Hot rolled stainless steel coils with 1% nickel content qualify for customs exemption despite department's re-classification attempt

CESTAT Ahmedabad allowed appeals challenging re-classification of hot/cold rolled stainless steel coils Grade 13 and denial of customs exemption. The department sought to change classification based on 1% nickel content, arguing it disqualified goods as Nickel Chromium Austenitic Stainless Steel. CESTAT held that low nickel content products also qualify as Austenitic Stainless Steel per Indian Standards, rejecting department's reliance on foreign websites. Additionally, the adjudicating authority classified goods differently than proposed in show cause notice, making the entire notice invalid. Since nickel content was disclosed in Mill Test Certificate, no suppression existed, rendering the demand time-barred beyond normal limitation period. Orders set aside with consequential relief.

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Issues Involved:
1. Custom Tariff classification of "Hot/Cold Rolled Stainless Steel Coils Grade 13."
2. Eligibility for exemption under Sr. No. 734 of customs Notification No. 50/2018-Cus dated 30.06.2018.
3. Invocation of extended period of limitation u/s 28(4) of Customs Act for demanding customs duty and imposing penalties.

Summary:

1. Custom Tariff Classification:
The issue pertains to the classification of "Hot/Cold Rolled Stainless Steel Coils Grade 13" under the Custom Tariff Act, 1975. The department contended that the subject goods were misclassified under CTH 7220 90 22 as they did not contain sufficient nickel content to be classified as Nickel-Chromium Austenite Steel. The department argued that to qualify as nickel austenitic stainless steel, the nickel content should range from 4.5% to 12%, while the imported goods contained approximately 1% nickel. The show cause notice (SCN) proposed reclassification under CTH 7220 9090/CTH 7220 1290 and rejected the exemption under Sr. 734 of customs notification No. 50/2018-Cus.

2. Appellant's Defense:
The appellant argued that the classification under Chapter Tariff Heading 7220 9022 as "Nickel-Chromium Austenite Type" was correct. They cited Indian Standard IS 15997:2012, which allows nickel content as low as 0.20% for certain grades of nickel austenitic stainless steel. They also contended that the adjudicating authority's reliance on copper content and the decision to reclassify the goods under a heading not proposed in the SCN was incorrect.

3. Tribunal's Findings:
The Tribunal found that the appellant's classification was correct based on Indian Standard IS 15997:2012, which permits nickel content as low as 0.2% to 14% for austenitic stainless steel. The department's reliance on external websites was not conclusive, and the adjudicating authority's decision to classify the goods under headings not proposed in the SCN was beyond the scope of the notice. Thus, the goods were correctly classifiable under CTH 7220 9022 as Nickel Chromium Austenitic Type.

4. Exemption Eligibility:
The appellant argued that the exemption under Notification 50/2018-Cus should not be denied merely because the foreign supplier was not the actual manufacturer. The Tribunal did not explicitly address this issue in the summary.

5. Extended Period of Limitation:
The appellant contended that the demand was time-barred as the SCN was issued beyond the normal period of two years from the date of imports. The Tribunal agreed, noting that the entire case was based on the Mill Test Certificate provided at the time of imports, and there was no suppression or mis-declaration of goods. The Tribunal cited several judgments supporting the appellant's case on limitation, concluding that the demand was time-barred.

Conclusion:
The Tribunal set aside the impugned orders, allowing the appeals with consequential relief, if any, in accordance with law. The judgment was pronounced in the open court on 01.05.2024.

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