2013(10)LCX0052
IN THE CESTAT, WEST ZONAL BENCH, MUMBAI [COURT NO. I]
S/Shri S.S. Kang, Vice-President and P.K. Jain, Member (T)
UTKAL INTRADE PVT. LTD.
Versus
COMMR. OF CUS. (IMPORTS), NHAVA SHEVA
Final Order No. A/2087/2013-WZB/C-I(CSTB) and Stay Order No. S/1398/2013-WZB/C-I(CSTB), dated 1-10-2013 in Application No. C/Stay/97444/2013-Mum in Appeal No. C/88249/2013-Mum
Cases Quoted -
Assistant Commissioner v. Aman Alloys Ltd. - 2010(05)LCX0261 Eq 2011 (271) ELT 0200 (P & H)
- Distinguished ...[Paras 6,9]
Advocated By -
Shri Vishal Agarwal, Advocate, for the Appellant.
Shri D. Nagvewkar, Additional Commissioner (AR), for the Respondent.
[Order per [S.S. Kang, Vice-President]. -
Heard both sides.
2. The applicants filed the application for waiver of pre-deposit of penalty. During the argument, we find that the imported goods are with the Revenue. Therefore, the appeal is being taken up for hearing at this stage.
3. The appellants filed this appeal against the impugned order passed by the Commissioner of Customs (Appeals).
4. The brief facts of the case are that the appellants filed bill of entry for clearance of goods declared as Heavy Melting Scrap classifiable under Chapter 7204 49 00 of the Customs Tariff Act. The goods were examined and inspected and thereafter the opinion of Chartered Engineer was obtained in respect of the imported goods and as per the opinion of the Chartered Engineer the goods are used defective and rejected rolls and the Chartered Engineer also opined that the used defective and rejected rollers are the part of the rolling mill plant and can be serviceable to put into use. The Revenue is of the opinion that the goods are not heavy melting scrap, rather the same are part of the rolling mill plant and classifiable under Chapter heading 8455 30 00 of the Tariff. The appellants waived show-cause notice and thereafter the adjudicating authority held that the goods are serviceable and rejected the value declared by the appellants and value was re-determined at Rs. 1,56,79,200/- by classifying the goods under Chapter 8455 30 00 of the Customs Tariff. The goods were also confiscated on the ground that the same are misdeclared and allowed redemption on payment of fine of Rs. 15 lakhs. Penalty of Rs. 2 lakhs was also imposed under Section 112(a) of the Customs Act. The appellants filed appeal before the Commissioner (Appeals) and the same was rejected by the Commissioner (Appeals). Hence the appeal.
5. The contention of the appellants is that the goods in question are heavy melting scraps. The contention is that earlier two consignments were cleared after investigation accepting the value and classification as declared by the appellants. The appellants also relied on the opinion of the Chartered Engineer and submitted that as per the opinion, the surface of the said rollers was also not uniform and as such if these rollers are used for the purpose they are meant for, the product cannot be extracted upto the mark. The MS sheets produced with these rollers would be of no use and eventually got rejected. The contention is that in view of this opinion, it cannot be said that the rollers are serviceable and can be used as part of rolling mill. The appellants also relied upon the certificate issued by the supplier which specifically mentioned that the rollers cannot be refurbished or re-rolled and put to any other use without re-melting and re-casting. Therefore, the impugned order is not sustainable.
6. Revenue relied upon the opinion given by the Chartered Engineer to submit that the rollers in question are not heavy melting scraps, rather the same are serviceable and can be put into use. Revenue also relied upon the decision of the Hon'ble Punjab & Haryana High Court in the case of Assistant Commissioner of Customs, Ludhiana v. Aman Alloys Ltd. - 2010(05)LCX0261 Eq 2011 (271) ELT 0200 (P & H) in support of their claim.
7. We find that the appellants made import of old and used rollers and declared the same as heavy melting scraps and classified the same under Chapter 72 of the Customs Tariff. The goods were examined at the request of Revenue by the Chartered Engineer and as per the Chartered Engineer's certificate, the opinion is as under :-
"3.1 Present condition. We have inspected all the containers mentioned above and it was confirmed that all of them contained Used Defective & Rejected rolls.
It is physically verified that the Used Defective & Rjected rolls was observed in the rollers form. Our study reveals that these rollers are extensively used in MS sheet manufacturing industry wherein the MS sheets drawn from the furnace are directly passed through a set/pai of such rollers to extract a uniform gauge throughout the MS sheet and to properly straighten these MS sheets further producing finished sheets in coil form.
During our physical inspection we noticed these rollers in considerably rusty and corroded condition. We also observed deep scratch marks on overall surface of these rollers, which definitely renders low tensile strength to these rollers. Such scratches also contribute to the weakness of these rollers.
We have also noticed these rollers were used for the production and thereafter rejected due to the ware & tare at the end.
We have also referred and verified the metal testing report no.T402 dated 3-12-2012 which we opine that the Nickel content is ranging from 4% to 6% approximately and Chromium ranging from 10% to 17% approximately which shown the presence of good quality steel. These percentages of Nickel & Chromium were only on the main middle working layer of the rollers and rest we found more percentage of FE 85% to 98% on the remaining portion of the roller. The working of the rollers is always done on the middle portion which has to be of good hardened steel to get proportionate tensile strength.
The surface of these rollers was also not uniform. As such if these rollers are used for the purpose they are meant for, the product cannot be extracted upto the mark i.e. the product sheet cannot have the desired polish, brightness, straightness and even the proper uniform gauge. In short, we can say that the MS sheets produced with these collers would be of no use and eventually got rejected.
Thus, in view of all the above inspection, observations, we, on our detailed physical inspection and verification, confirm that the Ferrous HMS material inspected are Used Defective & Rejected rolls."
8. Subsequently, a clarification was also brought from the Chartered Engineer to the effect that the rollers in question, used defective & rejected rollers, are part of the Rolling Mill Plant and these rollers can be serviceable to put into use. Revenue wants to classify the same under Chapter 84 as part of Rolling Mill Plant. We find that as per the opinion of the Chartered Engineer, the surface of the rollers are not uniform and rollers cannot be used for the purpose they are meant for and the product cannot be extracted up to the mark.
9. Revenue relied upon the decision of the Hon'ble Punjab & Haryana High Court in the case of Asstt. Commr. of Customs v. Aman Alloys Ltd. (supra). In that case the Hon'ble High Court after taking into consideration the Chartered Engineer's opinion which clearly pointed that the goods in question are usable as such held that MS rounds cannot be considered as Heavy Melting Scraps. In the present case, the Chartered Engineer nowhere in the certificate stated that rollers in question are usable as such. In view of this, the ratio of the Aman Alloys Ltd.'s decision is not applicable to the present case.
10. In view of the opinion of the Chartered Engineer and in view of the fact that earlier two consignments imported by the same importer were cleared after due verification, we find that the impugned order is not sustainable and the same is set aside.
11. During the argument the Id. counsel fairly submitted that the goods can be cleared after mutilation. In view of the offer made, we direct that the goods in question be cleared after mutilation under the supervision of the Customs authorities.
12. Appeal is allowed.
(Dictated in court)
Equivalent 2014 (300) ELT 0407 (Tri. - Mumbai)