TaxTMI 
TaxTMI 
2014 (5) TMI 789
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.... PSL Limited C/S/11297/2013 C/11457/2013 C/S/11298/2013 C/11458/2013 C/S/11299/2013 C/11459/2013 C. K. Goel Ashok Punj P. S. Mann KDL/COMMR/62/2012-13, dated 28/2/2013 2 C/S/12305/2013 C/12633/2013 C/S/12306/2013 C/12634/2013 C/S/12307/2013 C/12635/2013 C/S/12308/2013 C/12636/2013 Ratnamani Metals & Tubes Ltd. P. M. Sanghi R. Ravichandran Manoj Sanghvi KDL/COMMR/15/2013-14, dated 30/4/2013 3. C/10991/2013 C/11322/2013 C/11323/2013 C/11324/2013 C/11325/2013 C/11326/2013 C/12406/2013 Welspun Corp. Ltd Arunav Baruah Kirti Sachin Kambli Suresh Darak L. T. Hotwani B. K. Goenka Tata Steel International Limited KDL/COMMR/10/2013-14, dated 19/4/2013 4. C/11460/2013 C/11461/2013 C/11462/2013 C/11463/2013 Man Industries India Limited N. Nagrajan R.C. Mansukhani Abhilesh Ojha KDL/COMMR/64/2013-14, dated 28/2/2013 2. All the four importer appellants M/s. PSL Ltd, ....
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....on the part of the importer appellants to avoid payment of duty by either filing a wrong certificate for goods as Non-alloy steel or by not providing Mill Test Certificates (MTCs) to the assessing officers. After following the principles of natural justice Hot Rolled coil/plates of API 5L PSL2 x70 & x80 grades of steel were classified as other alloy steel under CTH 7225 by Commissioner Kandla under separate orders-in-original confirming demands with respect to goods cleared from Mundra, Kandla & Mumbai Ports by invoking extended period. Penalties under Section 112 (a), Section 114 AA & 114 A of the CA 1962 were also imposed upon the importer appellants & other individuals for which appeals have been filed as detailed in Para-1 above. All the stay applications, Misc. applications, and appeals were fixed for hearing on 20.03.2014 & 21.03.2014. After completion of the hearing all the appellants were directed to file written submissions within two weeks but the same could be filed only by 17.04.2014. 4. Sh. P. Sridharan (Senior Advocate), Sh. Laxmi Menon (Adv) and Sh. Manish Jain (Advocate) appeared for the appellants in Appeal No. C/11456/2013, C/11457/2013, C/11458/2013, C/114591/....
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.... CTH 7208 by the appellant which was also being accepted by the revenue. That the said assessments made on the Bills of Entry have not been challenged by the Revenue at any stage and cannot be re-opened now by way of demand without contesting the original assessments made. 4.1 That the show cause notice issued to the appellants is also without jurisdiction in view of the Apex Court's judgment in the case of CC Vs Sayed Ali & Another [2011 (265) EL5 17 (SC)] wherein it was held that Commissioner of Customs (Prev) was not competent to issue demand show cause notice under section 28 of the Customs Act 1962. That the ratio laid down by Supreme Court in the above case is applicable to the show cause notice issued by DRI. That further insertion of sub-section (11) to section 28, under the Customs (Amendment & Validation) Act 2011 w.e.f. 16.09.2011 also does not give any legality to the show cause notices issued by DRI before 16.09.2011 as the words 'this section' means only with respect to amended new Section -28(11). 4.2. That rate of customs duty on Alloy steel and Non-alloy steel has always remained same except for the period 29.04.2008 to 18.11.2008. During this period effectiv....
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....as per the internet downloads, copies of which are provided. 4.9 That applying the definition of other alloy steel as per the specifications of chapter Note 1 (f) of Chapter 72 for understanding the scope of Non alloy steel and SION C-593,as attempted by Revenue, will render a portion of SION redundant because other alloy steel goods of API grade PSL 2 x 70 will never make the same grade permissible for import. That accordingly applying the interpretation of chapter note 1 (f) of CTA to the API grades will render at least a portion of SION C-593 redundant as it permits to export pipes of any API grade but will not permit import of the some grades. 4.10 That extended period of limitation is not invokable as PSL Ltd. has provided all the MTCs at the time of importation, as is clear from the examination reports. That with respect to B/E No.221283 dt 13.12.2007 MTC was specifically called for where Molybdenum content was 0.08% which accordingly to chapter note 1 (f) will take it to the category of 'other alloy steel' of CTH 7225. That despite this fact known to the Revenue this consignment was still assessed under CTH 7208 as Non-alloy steel. 4.11 That for determining the good....
