TaxTMI 
TaxTMI 
2001 (9) TMI 970
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....usand only) under Section 125 of the Customs Act, 1962. (iii) I impose a penalty of Rs. 10,000/- (Rs. Ten Thousands only) of M/s. PCK Buderus (India) Tool Steel Company, Madras-17 under Section 112(a) of the Customs Act, 1962. 2. The allegation against the appellant is brought out in Paras 1 to 19 and the reply filed by the appellant is in Para 20 of the impugned order which is extracted below :- M/s. Alis Enterprises, the Custom House Agent (hereinafter called CHA) have filed the Bill of Entry No. 9212, dated 22-2-1996 on behalf of the importers M/s. PCK Buderus (India) Tool Steel Co., 13 South West Boag Road, Madras 600 017 (hereinafter called the importers). The goods covered under Bill of Entry were declared as "Alloy Steel Bars." The following documents have been filed alongwith the Bill of Entry : (a) Two invoices bearing Nos. 41568 and 41569, both dated 12-1-1996 raised by M/s. Edelstahlwerke Buderus AG in favour of M/s. PCK Buderus (India) Tool Steel Co. Madras for a total consideration of DM 45050.90 (CIF). The description of the goods is Alloy Steel Bars I grade 1.2714 : 1.2738 ISO-BM, 1.2311 ISL-BM. The country of origi....
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.... from port of Hamburg, Germany and Country of origin declared as Germany. In the declaration form to be given as per Rule 10 of Customs Valuations Rules, 1988 and signed by the importer at Sl. No. 17 no relationship with the buyer was declared. In the Bill of Entry importers claimed clearance of goods against an Advance Licence No. P/L/0544650/C/ XX/37/D/95, dated 24-2-1995. In the invoice filed with the Bill of Entry it is declared as per P.O. No. PCK/BVI/TSO-4/94, Alloy Steel Bars in grade 1.2311 ISL-BM and 1.2738 ISO-BM in sizes as mentioned therein. Importers also produced Test reports from the supplier giving the composition for all grades and sizes for the steel under import. 8. The above referred value based Advance Licence submitted for clearance has been issued to M/s. TOP Forty suspension and made transferable as per Para 127(i) of Hand Book of procedures to Export Import Policy 1992-97, for Alloy Steel Bars/Rods/Billets/Blooms/Ingots subject to the condition that quality and Technical Characteristics of Import items should match with the resultant product for a value of US $ 76125. As per a copy of shipping bill 410835, dated 30-1-95 produced by the importer M/s.....
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....t between us; that they import only from M/s. Edelstahlwarke Bunderus Ag, that many people import from Buderus and they do not get any commission for such sales; that for this import the supplier offered 150 days credit; that the list of items required are sent to Germany and orders are placed on M/s. Edelstahlwarke Bunderus AG, that they receive order confirmation from them confirming order acceptance; that M/s. P.C. Krishnan Iyer & Co. are the agents of M/s. Edelstahlwarke Buderus AG and he is also a partner of the said company. In case of third party imports like BHEL, TVS-SUZUKI IFB etc. where they need a local representation, M/s. P.C. Krishnan Iyer & Co. receives 2% agency commission in Indian rupees; that the steel items imported by them can also be imported by third parties in India and earlier M/s. Godrej has imported the same. The alloy steel bars imported under Bill of Entry No. 9212, dated 22-2-96 are basically for stocking in India and to be delivered against orders. 13. In continuation of his earlier statement he stated on 26-3-96, that opinion was given without visual inspection of cargo and requested for visual inspection in their presence on showing the opi....
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....port-Import Policy 1992-97 states that "wherever import of steel is allowed, the thickness and specification etc. of steel imported and that is used in export product should conform. It shows that the benefit of DEEC exemption to an article being usable is not available. The above mentioned provision suggests that there should be a nexus in the imports and exports and the intention is to prevent the mis-use of the DEEC Scheme. There is no provision to exclude the trader, who is importing under transferable advance licence. The burden of proving the nexus is on the person who is claiming the benefit. The importers have not proved the nexus in this case. 18. From the totality of facts, circumstances and investigation carried out, the following facts appear to emerge : (i) Importers have imported tool steel in guise of forging quality Alloy Steel Bars and sought clearance under an Advance Licence issued for export of forging quality Alloy Steel. Scrutiny of technical specification for grades under import, market enquiries and opinion from Steel Authority of India reveal that the steel under import is only tool steel which can be permitted....
