2022 (5) TMI 818 - HC - Customs

Court Upholds Customs Classification of Goods as Flat-Rolled Products under Tariff Item

The court upheld the Customs Authority's classification of the goods as flat-rolled products under Tariff Item 72099000, dismissing the appeal. The ruling ... Classification of goods - mill processed non-allow ferrous waste metal goods wound in a coil - goods has been treated as waste material under the Tariff item 72044900 of the First Schedule to the Customs Tariff Act, 1975 or not - Section 28 KA of the Customs Act, 1962 - HELD THAT:- The appellant being an importer intends to import mill processed non-alloy ferrous waste metal goods wound in coil from South Africa and placed a purchase order for a supply of 200 MT of the product in an 8x20 feet container. According to the appellant, it is a ''RE-ROLLABLE WASTE'' unavoidably obtained as a result of the manufacturing of '' Cold Rolled Coils'' from '' Hot Rolled Coils''. Such a coil which is neither a Hot rolled nor a cold-rolled is having multiple thicknesses, tensile strength etc. These coils are thus generated at the initial stage, and are cut out at ends and would in coil form, which is nothing but mill waste and does not serve the purpose for which they are meant. The thickness is between 0.30 mm to 4 mm which is a non-uniform thickness likewise the width is from 900 mm to 1400 mm. Accordingly, weight ranges from 200- 800 kgs and length are 15 to 20 meters. The goods in question are having a thickness between 0.30 mm to 4 mm, width is from 900 mm to 1400 mm with weight ranging from 200-800 kgs and lengths between 15 to 20 meters has rightly been categorized as flat-rolled products not waste and scrap. As per item No.7204, Ferrous waste and scrap; remelting scrap ingots of iron or steel and the appellant is claiming under the item No.7204 49 00 i.e. other because same is not falling in any of the items from 7204 10 00 to 7204 50 00 - As per the appellant, the goods in question are not used for recovery of metal by re-melting by way of repair, renovating or re-rolling these goods can be adapted for other use, hence, it is not wholly metal waste and scrap and is not liable to be classified under subheading 7204. Even otherwise the appellant is an importer and does not intend to use the product for himself, the appellant will sell the product after import to various other manufacturers, therefore, it can not be decided on an application by the importer that the goods in question are being purchased as waste and scrape. As per section 28J (2) of the Customs Act, if there is any change in the facts the ruling would not apply but it would be an issue for adjudication by the competent authority. The metal waste is invariably subject to physical examination, as there are various factors to be considered to conclude that particular good is a waste product or not, it depends on who is purchasing and how it would be used therefore, an advanced ruling cannot be treated as blanket permission to the importers to import the goods of all kinds of waste and scrap. Appeal dismissed. Issues Involved:1. Classification of 'mill processed non-alloy ferrous waste metal goods wound in a coil'.2. Eligibility for exemption under Serial No. 368 of Notification No.50/2017-Cus dated 30.06.2017.3. Determination of whether the goods in question are 'waste and scrap' or 'flat-rolled products'.4. Applicability of Note 8(a) of Section XV of the Customs Tariff.5. Consideration of changes in the definition of waste and scrap effective from 01.01.2022.6. Relevance of previous judicial precedents and circulars issued by the Central Board of Excise and Customs (C.B.E. & C.).Detailed Analysis:1. Classification of Goods:The appellant sought classification of the goods in question as 'waste and scrap' under Custom Tariff Item (CTI) 72044900. The Customs Authority for Advance Rulings (CAAR) classified the goods under Tariff Item 72099000, determining them as flat-rolled products based on their physical parameters and production process. The definitions of 'hot rolling' and 'cold rolling' were analyzed, confirming that the goods in question conform to the parameters specified in Chapter Note 1(k) to Chapter 72, thus classifiable under Heading 7209.2. Eligibility for Exemption:The appellant aimed to obtain an exemption under Serial No. 368 of Notification No.50/2017-Cus, which applies to waste and scrap. However, since the goods were classified as flat-rolled products, the exemption was deemed inapplicable.3. Determination of Waste and Scrap:The appellant argued that the goods were metal waste and scrap generated during the cold rolling process, characterized by non-uniform gauges and varying lengths. However, the Customs Authority concluded that the goods could still be used for other purposes and were not solely for recovery by remelting, thus not meeting the criteria for waste and scrap under Heading 7204.4. Applicability of Note 8(a) of Section XV:The appellant contended that the goods should be classified as waste and scrap based on Note 8(a) of Section XV, which defines metal waste and scrap. The Customs Authority, however, interpreted that the goods in question did not meet the definition as they could be adapted for other uses.5. Changes in Definition Effective from 01.01.2022:The appellant highlighted that the definition of waste and scrap had changed effective from 01.01.2022, suggesting the need for reconsideration of their classification. The court acknowledged this change but emphasized that the current classification was based on the prevailing definition at the time of the ruling.6. Judicial Precedents and Circulars:The appellant referenced a Division Bench ruling in Bharat Heavy Electricals Ltd. Vs. CC & CE, arguing that departmental officers must follow C.B.E. & C. circulars. The court noted that the Customs Authority had followed the legal framework and existing definitions, and thus, the appellant's reliance on the precedent did not alter the classification outcome.Conclusion:The court upheld the Customs Authority's classification of the goods as flat-rolled products under Tariff Item 72099000, dismissing the appeal. The court emphasized that the goods did not qualify as waste and scrap under the existing legal definitions and parameters. The ruling highlighted the importance of physical examination and the intended use of the goods in determining their classification, affirming that an advance ruling does not provide blanket permission for all types of waste and scrap imports.