2004(08)LCX0036

IN THE CESTAT, WEST ZONAL BENCH, MUMBAI

S/Shri S.S. Sekhon, Member (T) and T. Anjaneyulu, Member (J)

RASHTRIYA METAL CORPN.

Versus

COMMISSIONER OF CUSTOMS, NHAVA SHEVA

Order No. A/628/2004-WZB/C-II, dated 13-8-2004 in Appeal No. C/772/98

CASES CITED

P.M. Enterprises v. Commissioner — 2002(03)LCX0301 Eq 2002 (150) ELT 0357 (Tribunal) — Relied on.......... [Para 3]

Sabara Impex Pvt. Ltd. v. Commissioner — 1999(08)LCX0091 Eq 2002 (150) ELT 1016 (Tribunal) — Referred [Para 3]

REPRESENTED BY :        Shri Anil Balani, Advocate, for the Appellant.

Shri R.B. Pardeshi, JDR, for the Respondent.

[Order per : S.S. Sekhon, Member (T)]. - Importers had filed a declaration on BE filed by them as -

“MIXED BRASS SCRAP AS PER ISRI SPECS. NOMAD” the goods were on IInd check, on examination, were reported to be in fine coloured metallic powder of Copper/Bronze, or visual inspection and since they gave a colour shade on physically touching with hand they were suspected to be “metallic pigments”, the drums, in which they were imported, were having different markings. On test, the Custom Departmental Chemist reported the samples to be ‘yellow lustre powder composed of Brass with traces of fatty matters & it was not ink, but had characters of bronze powder metallic pigment.

2. On contest by the importer, the goods were got inspected by a Professor of IIT, Mumbai, who reported -

(a) The material is powder form was packed in drums of good quality (used drums), the powder having been put into the drums without any plastic containers. The drums were not sealed and did not have proper labels. The drums were not having any correlation between the material and the labels. The labels on the drums have many tiles such as - Canbro 7406-20.20.00, Gold Bronze, Fldee, Copper powder, Copper Flake etc. As regards the sample it was reported that the powder was in mixed condition with some of the particles shining and dark in appearance. The chemical analysis revealed Cooper to vary from 62% to 70% no trace of Tin metal was found and some particles were found to be covered by some polymers/organic material and all samples were without any fixed composition. Hence, the Professor concluded from non uniform in composition and impure nature not suitable for use in ink industry as a metallic pigment and that the material was reported to mixed brass scrap.

(b) The market enquiries made revealed that the product could be used for stenciling washable golden prints on fabrics, metallic paints on wooden furniture, photo frames and painting of idols. On comparison the values declared in BE in respect of Bronze powder was found to be low.

(c) the Commissioner, after hearing the appellants, passed the order, now impugned, ordering -

(i)       the goods are not Mixed Brass Scrap ‘Nomad’ as declared & on finding that it sticks to his finger, he held it to be metallic pigment and upheld misdeclaration and liability to confiscation under Section 111(m).

(ii)     after rejecting the proposed value of Bronze powder as noted by the officers, for the present imports, he arrived at assessable values with a 30 % discount to those value as found by market enquiries. He arrived at a value of Rs. 9,97,500/- cif for the consignment based on market value in India under Rule 8 of the Valuation Rules and upheld the charge of confiscation under Section 111(m).

(iii)    Confiscation orders under Section 111(m), with redemption for of Rs. 1,50,000/- offered along with the penalty of Rs. 25,000/- was passed and the goods ordered to be valued at Rs. 9,92,500/- for purpose of duty levy.

Hence this appeal.

3. After hearing both sides and considering the material it is found -

(a) Commissioner has applied Rule 8 of the Custom Valuation Rules to value the goods after ascertaining the sale price in India may cost Rs. 70/- to 80/- per Kg & thereafter giving discounts, he has arrived at value at Rs. 75/-. Rule 8(2) of these Rules for Valuation of Imported goods, stipulate -

“(2)      No value shall be determined under the provision of this rule on the basis of -

(i)       the selling price in India of the goods produced under the law

(ii)      the cost of production other than computed value

(vi)     arbitrary or fictitious value”

The findings, on valuation, as it appears from the order is as follow -

“... Once we decide it is brass powder mixed with fatty substance, we may have to look for its value as a brass product. The price of brass product is ranging from US $ 2650 PMT onwards. Because of the presence of the impurities and the fact that it is not a brass product in its real sense, the value it to be determined under Rule 8 of the valuation rules as it cannot be determined under Rules 5, 6 & 7. Market sources have been contacted and it is revealed that the powder in question may cost Rs. 70-80 per kg. The fair value of the goods in the absence of similar imports should be arrived after giving duty discount for the impurities present in the consignment. I therefore, decide that the value be taken as Rs. 75 per kg. The assessable value would be Rs. 75/- per kg C & F. The total value of the consignment is now determined as Rs. 9,97,500/- (CIF).”