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....ended period cannot be invoked, as there was a bonafide belief and prevailing practice that these grades are classifiable under CTH 7208. 4.16 That demands of duty by invoking the bond is not sustainable because of the following:- (i) That in Para 45 and 46 of the impugned order dated 28.02.2013, the Commissioner is invoking the bond for the purpose of demanding duty in respect of the imports made under advance authorizations. (ii) That the customs bonds will be invokable only in those cases where case for short levy is non-fulfillment of post-importation conditions and not other-wise. Where the exemption is being denied for non-fulfillment of threshold condition itself, duty demand cannot be made by invoking the bonds but has to be in terms of Section 28 only. (iii) That in the present case, the case of the revenue is that the raw material imported by the Appellant is not covered by the Advance Authorisations in question. This is therefore clearly a case where the benefit of the Notification is being denied at the threshold itself. It is not a case where in the appellants have violated post importation conditions of the Notification. In such a case, Section 28 alone is....
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....nd to have been provided. That for the imports through Mundra only the service of this CHA was used by the appellants and his statement cannot be applied to imports through Kandla. 4.18 That in view of the following case laws when a license was valid and export obligations were fulfilled it was held that no duty can be demanded:- (i) Aditya Birla Ltd. Vs. CC Bangalore [2010 (249) ELT 273 (Tri.- Bang.)] (ii) Hindustan Lever Ltd. Vs. CC (EP) Mumbai [2012 (281) ELT 209 (Tri- Mumbai)] Further, in view of Bombay High Court order in the case of CC (EP) Vs Hindustan Unilever Ltd. [2012 (285) ELT 500 (Bombay)] customs authorities are not justified in raising objection after the fulfillment of export obligations to the satisfaction of the licensing authorities. It was thus emphasized by the appellant that with respect to Advance Authorizations where export obligations have been fulfilled and licenses redeemed, no action can be taken where there is no fraud, willful misstatement or suppression. 4.19 That as per Customs Appraising Manual a classification giv....
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....nder Standard Input Output Norms [C-593 of SION] or under Adhoc Norms cover duty free import of H.R. Coils API Grade 5LPSL2 x70 imported by the Company as per Annexures B, B-1, B-2, B-3 to the Show Cause Notice dated 17/20.02.2012.? (iii) Whether the decision of the Norms Committee is final and binding on the Respondents? (iv) Whether the Company is entitled for exemption in terms of Notification No. 93/ 2004-Cus dated 10.09.2004 and Notification No. 94/ 2004-Cus dated 10.09.2004 in respect of the said goods imported under the 52 advance licences/ authorizations? (v) Whether duty can be demanded by invoking the extended period of limitation in terms of the proviso to Section 28(1) of the Customs Act, 1962. (vi) Whether duty can be demanded from the appellants under the said Notifications? (vii) Whether the said goods are liable for confiscation under Section 111 (m), and Section 111 (o) of the said Act on account of mi....
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....nation. (7) That there is no dispute that importers imported and declared the steel as 'HR Coils API Grade 5L PSL2 x70' in the bills of entry which were subsequently used in the manufacture of finished goods duly exported by the appellants. That as per Para 4.1 of the FTP (2004-09) Advance Authorizations are issued to import of inputs required for manufacture of export goods. Further, it was argued that para 4.1.3 of FTP provides that Advance Authorizations are issued to allow duty-free imports of inputs which are physically incorporated in the export products. That it is an admitted fact that 'HR Coils API Grade 5L PSL2 x70' is not only required for export production but also is physically incorporated in the manufacture of welded pipes duly exported by the appellants and foreign exchange against the said exports made has been realized. (8) That at this stage, it is relevant and important to examine the eligibility of the appellant to import any type of steel - alloy or non-alloy - under Advance Authorization. There are two methods by which Advance Authorizations can be applied for and granted. Para 4.4 of the Handbook of Procedure 2004-09 provides that where Standard Input-....