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....ice, Test Certificate have been perused by Assessing Officer and no query on any ambiguity relating to the description of goods was raised by AO (Gr 7). (1.2) The material was inspected by SIIB and no contradicting remarks to the description was recorded in the show cause notice. (1.3) Based on these points there was no contravention of Section 46(4) of Customs Act by way of any misdeclaration. (1.4) Accordingly the show cause notice on misdeclaration does not survive. (2.0) The show cause notice repeatedly points out that the material is not forging quality. (2.1) It was stated in Para 8 that the licence permitted only import of alloy steel forging quality due to specific endorsement on the licence to the effect that "Tech characteristics or items under import should match with export product." (2.2) the item of import namely alloy steel bars satisfy the chemical composition criteria laid down in Chapter 72 of Customs Tariff and consequently fulfill the technical characteristic condition in the sense that export product were only alloy steel forging under broad heading. On this count the specific condition of meeting technical charac....
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....jor point that the present issue is with reference to the material capability for a particular method or line of manufacture that is forging. So incorrect description of goods on this count does not sustained. (2.9) We also enclose a declaration of the supplier before German Chamber of Commerce certifying that the items supplied by them correspond to HSN No. 72284010 which covers bars of alloy steel not other than forged. Supplier's declaration clearly eliminated the other classifications under HSN 7228 which included Die and Tool steel. This itself is a testimony from a Foreign Chamber of Commerce that the material does not belong to Tool or Die steel category instead belong to forging category. (2.10) Din 17200 as mentioned in the Para 15 only to cover forging quality is not correct. The title of DIN 17200 is in fact "Quenched and Tempered steels" and not forging quality steels. This standard covers wide range of steels based on chemical and physical characteristics. Hence it is not acceptable that DIN 17200 covers forging quality steels. Moreover this is a standard classifying steels on characteristics and not manufacturing methods. (2.11) To further prov....
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....rises, CHA for the clearance of goods declared as Alloy Steel bars and sought clearance under duty free clearance in terms of advance Licence No. P/L/0544650, dated 24-2-95 in terms of CN 203/92. The goods were supplied by M/s. Edelstahlwerke Buderus AG vide Invoice Nos. 41568 and 41569 both dated 12-1-96. The description of the goods was Alloy Steel bars in grades 1.2714, 1.2738 ISO-BM and 1.2311 ISL-BM. The country of origin was Germany. 38. The value based advance licence cited supra was issued to M/s. TOP Forty suspension and made transferable in terms of Para 127(i) of Hand Book of procedures to Export Import Policy 1992-1997 for Alloy Steel Bars/Rods/Billets/Blooms/Ingots subject to the condition that quality and Technical Characteristics of Import items should match with the resultant product for a value of US $ 76125. M/s. TOP Forty suspension vide shipping bill 410835, dated 31-1-95 exported the resultant products namely Alloy Steel forgings machined upto 10 KGPC wt. as stipulated in the advance licence. Thus, the quality and technical characteristics of items under import should match the export i.e. only forging quality Alloy Steel Bars/Rods/Billets/ Blooms/Ingot....
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.... to supplement conventional mould steels in order to eliminate the well-known shortcomings enumerated with dimensions over 400 mm such as decline in strength towards the ingot centre problems with processing and inadequate graining capacity. 41. Comparison of chemical composition with the specification given for each grade i.e. 1.2714 (56 Ni Cr. MoV) 1.2311 (40 Cr. Mn. Mo) 1.2738 ISO-BM (40Cr Mn Ni Mo 8.6.4), the goods under import are only die steel/plastic mould steel. It is also mentioned that the plastic mould steel 2738-ISO-BM was developed to supplement conventional mould steels in order to eliminate the well known short comings over 400 mm. DIN standard 17350 (1890) Tool Steels also lists 56 Ni Cr. Mn. V grade steel with material No. 1.2714. 42. M/s. Steel Authority of India Ltd. (SAIL) have stated that the steels under import in grades 1.2714 1.2738 ISO-BM 1.237 ISL-BM are not of forging quality steel but tool steel as defined under DIN 17350 (1980) and the sizes mentioned are not bars but blocks. 43. M/s. PCK Buderus (India) Tool Steel Co. are related with M/s. P.C. Krishnan Iyer and Company. M/s. P.C. Krishnan Iyer and Co. are the agents of M/s.....
