Shree Ram Urban Infrastructure Ltd. Versus Commissioner of Customs (IMPORTS), MUMBAI>2009(05)LCX0407

2009(05)LCX0407

IN THE CESTAT, WEST ZONAL BENCH, MUMBAI [COURT NO. I]

S/Shri A.K. Srivastava, Member (T) and Ashok Jindal, Member (J)

Shree Ram Urban Infrastructure Ltd.

Versus

Commissioner of Customs (IMPORTS), MUMBAI

Stay Order No. S/169/2009-WZB/C-II/(CSTB), dated 5-5-2009 in Application No. C/S/1778/2008 in Appeal No. C/1183/2008

Cases Quoted -

Chinku Exports v. Commissioner - 1999(06)LCX0156 Eq 1999 (112) ELT 0400 (Tribunal) - Relied on [Para 11]

Commissioner v. Chinku Exports - 2005(02)LCX0089 Eq 2005 (184) ELT A036 (S.C.) - Relied on [Para 11]

Commissioner v. Raja Impex Pvt. Ltd. - 2008(04)LCX0239 Eq 2008 (229) ELT 0185 (P&H) - Relied on [Para 11]

Shiv Kripa Ispat (Pvt.) Ltd. v. Commissioner - 2008(09)LCX0305 Eq 2009 (235) ELT 0623 (Tribunal-LB) - Relied on [Para 11]

Weston Components Ltd. v. Commissioner - 2000(01)LCX0107 Eq 2000 (115) ELT 0278 (S.C.) - Relied on [Para 11]

Advocated By -

Shri Aqeel Sheerazi, Advocate, for the Appellant
Shri A.K. Prasad, Jt. CDR for the Respondent.

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

This stay petition has been filed by the applicants against the impugned Order passed by the Commissioner by which he has ordered as under:

"I order for classification of the goods imported vide B/E No. 799813/18-10-2004, 797341/8-10-2007 and 807496/23-11-2007 total valued Rs. 5,46,53,370/- (Rupees Five crores forty six lakhs fifty three thousand three hundred and seventy only) under CTH 76109030.

I order for recovery of the differential duty amounting Rs. 17,04,954/-(Rupees Seventeen lakhs four thousand nine hundred and fifty four only) under Section 23 of the Customs Act, 1962 for the goods imported vide the above mentioned three Bs/E along with interest on the differential duty under Section 28AB ibid.

I order for confiscation of the goods imported vide B/E No. 799813/18-10-2004, 797341/8-10-2007 and 807496/23-11-2007 total valued Rs. 5,46,53,370/- ((Rupees Five crores forty six lakhs fifty three thousand three hundred and seventy only) under Section 111(m) of the Customs Act, 1962.1 impose a redemption fine amounting Rs. 1,10,00,000/- (Rupees One crore ten lakhs only) in lieu of confiscation.

I impose a penalty amounting Rs. 5,00,000/- (Rupees Five lakhs only) on the importer under Section 112(a) of the Customs Act, 1962".

2. Heard both the sides and perused the records.

3. The issue involved in the instant case is regarding the classification of the goods, which have been described in the impugned Bills of Entry as 'Moulds' to use for Constructing Building in Dismantled Condition' - whether under CTH 76109030 as held by the Revenue or under CTH 84806000 as claimed by the applicants and the consequent demand of differential duty, imposition of fine and penalty.

4. The applicants have contended as under:

(i) CTH 76109030 covers only products of Aluminium, which ultimately become part of a structure, whereas in the present case, the goods are Moulds, which are predominantly made of polypropylene, used to assist in construction and the said moulds do not become part of the structure.

(ii) Two essential characteristics embodied in the above mentioned Chapter Heading are that the goods must be made of aluminium and that they must be "for use in structures", both of which are not satisfied in the present case as the goods are predominantly made of polypropylene and are not for use in structures.

(iii) The goods brought into India in knocked down condition are the parts for moulds into which concrete, cement etc. are poured, while making walls, ceilings, floors, etc. of a building. Once the cement, concrete, etc. has set, the moulds are removed and do not form part of the structure of the building under construction. These are removable and reusable.

(iv) In the present case, the goods are to be classified by applying Rule 1 of the Rules of Interpretation of the Tariff Since the heading under Chapter 76 does not cover the same, therefore the question of going to Rule 3(b) of the Rules for Interpretation does not arise at all.

(v) Rule 3(b) of the Rules for Interpretation of the Tariff, requires that goods shall be classified as if they consisted of the material or component, which gives the goods their essential character. Assuming but not admitting that the test of 'essential character' as laid down in Rule 3(b) of the Rules for Interpretation is applicable, even then the essential character of the said goods was not imparted by Aluminium and, therefore, the goods could not be classified under Chapter 76 of the Customs Tariff.

(vi) CTH 8480600 which relates to mould is the appropriate heading in the CTH under which the said goods are to be classified.

(vii) They have got strong case for stay of the operation of the impugned order passed by the Commissioner and prayed for the unconditional waiver of the pre-deposit of the amounts demanded.

5. The learned Jt. CDR reiterated the findings of the Commissioner and contended that the expression "for use in structures" used in the Chapter Heading 7610 does not necessarily imply that the goods should become part of the structure. Temporary use is also covered within the expression 'for use in structures'. He stated that the essential character is imparted to the panel by Aluminium. The goods are rightly classifiable under Chapter Heading 7610 and the applicants should be put to terms.

