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of <h1>Provisional assessment finalized after Regulation 5 2018 time limit held barred; import in 2014, finalization in 2022 impermissible</h1> <h3>Commissioner of CGST, C. Ex & Customs, Bhubaneshwar Versus M/s Saraogi Udyog (P) Ltd.</h3> Commissioner of CGST, C. Ex & Customs, Bhubaneshwar Versus M/s Saraogi Udyog (P) Ltd. - TMI ISSUES PRESENTED AND CONSIDERED 1. Whether the imported material described as 'Coke Breeze' constitutes 'metallurgical coke' for purposes of classification and entitlement to exemption under Sl. No. 125 of Notification No. 12/2012-CUS (basic customs duty @ 0%). 2. Whether Board's Circular treating 'coke breeze' as process waste and permitting exemption only up to 5% (Circular No. 56/2003-Cus) applies to the present import where the later Notification grants an unconditional exemption for metallurgical coke - i.e., whether a circular issued in a different contextual notification can be applied to a changed statutory context. 3. Whether finalisation of a provisional assessment after more than eight years (import 11.02.2014; finalisation 22.07.2022) is contrary to statutory time-limits and principles - specifically Section 18 read with sub-section (1A) and Regulation 5 of the Customs (Finalisation of Provisional Assessment) Regulations, 2018 - and therefore arbitrary and barred by limitation. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Classification: whether 'Coke Breeze' is metallurgical coke and eligible for exemption under Sl. No. 125 of Notification No. 12/2012-CUS Legal framework: Classification under the Customs Tariff hinges on the essential character of the goods (Note 3(b), General Rules for Interpretation of Schedule to Customs Tariff). Entitlement to exemption under Sl. No. 125 of Notification No. 12/2012 depends on the imported item being metallurgical coke as described in the notification. Precedent treatment: The Commissioner (Appeal) relied on established principles distinguishing context of notifications and the limits of administrative circulars; appellate reasoning cited Supreme Court authorities on context-sensitive application of rules (cases referenced in the impugned order). Interpretation and reasoning: The Tribunal accepts the Commissioner (Appeal)'s finding that there was no dispute as to the chemical nature of the goods being metallurgical coke. The presence of 18.74% material in size 0-10 mm was examined against the essential character test: the presence of that fraction did not change the essential character of metallurgical coke. The Commissioner (Appeal) relied on a technical confirmation (letter from a user/producer) supporting that 'Coke Breeze' was Low Ash Metallurgical Coke and therefore fell within the description eligible for the unconditional exemption in Sl. No. 125 of Notification No.12/2012. The Tribunal agrees with this conclusion and finds no error in treating the imported material as metallurgical coke for exemption purposes. Ratio vs. Obiter: Ratio - determination that 'Coke Breeze' retained essential character of metallurgical coke despite 18.74% 0-10 mm fraction and therefore qualified for the notification exemption. Obiter - peripheral references to comparative notifications and peripheral case citations that serve context but are not necessary to the operative conclusion. Conclusion: The imported 'Coke Breeze' is to be treated as metallurgical coke and is eligible for exemption under Sl. No. 125 of Notification No. 12/2012-CUS; the demand based on denial of that exemption is set aside as per the impugned order. Issue 2 - Applicability of CBEC Circular No. 56/2003-Cus (treating coke breeze as process waste) to the present unconditional exemption notification Legal framework: Administrative circulars interpret and apply notifications but must be read in the context in which they were issued; a circular issued for a notification with qualifying language may not control application of a later unconditional exemption issued under a different notification. Precedent treatment: The Commissioner (Appeal) relied on authorities establishing that rules or principles laid down in a different context cannot be mechanically applied to a changed context; those authorities were cited to demonstrate that context matters in application of prior administrative instructions. Interpretation and reasoning: The impugned Circular was issued in the context of an earlier notification that qualified the exemption (applicability to metallurgical coke imported by certain manufacturers using blast furnace or COREX technology) and which treated 'coke breeze' as process waste allowable up to 5%. The later Notification No. 12/2012 (Sl. No. 125) provided an unconditional exemption for metallurgical coke without that qualification. The Commissioner (Appeal) concluded that the earlier circular could not be applied to negate an unconditional exemption under the later notification; the Tribunal concurs, holding that the change in the statutory context alters the applicability of the circular. Ratio vs. Obiter: Ratio - a circular issued in the narrower context of a prior notification (with qualifications) cannot be applied to displace an unconditional exemption provided by a subsequent notification; the circular's 5% process waste rule does not override the later unconditional notification when the essential character criterion is satisfied. Obiter - discussion of whether the 18.74% fraction could have required enquiry under the circular (the Commissioner noted that the AC/DC had discretion to enquire where coke breeze exceeded 5%). Conclusion: Circular No. 56/2003-Cus is not applicable to deny exemption under Sl. No. 125 of Notification No. 12/2012-CUS once the imported material is found to be metallurgical coke in essential character; reliance on that circular to deny exemption was improper. Issue 3 - Validity and limitation of finalisation of provisional assessment after more than eight years: Section 18(1A) and Regulation 5 (Regulations, 2018) Legal framework: Section 18 provides for provisional assessment in specified circumstances. Sub-section (1A) (inserted by Finance Act, 2018) and the Customs (Finalisation of Provisional Assessment) Regulations, 2018 prescribe time limits for finalisation - Regulation 5 requires finalisation within two months of receipt of requisite documents/test/enquiry report, with a possible further three-month extension by the Commissioner for reasons recorded in writing. The use of 'shall' in the provisions indicates mandatory time limits. Precedent treatment: The Tribunal referred to Supreme Court authority holding that procedural time limits expressed in mandatory terms are to be treated as binding; prior to Regulation 2018, courts applied a 'reasonable time' standard (Supreme Court had indicated five years could be reasonable in the absence of statutory periods). The Tribunal also cited Union of India v. Dharamendra Textile Processors on mandatory character of statutory timelines. Interpretation and reasoning: Import occurred on 11.02.2014 and provisional assessment was finalised on 22.07.2022 - more than eight years later. Regulation 5 of the 2018 Regulations prescribes clear timelines which are mandatory. The Tribunal observed that prior to insertion of sub-section (1A) and the 2018 Regulations there was no statutory timeline, but once enacted the timelines are binding and cannot be ignored. The finalisation after more than eight years, without adherence to Regulation 5, was held arbitrary and contrary to the apex court's decisions regarding mandatory timelines, and thus liable to be set aside on limitation grounds. Ratio vs. Obiter: Ratio - finalisation of provisional assessment made without complying with the mandatory time limits in sub-section (1A) of Section 18 and Regulation 5 (Regulations, 2018) is arbitrary and barred by limitation; consequently, the late finalisation is invalid. Obiter - discussion of how provisional assessment should have been finalised earlier given the load port chemical report and that provisional duty was not adjusted from the bond (commentary on procedural omissions). Conclusion: Finalisation of the provisional assessment after more than eight years violated the mandatory time limits now prescribed by sub-section (1A) of Section 18 and Regulation 5 of the 2018 Regulations. The delayed Order-in-Original is arbitrary and set aside on limitation grounds; in view of this and the merits, the impugned appellate order is upheld and the Revenue's appeal is dismissed. Cross-references Issue 1 and Issue 2 are interrelated: factual finding on essential character (Issue 1) determines applicability of unconditional exemption and thereby negates the restrictive operation of the earlier circular (Issue 2). Issue 3 (limitation/time-bar) provides an independent, mandatory ground to set aside the belated finalisation; the Tribunal decided both on merit and limitation, but emphasised limitation as a separate basis for invalidating the late finalisation.
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