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....stoms Tariff Acts. It is settled law, as held in the following amongst other cases, that any interpretation which furthers the object and purpose of the law, must be preferred over the one which defeats the same: (a) Oblum Electrical Industries Pvt. Ltd. Vs Collector [1997 (94) ELT 449] (b) Commissioner Vs. Rupa & Company [2004 (170) ELT 129] That without prejudice to the above, the use of alternate inputs is permissible under Duty Exemption/Remission Schemes covered by Chapter 4 of FTP. Advance Authorizations is part of Chapter 4 of FTP. Appellant placed reliance on Policy Circular No. 30 (RE-05)/2004-2009 dated 10.10.2005 and Policy Circular No. 72 (RE-08)/2004-2009 dated 24.03.2009 in both of which, the DGFT has clarified that alternative inputs are permissible for import. It was argued that assuming whilst denying that the said goods imported by the company are alloy steel, the fact that the Licenses/Advance Authorizations bear the description 'non-alloy steel' does not prevent the Company from importing alloy steel as alternate inputs so long as wh....
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....etition and the above interim order shall not come in the way of the respondent authority considering the petitioners request for examining the grade of material imported and exported which obviously means that alloy and non-alloy are not to be treated as grades. That the above mentioned Orders of the Honorable Bombay High Court and of the Additional DGFT, were tendered at the time of hearing and it is significant to note that the Honorable Bombay High Court has also in the Order dated 20.11.2013 put the issue beyond doubt that reference to the word 'grade' (which word is appearing in SION as well as the decision of the NC) does not refer to alloy or non-alloy. Obviously, the word 'Grade' referred to in decision of Norms Committee means 'API or ASTM Grade' since the relevant entries C-593 in the SION talks about API or ASTM Grade. The appellant has also declared the Grade in the Bills of Entry and Shipping Bills as API grade. Pursuant to the Order dated 20.11.2013 of the Honorable Bombay High Court, by letter dated 27.02.2014, the office of the Joint DGFT, Vadodara has confirmed that the Company has exported goods of the same grade as imported by it under the Advance Authorizat....
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....ical composition manufactured by domestic industries have been treated as non-alloy steel of CETH 7208. (13) That MTCs are required to be seen by assessing officers where consignments are declared as prime or defective and, therefore, in order to ascertain the correctness of such description/declaration it is for the proper officer to call for the MTCs from the appellants for arriving at the correct assessments. This is evident from standing order No. 7837 dated 05.02.2004 issued by Commissioner of Customs (Imports) Ballard Estate, Mumbai. Similar standing orders/public notices have been issued by other Custom Houses as well. The Proper Officer in the present case did not call for MTCs. That apart from that it is a matter of record that contemporary imports of other importers, where the MTCs were available before the assessing officers, the steel was still assessed and classified under CTH 7208. That this is a matter of record and is evident in the case records of M/s Ratnamani Metals, M/s PSL Limited and M/s Man Industries which were heard together. The examination orders and the examination reports in the case of contemporary imports show that despite verifying the MTCs Proper....
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.... 30 days from the expiry of the specified export obligation period to the satisfaction of the Government (iv) in the event of failure to fulfill full or part of the export obligation as specified in the said notification and the Authorization, I/We, herein undertake to pat the customs duty but, for the exemption and also interest @ 15% per annum, thereon forthwith from the date of payment of duty and without any demur, to the Government That as all the export obligations for the majority of the advance authorizations have been fulfilled and in majority of the cases, bonds have also been cancelled, therefore, no recovery can be made by enforcing the customs bonds executed by the importers at the time of clearance of goods availing exemption notifications. (17) That as per Bombay High Court's order in the case of Repro India Ltd Vs. UOI [2009 (235) ELT 614] export goods cannot be burdened with taxes as the intention of the government during the relevant time was to contain inflation in steel products and also to have 'zero-rated exports'. (18) On the issue of imposition of penalties on the individuals and confiscation of im....
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.... is also reconfirmed in para 8 of the said order dated 09.07.2013 by the Revenue. There is, therefore, no violation of any post clearance condition and hence, provision of Section 111(o) has been wrongly invoked. As far as individual officers of the Company are concerned, the reasons for imposition of penalty on them are totally misconceived. The Company is professionally managed where no individual has any personal gain. All the officers have duly discharged their duties without intent to evade payment of customs duty or violated the provisions of the said Act or conditions of the Advance Authorizations. The work of the Company is divided into departments, such as marketing and sales which looks for exports, supply and procurement of raw materials and customs clearance and delivery up to the factory. The departments concerned with the export orders and supply chain, which applies to persons like Lal Hotwani, Arunav Barua and Kirti Kamble do not deal with the customs clearances and have not made any declaration which have been alleged to have rendered the goods liable for confiscation under Section 111(m) of the said Act. So also the customs clearance department which involves pers....