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....Central Excise Tariff and not under item 68 as an article of iron and steel. The present case involves the determination of nexus between the imported and exported goods. 48. The other Case Law reported in [1992 (58) E.L.T. 248 (Tribunal)] in the case of Overseas Cycle Company v. Collector of Customs relates to the MS defective cold rolled steel sheets for manufacture of cycle parts and export under DEEC are allowed eventhough the licence shows mild steel cold rolled sheets. In this case there is a restriction of 4% of tool steel/die steel in terms of input output norms. There is no such restriction in the cited Honourable case. Therefore, the cited case is different and distinguishable to this case. 49. It is also observed from the catalogue sheets produced by the importers that the applications of the different grade under import shows that they are not useful for making alloy steel forgings machined, whereas they are useful in making dies, tool components etc. Therefore, the goods under reference, cannot be used for the production of the resultant product viz. : Alloy steel forgings machined upto 10 kg. pc weight. The possible items that can be manufactured from ....
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....ned the provisions of Section 3(3) of the Foreign Trade (Development Regulation) Act, 1962 readwith Sections 111(m) and 111(d) of the Customs Act, 1962. By the above said acts of commissions and omissions the importers are liable to penalty under Section 112(a) of the Customs Act, 1962. 54. Having regard to the facts and circumstances of the case and the demurrages incurred by the importer, I pass the following order : 4. Arguing for the appellant, ld. Counsel submitted that the order is violative of principles of natural justice in as much as that they produced the expert evidence in the form of opinion given by Shri N. Krishnaraj, Consultant Metallurgist, Research Scholar, IIT, Madras of 25 years experience who on examination of the imported of goods had opined in his certificate which is annexed with this order. 5. The opinion of Chartered Engineer which is at Page 34 of the paper book is also relied on by the appellant. The same is reproduced herein below :- CHARTERED ENGINEER'S CERTIFICATE This is to certify that I have throughly gone through the catalogues of grade 2714/2311/2738 enclosed. All the three above STEEL grades are conforming to All....
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....on that the item imported was in terms of licence and for the purpose of final product. He filed written submissions which are extracted below :- 1. The appellants were holding value based "Advanced License", which was made transferable as per Para 127(1) of Handbook, 1992-1997, which was originally issued M/s. Top Forty Suspension, from whom the licence was transferred to the appellant. As per the license, the licensee, in this case the appellant, is entitled to import alloy steels bars, rods, billets, blooms, ingots. While importing under bill of Entry No. 9212, dated 22-9-1996 after fully describing the property as per the invoices the appellant claimed exemption on the ground that the imported goods represented "Alloy Steel Bars". However the appellant were not allowed to clear the goods and the respondent issued show cause notice dated 10-4-1996 on the ground that - (a) the imported goods were not of forging quality and liable to be confiscated (b) a duty of Rs. 6,73,080/- was imposable and (c) penalty was also imposable for rendering the goods liable for confiscation. ....
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....ioner cannot ignore substantial material available when the importer had given enough experts opinion. Further in Sewa Polymers v. CCE [2000 (118) E.L.T. 621 (Tribunal)] it was held that in matters of classification on the basis of parameters of chemistry in interpretation of those parameters the opinion of experts will prevail over a impression of a lay person and it would be patently wrong if such expert opinion was not relied on. It was also held that the assessees would be entitled to seek clarification as to in what manner the samples were examined and what methodology was adopted to arrive at the conclusion. 5. In the present case also the Commissioner erred in relying on the opinion of Mr. Dev Dhar and ignoring the opinions given by the appellant. Further he also erred in entering into a judgment on a technical matter as he does at Para 49 of the order (Page 58 of the typed set of papers). 6. It is also submitted that all the opinions were given on the basis of the catalogues and the chemical compositions as per test reports only. There is no indication any where in the record to show that even the surveyor had taken samples of the imported goods for making t....
