. S.A.I.L. is fixed by a Pricing Committee of SAIL as per the guidelines of Ministry of Steel, Government of India and it has no bearing, whatsoever on the cost of production of the finished products. He also pointed out that the excess Customs Duty paid is always kept in a separate Suspense Account and it would not be added to the cost of production. In order to substantiate this point, he showed us the relevant Statements maintained by M/s.S.A.I.L.

3. Learned J.D.R. appearing for the Revenue, reiterated the findings of the lower authorities and contended that when the goods were assessed under Chapter Heading 8414.59 and the appellant company did not challenge the Assessment Order, they would not be entitled for the refund claim now.

4. Shri Siddique appearing for the appellant company countered that objection by stating that the Tribunal on the same issue in the appellant company's case by Order No. A-225/KOL/2004 dated 23-4-2004 held that the appellant company in that case was entitled to seek a variation in the assessment through the Refund Claim under Section 27 of the Customs Act, 1962.

5. We have gone through the case records carefully. The first issue to be decided is whether the goods imported by the appellant company are spare parts of Sinter Fan or the Fan itself. A perusal of the bill of entry reveals that whatsoever imported are only Sinter Fan Impellers which are actually parts of the Fans and not Fans themselves. Thus is clear from the service also. In these circumstances, the correct classification of the item would be under Heading 98.06 read with sub-heading 8414.90. It is not disputed that when the item in question falls under Heading 98 06, there is a complete exemption of CV Duty, vide Notification No. 69/87-CUS. Hence we observe that the appellant company had paid an excess amount of CV Duty and is rightly eligible for the refund.

6. The next issue to be decided is in respect of unjust enrichment. The extract of the Unjust Enrichment Certificate given on 30-8-06/25-9-06 by AGM(F)-T&S/ER, SAIL/BTSO/KOLKATA, reads as follows :-

"We confirm that price in respect of goods manufactured and sold by M/s. SAIL is fixed by a Pricing Committee of SAIL as per guidelines of Ministry of Steel, Govt. of India and have no bearing whatsoever on cost of production of the finished products.

The price of Iron & Steel products manufactured and sold by M/s. SAIL do not depend on the cost incurred by them. Steel is a commodity item, the price of commodity items are determined based on various market forces viz. Demand and Supply, landing imported cost of steel, competitors activities, Govt. policies, etc. It has got nothing to do with the reclassification/reassessment of the imported materials leading to either demand or refund of Customs Duty. Therefore, the price fixed by the Pricing Committee is charged for all the products manufactured by the Steel Plants under SAIL irrespective of the fact that any refund of customs duty arising out of reassessment has been received or any additional amount of customs duty has been paid. These are debited to Profit & Loss Account of the Company straightway.

It is, therefore, contended that there is no link between the excess amount of Customs Duty initially paid by M/s. SAIL and the price charged to the customers on various products manufactured and cleared by them. So there is no question of getting unjustly enriched rather the denial of refund shall lead us to improvisement.

Further we keep the excess Customs Duty in our books of accounts under Claims Recoverable - Customs Duty. Therefore, question of passing the benefit to consumer does not arise. In regard to Unjust Enrichment not applicable in the event of the goods as imported not having sold as such but used in the manufacture of, another product which came to be ultimately sold [ref. Case of Solar Pesticides Pvt. Ltd. -1992 (057) ELT 201]."

We have also seen the records, which indicate refund due to Customs in Suspense Account. Hence we are satisfied that the appellant company has not passed on the burden of Customs Duty to the buyers. We want to observe here that even though the bill of entry was filed in 1988, there had been an enormous delay in processing the claim of the appellant company. While the refund claim was filed in October, 1988, the first Order of Rejection was done in 1995 i.e., after a lapse of nearly seven years. The De Novo Adjudication Order rejecting the claim second time, was passed in 2003, i.e. after a lapse of about seven years of passing of the Appellate Order in 1996. In this case, it is not explained as to why so much time had been taken by the Customs Authorities to decide the issues. In view of our above observations, we allow the appeal with consequential relief to the appellant company.

7. While parting, we order that a copy of this Final Order be endorsed to the jurisdictional Chief Commissioner for information and necessary action, as deemed fit.

(Pronounced in the open Court on 15-1-2007)

Equivalent 2007 (210) ELT 0353 (Tri. - Kolkata)

Equivalent 2007 (080) RLT 0885 (CESTAT- Kol.)