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....ses will not be covered under Notf. No. 31 dated 01.08.2013 (as amended), irrespective of whether the concerned authorization (AA/DFIA) has been redeemed or not. (4) That the appellant has submitted the required MTCs at the time of clearance of goods which is evident from the examination reports submitted by the contemporary importers that there is no suppression/misstatement of facts. (5) That in spite of the MTCs produced by the appellants before the Assessing Officer, the classification of the imported steel was still made under CTH 7208. (6) That in the event of conflict between the documentary evidence (in the form of examination reports) and statement dated 16.03.2012 of CHA, the former shall prevail as per the following case laws: (a) R.P.Industries vs. Collector [1996 (82) ELT 129 (Tribunal)] (b) Philip Fernandes vs. Commis....
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....Dayaram Agarwal vs. Commissioner of Central Excise [2007 (218) ELT 33 (Tri-Ahmd)] (iii) Ld. Commissioner vs. Praveen Ahuja [2008 (226) ELT A103 (Guj.)] (iv) Praveen Ahuja vs. Commissioner of Customs [2002 (149) ELT 356 (Tri.-Del.)] 8. Shri J.C. Patel (Advocate) appearing on behalf of appellant Shri Tamal Gupta borrowed the arguments made by the other Senior Advocate and emphasized that no penalty is attracted as Shri Tamal Gupta has not signed any document furnished before the Customs Authorities. 9. Shri A. Sheerazi (Advocate) and Shri Shri Anay Banhatti (Advocate) appearing on behalf of the Tata Steel Industries Limited (Appeal No. C/12406/2013) made the following arguments during the course of hearing as well as through written submissions:- (a) That appellant was only required to co-ordinate between appellant Welspun Corporation Limited and the local office of Corus entity in the country in which the manufacturing mill or trader was located. &nb....
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....fit of customs exemption notifications by willfully mis-declaring the description and the classification of imported goods. That all the importer appellants had imported alloy steel of CTH 7225 as per Chapter note 1(f) of Chapter 72 of the Customs Tariff. (b) That for deciding the classification of the steel items imported by the appellants Mill Test Certificates (MTCs) were required to be provided to the customs authorities which was not provided except one case of M/s. PSL and one case of M/s. Man Industries India Limited. That only during investigation MTC's were obtained from the importer appellants and on examination of MTCs, it was found that Steels imported had the characteristics of Alloy Steel as per Chapter Note 1 (f) of Chapter 72 of the Customs Tariff Act as 'niobium and molybdenum' percentages were within the specified ranges of Chapter note 1(f). That argument of Welspun Corporation Limited with respect to sub-heading note 1(f) of Chapter Note 72 of the Customs Tariff Act is misplaced in as much as the proportion of lead as 0.1% or more when read with Chapter note 1(f) will mean that for non-alloy steel ....
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....nagement) had, inter-alia- stated that HR Steel Coils API 5L PSL2 X70 Grade imported from TISCO, China through M/s. Corus International were 'alloy steels' against Advance License authorized for import of non-Alloy HR Coils/ Plates, he replied that though he was aware that the said goods were alloy steels, he never conveyed the same down to the officers under him. (iii) In his statement dated 13.5.2010, Shri Balkrishna Goenka, Chairman and Managing Director of M/s. Welspun had, inter-alia, stated that the imported API grade steel coils/plates were alloy steels only because the same were needed for manufacture of API grade pipes for gas and petroleum industry. During recording of his statement, he was shown certain certificates claimed to have been issued by M/s. TISCO, China and obtained through M/s. Corus International certifying that the said API 5L PSL2 X 70 grade of steel was non-alloy steel. On being asked as to why these false certificates were submitted to Customs when the goods imported were actually alloy steel, he stated that the same had been done in order to fulfill the Advance License obligations and admitted th....
