TaxTMI 
TaxTMI 
2013 (9) TMI 422
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....der Notification No. 21/2002-Cus. at Sl. No. 200 was not available to the goods. Further goods falling under this Tariff Item was subject to import restrictions. Since Revenue felt that the goods were mis-declared for circumventing import policy and also for claiming exemption and hence the goods were liable to confiscation under Section 111(d) and 111(m) of the Customs Act, 1962 and proceedings were initiated for confiscating the goods and for denying the exemption claimed. On conclusion of the proceedings, the goods were confiscated under the provisions of Section 111(d) and 111(m) of the Customs Act, 1962 read with Section 3(3) of the Foreign Trade (Development & Regulation) Act, 1992 and the appellant was allowed to redeem the goods on payment of a fine of Rs. 6 lakhs as per the provisions of Section 125 of the Customs Act, 1962. Further, a penalty of Rs. 3 lakhs was imposed on the appellant under Section 112(a) of the Customs Act, 1962. Aggrieved by the order of the Commissioner, the appellants have filed this appeal before this Tribunal. 3. The counsel for the appellant submits that the consignment contained used rails of various lengths less than 2 mtrs. The position that....
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....ating to steel it is recorded that the Committee took a view with the approval of the Director General that used rails would be treated as free for import without any restriction as it would fall under ITC (HS) Code 72.04. Therefore, the counsel submits that one arm of the Government is taking the view that the goods are classified under Heading 72.04 and the other arm namely the Customs Department is taking the view that the goods are classifiable under Heading 73.02. 9. Opposing the prayer, the learned AR for Revenue relies on the test report given by National Metallurgical Laboratories, Madras Centre contents of which are reproduced below :- METALLURGICAL INSPECTION REPORT 1. Number of packages/pieces and number of consignments One consignment in ten containers consisting of rails and fixtures including nuts and bolts 2. Nature of packing Nil 3. Labels/Markings on packages/pieces Nil 4. Number of packages/pieces inspected Entire consignment 5. Standard referred to IS 2549 6. Nature of materials (as per B.E) Foundry grade HMS scrap 7. Number of samples visually inspected - 8. Nature of samples and measured....
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.... takes the form of : (1) Waste and scrap from the manufacture or mechanical working of iron or steel (e.g. crop ends, filings and turnings) (2) Articles of iron or steel, definitively not usable as such because of breakage, cutting-up, wear or other reasons; iron or steel waste and scrap is usually prepared by means of the following processes, in order to adapt it to the dimensions and qualities required by the users :- (a) Shearing or flame-cutting of heavy and long pieces (b) compression into bales, particularly in the case of light scrap, using for example hydraulic press (c) Fragmentation (shredding) of motor vehicle bodies and other light scrap, followed by separation (which may be magnetic) with a view to obtaining a high density product that is fairly clean (d) Crushing and agglomeration into briquettes of iron and steel filing and turnings (e) Breaking up of old iron articles. Waste and scrap is generally used for the recovery of metal by remelting or for the manufacture of chemicals. But the heading excludes articles which, with or without repair or renovation, can be re-used for their former purposes or can be adapted for other uses; it also exc....
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....s are classified under Heading 73.02 there is a restriction on import of such goods and therefore the confiscation of the goods under Section 111(d) is maintainable. Further he argues that the exemption at S. No. 200 of Notification 21/2002-Cus. is applicable only to goods classifiable under Heading 72.04 and hence will not apply to the imported goods. 14. Further, he argues that since the goods were declared as heavy melting scrap when the goods were used rails, he submits that there is a mis-declaration of material particulars and therefore provisions of Section 111(m) are attracted. 15. The appellants submit that the DGFT has classified such goods under Heading 72.04. We are of the view that it is not appropriate to leave the decision of classification to DGFT in which case the classification does not get settled though a judicial process and stakes of Revenue gets decided by an officer not concerned with Revenue. So we are not giving much importance to the decision of DGFT. However when it comes to deciding whether there is any restriction on import of the goods we consider it appropriate to go by the decision of DGFT who lays down the policy in that regard. So even if th....
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....e waste and scrap is generally used for recovery of metals by remelting or for the manufacture of chemicals. However, the heading excludes articles, which with or without repair or renovation can be reused for former purpose or can be adopted for other uses; it also excludes structural steel works usable after renewal of worn out parts. Decision : The Board considered the alternative headings of 72.04 and 73.02 for the item. The main point for discussion related to the policy restrictions on the import of used rails. Chapter 73 of the CTA'75 specifically covers articles such as rails. In the case under reference, even though the items in question were in the form of rails, these bore markings of use and therefore these could not be used again as rails. Hence, suitable classification would be as scrap of CTH 7204 and not as articles under heading 7302. It has accordingly been decided by the Board that used steel rails for re-rolling were appropriately classifiable under CTH 7204 and these were freely importable. (v) Circular dated 08/2006-Cus., dated 17-1-2006 clarifying that used steel rails shall be classified under CTH 73.02 and not under 72.04. The circular reads as under ....
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....takes away the freedom of adjudicating authority to decide the issue on merit. 18. Thus C.B.E. & C. changed its view on the issue a few times. Added to that is the latest clarification by DGFT that such goods will be classifiable under Heading 72.04. These conflicts arise from the fact that there is a clear exclusion in the HSN notes under Heading 72.04 to the effect that scrap which can be used without re-melting to recover metal is not classifiable under the heading. At the same time the issue as to where re-rollable scrap will get classified is not specifically stated in HSN Notes. Classifying used rails, having length less than two metres, in the heading for rails does not stand to common sense because it is very obvious that the goods cannot be used as rails any more. Neither do the HSN Notes for Heading 73.02 state explicitly that used and cut rails will also be classifiable as rails. 19. Classification under different Tariff items is for the purpose of levying different rates of duty as also for collection of statistics of trade. It is only natural that Government may want to impose a different rate of duty on goods which can be re-rolled into useful products like bars....
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....S. No. there was a condition which described the scope of "re-rollable scrap" and the description specifically covered items of the type considered in this case. So it is clear that in 2002 when this notification was issued the Ministry was of the view that re-rollable scrap would fall under CTH 72.04. (viii) Shiva Ispat Udyog v. CC - 2010 (254) E.L.T. 297 (Tri.-Kol.) - rules that used railway axles are classifiable under CTH 72.04. This decision does not examine the exclusion mentioned in HSN Notes for Heading 72.04 and the distinction between re-rollable scrap and melting scrap. 21. The decisions in favour of Revenue to some extent are the following : (i) LML Ltd. v. CCE - 1997 (94) E.L.T. 273 (S.C.); (ii) CCE v. Bhushan Steels and Strips Ltd. - 2010 (257) E.L.T. 5 (S.C.). These decisions deal with the issue of classification of side slitting, cuttings, roughly shaped pieces and trimmings generated in a factory. The competing headings considered are Heading 72.16 in preference to Heading 72.04. This decision is not in respect of old and used item. The decision is based on the finding of fact that "It is quite evident that those portions of cut sheets which are used....