TaxTMI 
TaxTMI 
1995 (6) TMI 100
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....88 " 40.000 3,14,412 4,55,897/- 5 F-1127/07-03-88 " 20.000 1,43,327 2,07,824/- 6 F-1128/07-03-88 " 20.000 1,43,327 2,07,824/- The value of the goods was declared on the basis of the invoice price at US Cent 25 lb CIF Kandla. The importers claimed clearance of the goods under Tariff Heading 2620.30 as "Brass Dross". The goods were assessed provisionally, However, in view of the suspicion that the goods were actually : Brass Scrap" a representative sample from the consignments was sent for test to the Custom House Laboratory, Kandla. The Chemical Examiner in the relevant test reports inter alia stated that the goods were similar to the sample tested under Lab. Report Nos. (1) KCL/IMP/1159 and 1160, dated 9-7-1987; (2) KCL/IMP/1107, dated 1-7-1987; (3) Test Memo Nos. 877 & 878, dated 9-7-1987 and (4) 838, dated 1-7-1987 respectively which were forwarded to the Chief Chemist by D.R.I. for test and in respect of which the Chief Chemist had reported that the goods were Brass Waste/Scrap. In view of the aforesaid test result a show cause notice was issued to the appellants - M/s. N.J. International on 3-8-1991 requiring them to show cause....
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....Section 112(a) of the Customs Act, 1962 for mis-declaration and evasion of the customs duty. The importers denied the allegation in the show cause notice and contended that the imported goods were Brass Ash/Dross. By the impugned order the Collector accepted the importers' contention that the imported goods had to be deemed as "Dross" mainly on account of the finding in the relevant chemical test report that they were in the form of oxidised metal. He held that the goods were in the nature of metallurgical residues arising in the course of metallurgical processing and were correctly classifiable under Heading 2620.30 of the Customs Tariff Act as "Brass Dross". On these considerations the Collector dropped the proceedings initiated in terms of the show cause notice. Being aggrieved by the order passed by the Collector, the Revenue have come up in appeal. 3. Appearing on behalf of the importers M/s. N.J. International, Shri Lachman Dev, Learned Consultant submitted that dross is the scum that forms on the surface of molten metal such as iron, lead, zinc, aluminium etc. due largely to oxidation. He submitted that according to Metallurgical Dictionary by Henderson and the Chemi....
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....te metallurgical process. He stated that the HSN on page 210 explained that these residues result from the treatment of ores or intermediate metallurgical products or from electrolytic, chemical or other processes which do not involve the mechanical working of metal. He stated that the Collector had not dealt with the importers' submissions that the goods being, essentially residues arising out of the treatment of ores or from electrolytic, chemical or other processes not involving any mechanical working of metal, they were classifiable under Heading 26.20. He contended that the finding of the Collector that the goods were metal waste and scrap is not sustainable since the Department had failed. to discharge the onus of proving that they had arisen from the manufacture or mechanical working of the metal. He submitted that the Collector's order determining the unit price of the goods as 41 Cents per lb was arbitrary since the invoices relied upon by the Department showed a wide variation and apart from the fact that the Department had failed to prove that the goods were metal waste and scrap, the type of scrap to which the imported goods belonged had also not been identified . In su....
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....y the Collector. He argued that under these circumstances the determination of the value of the imported goods on the basis of the price of contemporaneous imports of brass scrap was sustainable in terms of the provisions of Section 14 of the Customs Tariff Act. In support of his contention he also placed reliance on the Tribunal's decision in the case of Pradeep Kedia v. Collector of Customs reported in 1993 (67) E.L.T. 519 and Deepak Electronics v. Collector of Customs, Bombay reported in 1994 (73) E.L.T. 817. 5. We have examined the records of the case and considered the submissions made on behalf of both sides. It is seen that the main question that arises for consideration in this case is whether the imported goods were brass ash/dross falling under Heading 26.02/04 of the Customs Tariff Act, 1975 as claimed by the importers or they were brass waste/scrap falling under Heading 74.01/02 of the Customs Tariff Act, 1975 as claimed by the Revenue. On behalf of the importers it has been contended by the Learned Consultant that the Department's finding that the goods were brass waste/scrap was mainly based on the opinion given by the Chief Chemist which could not be relied u....
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....or above referred samples." It is seen that the assessee's contention that in arriving at his finding that the imported goods were brass waste/scrap the Collector had relied on the report of the Deputy Chief Chemist which was not given after testing of the sample drawn from the imported consignments is not based on fact. A perusal of the record of cross-examination of R.S. Vankataraman, Retired Deputy Chief Chemist follows that the opinion given in the letter C. No. 33/Cus. 87, dated 21-12-1987 from the office of the Chief Chemist was issued in reply to letter dated 6-7-1987 from the Assistant Director, DRI, Jamnagar and the goods covered by the consignments which were the subject matter of the proceedings before the Collector were not actually tested by the Control Laboratory at Delhi. The Deputy Chief Chemist had confirmed that the samples from the consignments which were the subject matter of the proceedings before the Collector could not have been tested by the Control Laboratory at Delhi. However, as observed by us the reports given by the Chemical Examiner, Kandla Custom House in respect of the goods imported in the consignment which were the subject matter of the proceedi....
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.... imagination be deemed as consisting mainly of metallic oxides of the type which rise to the surface of the molten metal during metallurgical processes. 6. The goods being mainly in the form of metallic pieces of irregular shape and having pointed edges, in our opinion they would qualify for classification as Brass Waste/Scrap even in terms of Note 6(a) to Section XV of the Customs Tariff Act according to which waste and scrap arise from the manufacture or mechanical working of metal. As observed by us earlier the imported goods on test by the Customs House Laboratory was found to be having metallic content ranging between 93.8% and 96.4% with very little presence of oxide. The classification of such goods was examined by the Tribunal in the case of Premier Brass & Metal Works Pvt. Ltd v. Collector of Customs reported in 1990 (48) E.L.T. 98, wherein it was held that goods having metal content of 91% to 97% with little presence of oxides and sulphide were classifiable as Brass Waste/Scrap under Heading 74.01/02 of CTA, 1975 and not as Dross/Ash under Heading 26.02/04 of CTA, 1975. Para 7 of the said order being relevant is reproduced below : ******* 7. We find tha....