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....ficates, Shri Tamal Gupta stated that he had once confronted Shri Baruah with the question as to why they required a certificate of 'Non-Alloy Steel' when the product was Alloy Steel. To that Shri Baruah had replied that it was required for their customer and it was none of his business to ask. (vii) In his statement dated 12.5.2010, Shri Ketan Shah, Branch Manager of CHA firm M/s. Thakker Clearing Agency Pvt. Limited, Gandhidham had, inter-alia, stated that he never submitted MTCs with import documents to Customs department as he did not receive the same from the importer. He clarified that WCL used to forward a certificate supposedly issued by the manufacturer of the imported steel certifying that the goods were nothing but 'Non-Alloy' steels and that the said certificates were given to him by Shri Deepak Thokle of WCL. When he was shown the Country of Origin Certificates in respect of certain Bills of Entry wherein the HAS Code was mentioned as 72253000, he stated that they never thought of classifying the goods under CTH 72253000 as per Country of Origin Certificate as the importer had asked them to present the Bills of Entry ....
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....mpany in his statement dated 13.04.2012 had, inter-alia, stated that his family is the promoter of the Company and that Shri Manoj Sanghvi, his son is a Business Head of the Company. He is answerable for all these activities and he reports to him (P.M. Sanghvi). (e) Statement of Officials of Man Industries (xi) Shri N. Nagrajan, the then General Manager (Operation) of the firm in his statements dated 01.12.2009 and 21.12.2009 had, inter-alia, stated that as per Chapter note 1(f) of Chapter 72 of the Customs Tariff, the goods imported vide bills of entry number 125570 dated 27.6.2008, 126772 dated 05.08.2009 and 124259 dated 16.05.2008 were 'Alloy Steel' and there was mistake to take exemption which was available only to 'Non-Alloy Steel'. Though he was not with the company during the period 29.04.2008 to 18.11.2008, he was with the company before and after the said period when the planned duty evasion took place. He was well aware that under the SION norms C-593, only 'Non-Alloy Steel' was permitted to be imported, despite that he used the Advance license for import of Alloy Steel. (xii) ....
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....ll date, paid duty of Rs. 25,50,80,984/- on the imports of 'Alloy Steel' during the period 29.04.2008 to 18.11.2008. On being asked as to why and how Alloy steel was cleared using the Advance License permitting 'Non Alloy Steel', he merely stated that he never went into such details and carried on the practice followed since long. (xvi) Shri C.K. Goel, the then resident Director, in his statement dated 21.06.2010 had, inter-alia, stated that after going through the Chapter Note 1(f) of Chapter 72 of the Customs Tariff Act, 1975 and presence of percentage of elements in the MTCs, the H R Coils merited to be classified as Alloy steel only and admitted that his Exim Department failed to notice that exemption of the Notification No. 21/2002 (Sr. No. 190C) was not available on these bills of entries. (xvii) Shri Ashok Punj, Managing Director of PSL Limited in his statement dated 11.08.2010 had, inter-alia, stated that his company had executed the VAJAIPUR DADRI BAWANA PIPELINE project of GAIL (India) Limited for which they imported API X70 PSL2 5L grade steel coils/ plates. He was sho....
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....LT 356 (5)] and Commissioner of Customs Calcutta vs. G.C. Jain [2001 (269) ELT 307 (SC)] are not applicable to the facts and circumstances of the present appeals. (g) That contentions of the appellants that amendment of SION C-593 under DGFT Public Notice No. 51 (RE-2010)/2009-2014 dated 02.6.2011 is retrospective is not correct by virtue of the express language of this public notice. (h) That the clarification dated 06.6.2012 given by the Norms Committee decision has no relevance as the power to issue clarification is vested only in the DGFT under Para 2.3 of the FTP as follows: 2.3. The decision of DGFT shall be final and binding on all the matters relating to interpretation of Policy or Provisions in HBP v1, HBP v2 are classification of any import/ export policy in the ITC (HAS). (i) That norms committee has not dwelt upon the aspect of mis-declaration and misrepresentation on the part of the appellant at the time of import and that observation of Norms Committee, which is subordinate to the DGFT, will have no consequence. It was also his case that as per affidavit of Shri Daya Shankar, Dy DGFT on behalf of....
