TaxTMI 
TaxTMI 
2014 (2) TMI 779
X X X X Extracts X X X X
X X X X Extracts X X X X
....duty under Notification 21/2002-Cus (S. No. 200) for 'Melting Scrap of Iron and Steel' falling under heading 7204 of the Customs Tariff. On examination the goods were found to be 'used rails of assorted sizes' (The sizes are not recorded in the impugned orders). Revenue was of the view that such goods were classifiable under heading 73021090 with the consequences that a license would be required for import of such used goods and the concessional rate for basic customs duty under Notf 21/2002-Cus (S. No. 200) would not be available to the appellants. Further the Revenue made out a case that the description of the goods were mis-declared and hence value declared on the Bills of Entry could not be accepted. So value was enhanced on the basis of value of similar goods imported around the time of import of the disputed goods. The goods were confiscated under sections 111 (d) and 111 (m) of the Customs Act, 1962 read with section 3 (3) of the Foreign Trade (Development and Regulation Act, 1992. and allowed to be redeemed on payment of varying fines, under section 125 of the Customs Act, for each consignment. Further penalties for varying amounts for each consignment were imposed under se....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Para 2.17 of Foreign Trade Policy of the relevant period. (iv) The value of goods was enhanced as per the value admitted @ US$ 418/MT CIF by the importer as against a declared value of US$ 350/MT(C&F) on the Bills of Entry. (v) Accordingly, goods were reclassified under 73021090 and ordered for reassessment at the enhanced value of US$418/MT CIF; along with imposition of Redemption Fine and Penalty. 7. He points out that in the case Hinduja Foundries Ltd (Supra) to arrive at the decision to classify Used Rails under 7204 the Tribunal placed reliance on two factors, namely,- (i) DGFT's decision to classify said goods under 7204; and (ii) the importer in that case was an actual user who intended to melt the goods and was apparently not a re-roller. 8. He argued that in this case the importers are traders and hence the concession given to actual user cannot be extended to a trader. Secondly he produced copy of Notification No. 36 (RE-2012)/2009-14 dated 28-02-2013 issued by DGFT. Para 3 of the notification clarifies that the effect of the notification as under: Used Rails, including cut rails of all lengths, will be classified under Chapter 73 of ITC (HS). Import of Used Rails....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 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 excludes articles which can be refashioned into other goods without first being recovered as metal. Thus, it excludes, for example, structural steel work usable after renewal of worn-out parts, worn railway lines which are usable as pitorops or may be converted into other articles by re-rolling; steel files capable of re-use after cleaning and sharpening. 14. He relied on HSN Notes under heading 73.02 reading as under: This heading covers iron or steel railway and tramway track construction material, whether of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ap, which is also separated from the purpose of 'use as waste & scrap for melting' for the reason that the same is not adapted to the said purpose. In second category of cases, Re-fashioning or re-rolling is possible without first being recovered as metal. 19. He also relies on the decision of Hon'ble Supreme Court in the case of Commissioner of Central Excise Vs. Bhushan Steels and Strips Ltd. [2010 (257)ELT 5 (SC)]. Relevant findings are reproduced below. 12. The Tribunal neither accepted the contention of the counsel for the assessee to place the items in question under Heading 72.04 as 'waste and scrap' nor did it accept the contention raised by the Revenue that the disputed items were liable to fall under Headings 72.08, 72.09 and 72.11. Following the judgment of this Court in L.M.L. Ltd. v. CCE the Tribunal held that in view of the definition of 'waste and scrap' given in Chapter 72 of the Tariff Act, the items in dispute would not fall under Heading 72.04 as the same are 'usable as such'; that if iron and steel items were fit for any purpose other than recovery of metal or for use in the manufacture o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....efective argument because the Additional Notes reads as under:- 'heading', in respect of goods, means a description in the list of tariff provisions accompanied by a four digit number and includes all sub-headings of the tariff items , the first four digit of which correspond to that number The note implies that heading numbers specified in the tariff and descriptions in the tariff have to be read together. The note also implies that that a heading includes sub-headings under it.) 21. Further, the Ld A. R argues that classification cannot be based on intended use goods was confirmed in the case of 'Sarvalakshmi' Paper & Board 2000 (126) ELT 935 (Tri.). In the subject case, goods imported were used Rails, its intended use has no significance for classification. 22. As regards value, the value of goods was enhanced as per the value admitted by the importer / Appellant @ US $ 418/MT CIF as against a declared value of US$ 350/MT C&F. 23. Further to above submissions, the findings in O-in-O on confiscation of goods under Sec 111 (d) and (m) of Customs Act, 1962 and subsequent order for redemption fine and penalty were reiterated. 24. We have considered submissions on both sides. T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at the goods were classifiable under heading 72.04 and allowed to be freely imported. Dispute Regarding Rate of duty applicable 26. Issue of classification cannot be proved by admission. If it is decided that these goods cannot be considered to eligible for exemption then only the charge of mis-declaration gets support. 27. For this issue the situation is that if the goods were considered to be 'Melting Scrap of Iron and Steel' falling under chapter 72 basic customs duty was exempted under notification 21/2002-Cus (S. No. 200). Revenue submitted two arguments. First argument was that the goods were suitable for re-rolling and hence it could not be considered as 'Melting Scrap'. Second argument is that HSN notes under heading 72.04 exclude worn railway lines which are usable as pitorops or may be converted into other article by re-rolling. So if HSN notes are taken into account the goods imported could not be classified under heading 72.04. 28. We have considered all the arguments given by the Ld. A. R. against classification under heading 72.04. We do not find anything in the arguments based on Section Notes, Chapter notes and descriptions of heading in the Traiff which is agai....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat when a choice is between 73.02 for Rails and 72.04 for Scrap the more appropriate heading is 72.04. Here the Interpretative Rules for the Tariff are in favour of classification under 72.04 and not under 73.02 because the nature of goods is that of scrap and not of rails. The decision of the Hon Apex Court in the case of TISCO Vs CCE 1995 (75) ELT 3 (SC) is also to the effect that defective rails cannot be considered as rails though this decision is with reference to the old Central Excise Tariff. Though this decision was in the context of old Central Excise Tariff the Tribunal had taken note of this decision while arriving at the decision in Hiduja Foundries. The decision of the Apex Court in the case Bhusan Steel and Strips decided classification of the particular type of waste involved in that case, between different heading in chapter 72 and it is not a decision to choose between a heading under headings in chapter 72 and chapter 73. Here it is to be noted Chapter 72 of the Customs Tariff only have headings for waste and scrap and not chapter 73 which covers various articles of iron and steel. The Tribunal had also noted that the Finance Ministry was originally classifying r....