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....CE [1995 (75) E.L.T. 865 (T)] may not directly apply to the present case as the show cause notice does not proceed on the basis that the end product did not correspond with the imported raw materials. On the other hand Clause (A) in Para 18 only says that "Goods are not Alloy Steel Bars of forging quality" (at Page 27 of the typed set of papers). Any finding in the order beyond the scope of the show cause notice would be illegal and violative of principles of natural justice. 8. He relies on the following judgment in Nitco Marble and Granite Pvt. Ltd. v. CC Nhavasheva reported in [1999 (112) E.L.T. 193] wherein the Tribunal held in Paras 5 and 6 as follows :- 5. The more important question relates to the nexus between the goods. The duty-free import entitlement has been earlier allowed and goods imported or sought to be imported. The entitlement is, in some cases, in respect of "relevant raw marble slabs", and in other cases in respect of "raw marble slabs". The stand taken by the Commissioner was that the goods imported are not raw marble slabs but processed marble slabs. The Customs Authorities have taken the samples from various containers of imported marble slab....
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....f Shri Hafeez, Contractor, an architect of Bombay was available, the Commissioner chose to consider only the report and opinion of Professor S.D. Shah of IIT, Bombay and disregarded the opinion given by Shri Hafeez, Contractor and ignored the reports of other experts which were also secured by the department itself. The department having consulted a number of experts, the Commissioner relied only on the report of Professor Shah, though according to the appellant, various reports contained data and were favourable to them. It would have been open to the Commissioner on proper consideration of the available material to arrive at a reasonable conclusion; the conclusion arrived at by ignoring substantial material available cannot be regarded as reasonable or germane. On this ground alone, the impugned orders deserve to be set aside and are hereby set aside. The three cases will be considered afresh by the Commissioner. It is for the Commissioner to consider whether in the circumstances any of the experts should be called for examination. It is also open to the appellants to suggest to the Commissioner that one or more experts should be examined by the Commissioner." 9. He furth....
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....by the Supreme Court in their Judgment in the case of Novopan India Ltd. v. Collector of Central Excise and Customs, Hyderabad [1994 (73) E.L.T. 769 (S.C.)] would also not apply. 9. Both the Assistant Commissioner and the Commissioner exclusively relied upon test report (infact an extract of the report) to the entire exclusion of an opinion given by an independent expert after visiting the assessees factory and after studying the raw materials, the process involved and the chemistry relating to such process. 10. The coverage of Chapter 40 is governed by the stipulations made in the notes thereto. The phrase "rubber" covers synthetic rubber. Synthetic rubber has been defined in Note 4 to Chapter 40. Synthetic rubber is a term applicable to natural rubber which is modified by grafting or mixing with plastics, depolymerised natural rubber, mixtures of unsaturated synthetic substances with saturated synthetic high polymers provided that all the above mentioned products comply with the requirements concerning vulcanisation, elongation and recovery as given in part (a) of the said note. The parameters briefly are elongation and residual length after being returned to the ....
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....ice that appellants had clearly described various chemical composition in the alloy steel bars, rods, billets etc., in terms of invoices indicated in the bill of entry. The said details have not been challenged by the revenue by sending samples for chemical test. On the other hand, the appellants have got this tested through their supplier and the details furnished by the supplier in the form of catalogue, literature and the materials. There is also reliance on the said certificate issued by the expert, Shri Krishana Raj, Metallurgical, Research Scholar, IIT Madras and the Chartered Engineer. In spite of these evidences produced by appellants, Revenue had merely referred the matter to SAIL. One Shri Dev Dhar, Asstt. General Manager of SAIL had merely opined in his letter as below :- "We thank you for your telefax message dated 14-3-96 seeking certain clarification on the importance of Alloy Steel material. We wish to confirm that the sizes and grade indicated in your telefax message are - (a) not of forging quality steel but tool steel as defined under DIN 17350 (1980) and (b) sizes mentioned are not bars but bloc....