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....effect the investigation or as the case may be, enquiries to see whether there was any evasion of the customs duty. Therefore, the discharge of the export obligation per se cannot put an end to the whole story. (k) That it was the common submission of the appellants that the demand of duty is barred by limitation. It was contended that they had not suppressed any fact from the department. The goods imported were described in the Bills of Entry as per the import invoice. The goods were allowed clearance by the Customs authorities after necessary examination. Therefore, in the facts of this case, the extended period of limitation under Section 28 of the Customs Act, 1962 is not available to the department. This contention cannot be accepted for reasons more than one. It is established on record that they had imported 'Alloy Steel' in the guise of 'Non-Alloy Steel'. These are two different products even as per the DGFT. By giving wrong description of the goods, they have availed the benefit of exemption under the relevant notifications viz. Notification Nos. 93/2004-Cus and 94/2004-Cus both dated 10.09.2004. Except in one case of PSL Limited and one case of Man Industries, the appe....
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....r Chapter Heading 7225 which is for other alloy steel. (iii) That it was contended by the learned Counsel for Welspun that they have always declared the product as imported. In today's World, the specification of the product is available very easily through internet and anybody can see the specification and find out whether it is alloy steel or non-alloy steel. He also referred to the specification of API X 70 grade steel stating that the said specification always mentions the maximum percentage of the elements required to be present in the said grade of steel. Hence non-submission of MTCs cannot be regarded as willful suppression of fact. (iv) That in this connection, attention may be drawn to the statement submitted by the learned Counsel of Welspun at the time of hearing showing the chemical composition of API specification. Though the source of the said statement had not been mentioned, the maximum weight in percentage terms of each element has been prescribed. The percentage of Molybdenum has been shown as 0.5% (Maximum). The word 'maximum' clarifies that the presence of the said element could be up to 0.5%. The customs Tariff prescribes that percentage of the said eleme....
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....ision of the Hon'ble Tribunal in the case of Stylo Footwear vs. Commissioner of Customs, Coimbatore - [1995 (80) ELT 157 (Tri.)] holding that claiming classification of the goods under a particular Heading or benefit of exemptions in the Bills of Entry does not amount to mis-declaration. Hence the provisions of Section 111(m) of the Customs Act, 1962 are not applicable. Consequently, the goods cannot be confiscated under the said provisions on the charge of mis-declarartion of goods. (m) It is submitted that the appellants were well aware of the fact that the gods imported were 'Alloy Steel' and not 'Non-Alloy Steel' for which they obtained Advance Authorisation from the DGFT. Though they knew that exemption will not be available to Alloy Steel, they deliberately indicated classification under Chapter Heading 7208 meant for Non-Alloy Steel. In some of the Country of Origin Certificates, the classification of the goods was shown as 72253000, but they ignored the same and classified the goods under Heading 7208. It was a case of deliberate attempt to conceal the fact. Had it not been so, they would not have suppressed the Mill Test Certificates which are essential to ascertain....
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....ector General Foreign Trade, Mumbai and Joint DGFT Ahmedabad against the following Advance Authorizations issued to the present appellants M/s Man Industries (India) Limited, M/s PSL Ltd., M/s Ratnamani Metals & Tubes Ltd. and M/s Welspun Corpn. Limited: Welspun Corporation Limited Ratnamani Metals and Tubes Ltd. Man Industries (India) Ltd. PSL Ltd. S. No. Advance Authorization No S. No. Advance Authorization No. S. No. Advance Authorization No. S. No Advance Authorization No. 1. 3410014136 27. 3410019072 1. 0810059887 1. 031042737 1. 0310438433 2. 3410014534 28. 3410019073 2. 0810070806 2. 0310435447 2. 0310439802 3. 3410014623 28. 3410019074 3. 0810067839 3. 0310435548 3. 0310439800 4. 3410016019 30. 3410019124 4. 0810068758 4. 0310436872 4. 0310441546 5. 3410016020 31. 3410019159 5. 081007387 5. 0310447253 5. 0310443820 6. 0310387110 32. 3410019160 6. 0810070762 6. 03104453941 6. 0310541220 7. 3410016353 33. 0310450....
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....ther DGFT and its subordinate officers have powers under the Foreign Trade Policy to amend/modify the Advance Authorizations retrospectively when export obligations with respect to majority of advance Authorizations have been fulfilled and accordingly Licences have been redeemed & customs bond also cancelled? (v) Whether penalties under the Customs Act, 1962 are imposable upon the appellants in these proceedings? 13. On the issue of imported grades, and their classification, as outlined in Para 12(i) above, the Revenue is of the argument that these grades imported were 'Other alloy steels' falling under CTH 7225 as per Chapter Note 1(f) to Chapter 72 of the Customs Tariff Act, 1985. On the other hand, all importer appellants are of the view that before the period of present dispute also these grades, imported by the importers, were being imported and classified under Customs Tariff Head 7208 and no objection was raised by the Revenue at the time of their clearances. Before we deliberate this issue it is relevant to glance through Chapter Note 1(f) to Chapter 72 of the Customs Tariff Act reproduced below: &n....