This determination based on ‘Cost in the market in India and ‘arbitrary discounts’ would induce the setting aside of the valuations as arrived by holding that it is contrary to the Rule 8. The charge of confiscation under 111(m) for having misdeclared the value will not survive.

(b) (i) As regards the declaration of the imported goods to be not correct, it is the submission of the Learned DR and the finding in the order that the goods are not Brass Scrap ‘Nomad’ as per ISRI specifications. As per ISRI specifications, admittedly NOMAD Brass Scrap covers Brass Turnings. No material is produced how ‘Brass’ Powder’ which the goods under import undoubtedly are could not be the resulting or and arising during the turning, shaping; processing of Brass on Lathes and other such machines, while such lathes etc. operate on jobs, powders do result. The presence of fatty substances, in such powders, should not alarun us. Lots of cutting, cooling oils of various blends, are used when ‘jobs’ are being taken for turning, shaping etc. on lathes. The powders accumulating can have residue of such oil as fatty substance. The use of such powder with oil content may find users as noted by adjudicator. That would not call for the classification as metallic Pigments, merely because when touched, particles of the same, get struck on the adjudicators fingers. The Commissioner order is silent on the classification arrived for & as such Pigment & is not ruling out of classified under 740400 for waste and scrap of Brass which could arise during Mechanical working of metal.

(ii) The relevant tariff for entries relating to Brass Scrap at 7404 and Pigment at 3212 show that the rate of duty is same in both headings. However, the goods have been finally assessed as under Brass Scrap heading only and even the Commissioner does not order classification as for heading of Pigment. The Commissioner merely, confiscates the goods for misdeclaration since the goods as imported do not satisfy the definition of Brass Scrap ‘Nomad’, which is for Turning Scrap as per NARI specifications. He therefore, also rejects the transaction value and revalues the goods under Rule 8 of the Custom Valuation Rules, 1988 on account of the misdeclaration.

(iii) Ld. DR relies upon case of M/s. Sabara Impex Pvt. Ltd. reported in 1999(08)LCX0091 Eq 2002 (150) ELT 1016 (T) held as under :

“The goods have been declared in the bills entry to be scrap. We agree that it is possible that there may be different perception in different country with regard to what is scrap and what is not scrap. What is considered as scrap in one country may not necessarily be considered as scrap in another country, where it may be put to us use and hence would be considered as serviceable material. At the same time, we have to take note of the fact that the goods were not scrap within the meaning of NARI specifications. These specifications command considerable respect in the market and are often referred to. Taking note of this, as also the demurrage incurred by it, was set aside the penalty imposed upon the appellant and reduce the redemption fine from Rs. 1.00 lac to Rs. 50,000/- in each Bill of Entry.”

(iv) However, Tribunal in the case of P.M. Enterprise reported in 2002(03)LCX0301 Eq 2002 (150) ELT 0357 (T) as under :

“We have seen the ITC (HS) Classification at the material time. The imports of the brass scrap of Drink grade was freely importable. Shri Sarkar submits that this classification ‘Honey’ permits a maximum of 5% Iron and therefore the (HS) Classification permitting free import is not attracted and that the goods would require a licence. We notice from the Bill of Entry that the importer had produced DEPB licences and therefore it cannot be said that the import was without cover of a licence. Even if it is asserted in view of the higher percentage of iron that there was a wrong declaration, it would not satisfy the charge of the misdeclaration because the importer did not derive any benefit. It is well known that iron commands lesser value than Copper. There was no ground for the Commissioner to confiscate these goods either under Section 111(d) or under 111(m) of the Act.”

In the present case, when there was no duty rate difference, there is no reason for the appellants to have misdeclared pigment as scrap. There is only a perception difference, when it is found that the ‘Nomad’ specification will have turnings in it & the powder form cannot be ruled out as emerging from such turning on lathes etc. The nature of goods under import as noticed by ld. Professor from I.I.T. who has seen the goods induces us to conclude the impose to be of “Brass Scrap” and not ‘pigment’. Relying upon the case of P.M. Enterprises (supra), we find no reason to call for a motivated misdeclaration of nature of goods. Section 111(m) cannot be involved for confiscation in this case for description.

(c) When confiscation of goods cannot be upheld under Section 111(m) for value and description. The redemption fine impose is not called for, penalty therefore, cannot be arrived at.

4. The order, the valuation arrived at, the confiscation, redemption fine and penalty are to be set aside.

5. Goods ordered to be assessed or copper was scrap powder and cleared on declared value.

6. Appeal allowed with consequential relief.

Equivalent 2004 (172) ELT 0380 (Tri. - Mumbai)