6. We have examined the position. CTH 84806000 relates to moulds and states as follows:

Moulding boxes for metal foundry; mould bases; moulding patterns; moulds for metal (other than ingot moulds), metal carbides, glass, mineral materials, rubber or plastics.

- Moulds for mineral materials.

The explanatory notes 848060 F to the HSN clarify that Moulds for mineral materials include Moulds for moulding concrete, cement or asbestos - cement goods and for making pre-fabricated construction elements of reinforced or pre-stressed concrete. The sample of the goods, which was produced for our inspection alongwith the catalogue, shows that it is predominantly made of polypropylene with a thin layer of aluminium, which is apparent to the eye and/or with the help of diagrams as found in the manual/catalogue of the manufacturer.

7. The Commissioner, vide the impugned Order has held as under:

"In the above mentioned product the aluminium which is one of the constituents of the panels imported is used for giving rigidness and strength to the composite panels and appears relevant product for giving essential character, under Rule 3(b) of the Rules of Interpretation".

He has further held that -

"In the present case, the essential character of these panels is its rigidity and strength and these essential characteristics are imparted by aluminium. Therefore, in my opinion by applying Rules 3(b) and going by the essential characteristics of such panels which are the basic part of the imported goods are more appropriately classifiable under CTH 7610".

We note that the Commissioner has nowhere in the impugned Order set out the reasons or rationale in support for his opinion and for arriving at such a conclusion. The impugned Order does not refer to any evidence or substantiation based on which the above conclusions/findings could be said to have been drawn. In matters of classification, where technical issues are involved, it is the opinion of an expert or an authority on the subject that should be taken into account before deciding the dispute. In the instant case, no expert's opinion has been sought by the Department nor any authority quoted. The Commissioner has substituted his own personal opinion as evidence for the opinion of technical experts, which is not permissible.

8. Further, the applicants have stated that the goods imported by them have been classified under Heading 84806000 even by the German Manufacturer (MEVA) of the said goods, who has declared, vide letter dated 19-5-2008, that the said goods are exported internationally and are classified under Heading 84806000 and that similar consignments of the said goods have also been cleared by the Customs Authorities into India under CTH 84306000. This remains unre-butted by the Commissioner although it was brought to his notice by the applicants.

9. After examining the sample and its composition, perusing the catalogue and the competing Chapter Headings as well as the explanatory notes 848060F to the HSN and keeping in view the functional use of the good it appears that the goods are rightly classifiable under Chapter Heading 84806000 as claimed by the applicants.

10. There is no misdeclaration by the applicants as to either the description of the goods or the value thereof and, therefore, the finding that the goods are liable to confiscation under Section 111(m) does not appear to be sustainable. So also the penalty.

11. Further, the factual position is that the goods were not available for confiscation at the time of the passing of the impugned Order. Neither these goods were released on bond/undertaking. It is seen that one of the questions of law raised in the appeal filed by the Revenue before Punjab and Haryana High Court in the case of Raja Impex Pvt. Ltd. [2008(04)LCX0239 Eq 2008 (229) ELT 0185 (P&H)] was whether redemption fine under Section 125 of the Customs Act, 1962 can be imposed where the goods were neither available for confiscation nor cleared under bond/undertaking. The Hon'ble High Court after considering the Apex Court's judgment in the case of Western Components reported in 2000(01)LCX0107 Eq 2000 (115) ELT 0278 (S.C.), held that redemption fine cannot be imposed in the absence of the goods, which had already been released by the Customs authorities to the importer, without execution of any bond/undertaking by the latter. This judgment is reported in 2008(04)LCX0239 Eq 2008 (229) ELT 0185 (P&H). Larger Bench of the Tribunal in the case of Shiv Kripa Ispat (Pvt.) Ltd. v. Commissioner of Central Excise, Nashik and Commissioner of Customs v. Rishi Ship Breakers vide Order No. M/43-44/09/SMB/LB dated 19-1-2009 [2008(09)LCX0305 Eq 2009 (235) ELT 0623 (Tri.-LB)], relying upon the Punjab and Haryana High Court Judgment in the case of Raja Impex Pvt. Ltd., (supra), has held that the goods cannot be confiscated and fine in lieu of confiscation cannot be imposed if the goods are not available for confiscation (excluding the cases where the goods are initially seized and provisionally released). Similar view was taken by the Tribunal in the case of Chinku Exports v. Commissioner of Customs, Calcutta - 1999(06)LCX0156 Eq 1999 (112) ELT 0400 (T), which decision has been upheld by the Supreme Court as reported in 2005(02)LCX0089 Eq 2005 (184) ELT A036 (S.C.). Therefore, confiscation of the goods on this count and ordering their release on payment of redemption also does not appear to be sustainable.

12. The applicants have made out a strong case for stay of the operation of the impugned order passed by the Commissioner. We accordingly stay operation of the impugned order and dispense with the pre-deposit of the duty and interest demanded and penalty imposed and stay recovery thereof pending disposal of appeal. We also stay recovery of the redemption fine.

(Pronounced in court)

Equivalent 2009 (246) ELT 0718 (Tri. - Mumbai)