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....ages in the Iron obtained from Iron Ore. Any steel made out of Iron obtained from Iron Ore will thus contain these elements (in both alloy steel and non alloy steel) and if the percentage limits of all these elements are opined to be essential in an alloy steel as per Chapter Note 1(f) proportion, then there will be no steel for classification under 'Alloy steel' & all steels will be 'Non alloy steel'. By following that interpretation a 'Stainless Steel', defined in Chapter Note 1(f) of Chapter 72, will also not be an alloy steel because it will have other elements also. Such alloying elements will thus be specifically required to be added to a steel to get required properties in an 'alloy steel' in addition to other metallic elements naturally present in Iron Ore. Accordingly we hold that if any one of the elements specified in Chapter Note 1(f) to Chapter 72 in a steel, imported by importer appellants, is within the specified limit mentioned therein then that steel will be considered as 'Other alloy steel'. When the grades imported by the importer appellants had Niobium (Nb) and Molybdenum (Mo) elements as per the limits specified in Chapter Note 1(f), theoretically those grades ....
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.... From the above comparative data it is evident that percentage of Nb & Mo in PSL2x70 & x80 grades could be lower than the limits Specified in Chapter Note 1 (f) of Chapter 72 of CTA or these could be more than the minimum limits specified in Chapter Note 1(f) which is not known to the appellants at the time of placing orders. Therefore, in API PSL2 x70 & x80 grades of steel internationally, both non alloy steel of CTH 7208 & Other alloy steel of CTH 7225 could exist. This distinction has neither been made nor clarified in the Export Item under SION C-593. As per the Foreign Trade Policy in Para 4.1.3 of Foreign Trade Policy 2009-14 what is exported is required to be allowed as an import item. There was thus a practice to allow API PSL-2 x 70 & x80 grades to be cleared duty free under Advance Authorisation as per SION - 593, whether the same were Non alloy steel or Other alloy steel by treating them as goods of CTH 7208, as if correct classification of these grades was not at all relevant for the purpose of allowing exemption from Customs duty when imported against such advance authorizations. Necessary amendment was brought into effect from 02.06.2011 by the DGFT to SION C-593. B....
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....ering the petitioners request for examining the grade of material imported and exported which obviously means that alloy and non-alloy, are not be treated as grades. 14.2 It is also relevant to observe from the case records that there were a total of 52 Advance Authorizations issued to M/s Welspun Corpn Ltd. for which Norms Commission Committee decision dated 02/05/2012 was mentioned in the Honorable High Court Order. Out of these 52 Advance Authorizations, 16 pertained to the office of the Additional DGFT, Mumbai and 36 pertained to Joint DGFT, Vadodara. All 36 Advance Authorizations pertaining to Joint DGFT Vadodara have been verified and found to be correct for accepting fulfillment of the export obligations as per Norms Committee decision dated 02/05/2012. From the above facts available on records technically the Advance Authorizations produced before the Customs assessing officers were not valid for the import of 'Other alloy steel' at the time of importation but looking to the provisions of Foreign Trade Policy and the subsequent acts of the offices of DGFT, necessary curative action was taken in favour of some of the importer appellants by the appropriate authorities in ....
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.... can also not be attributed as the imported steel was used by the appellants in the manufacture of steel pipes which have been duly exported containing the grades of steel imported. In this regard reliance placed by importers on Para 3 of the Customs Appraising Manual at page 20 which is relevant and reproduced below: 3. Declaration of tariff classification. The Bill of Entry can be filed by an importer himself or he can have it processed through his Clearing Agent who is authorized and holds a Custom House Agent's Licence. Whereas the Bill of Entry as mentioned above contains various columns relating to the goods, their value and their assessment under Customs Tariff as also Central Excise Tariff (for countervailing duty), it is not obligatory under the Customs Act that while presenting to Customs the importer or his Clearing Agent must indicate in the Bill of Entry the correct Customs Tariff Heading or customs duties or c.v. duties leviable or total duty leviable on the goods sought for clearance against the Bill of Entry. However, an indication of Customs Tariff Heading and Exemption Notification, if any, which t....
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....n the ground that there was a separate exemption notification in respect of jumbo rolls for Cinematographic Films. While dealing with such a claim in respect of payment of customs duty we have already observed that the declaration was in the nature of a claim made on the basis of the belief entertained by the appellant and therefore, cannot be said to be a mis-declaration as contemplated by Section 111(m) of the Customs Act. As the appellant had given full and correct particulars as regards the nature and size of the goods, it is difficult to believe that it had referred to the wrong exemption notification with any dishonest intention of evading proper payment of countervailing duty. 23. We, therefore, hold that the appellant had not mis-declared the imported goods either by making a wrong declaration as regards the classification of the goods or by claiming benefit of the exemption notifications which have been found not applicable to the imported goods. We are also of the view that the declarations in the Bill of Entry were not made with any dishonest intention of evading payment of customs and countervailing duty. 15.2 In the light of above law laid down by the Apex Court ....
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....fore us which indicate that during examination of the consignments of these grades MTCs were called by the Assessing Officers. Even after examination of these MTCs Assessing Officers have not questioned the classification of the imported steel grades under CTH 7208 or also did not raise any query that the grades imported are not covered by the Advance Authorizations as per SION C-593. On this issue a dissenting view has also been expressed by a CESTAT Member in the case of Tata Motors Ltd Vs. Commissioner of Customs (Imports), Mumbai (Order No. M/ 948-949/ 13/ CSTB/ C.I dated 19/03/2013- 17/06/2013) that a steel can be considered only as 'Other alloy steel' if all the elements present in a steel are more than the percentage ranges specified under Chapter Note 1(f) of Chapter 72 of the CTA. Under these circumstances, there could be a bona fide view harboured by the importers that API 5L x70 PSL 2 grade is classifiable under CTH 7208. In view of the above no malafide can be attributed on the part of the appellants and it cannot be held that imported goods were liable to confiscation or the importer appellants and other appellants were liable to penal action under the Customs Act 1962....
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....ct to majority of them have already been fulfilled and Advance Authorization/ Customs Bonds also redeemed/ cancelled. It is the case of the importer appellants that Norms Committee under the DGFT is the Apex Authority for issue/ amendment of the Advance Authorizations and formulation of new SION. For further discussion on this issue it will be relevant to see the provisions of Foreign Trade Policy contained in Para 2.3, 2.5, 4.1.3, 4.1.4 and corresponding provisions contained in Para 4.4, 4.4.2, 4.7 and 4.8 of Handbook of Procedures, which are reproduced below: Relevant Paras of FOREIGN TRADE POLICY 2009-2014 2.3 Interpretation of Policy If any question or doubt arises in respect of any provision contained in FTP, or classification of any item in ITC (HS) or HBP v-1 or HBP v2 or Schedule of DEPB Rates (including content, scope or issue of authorization there under) said question or doubt shall be referred to DGFT whose decision thereon shall be final and binding. 2.5 DGFT may pass such orders or grant such relaxation or relief, as he may deem fit and proper, on grounds of genuine hardship and adverse impact on trade. DGFT may, in public interest, exempt any person or....
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....datory authority for SION. DGFT may notify such norms. 4.7 Self Declared Authorisations where SION does not exist RA may also issue Advance Authorisations, where SION are not fixed, based on self declaration and an undertaking by applicant for a final adjustment as per Adhoc/ SION fixed by NC. 4.8 Standardisation of Adhoc Norms For standardisation of norms, an application may be made by manufacturer exporter or merchant exporter tied to supporting manufacturer, duly filled in with complete data. Such applications shall be made to NC in ANF 4B. 4.9 Modification of SION An application for modification of existing SION may be filed before the NC by manufacturer exporter or merchant exporter, tied to supporting manufacturers, in Form ANF 4B. 4.10.1 Revision of SION by NC NC may identify SIONs which in its opinion are required to be reviewed. Exporters are required to submit revised data in ANF 4B for such revision. It is mandatory for industry/ exporter(s) to provide production and consumption data etc. as may be required by DGFT/ EPC for revision of SION. Otherwise, applicant shall not be allowed to take benefit of Advance Authorisation scheme. 17.1 From th....
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....AM 13/ Enf. Wing/ respectively and pertaining to M/s PSL Ltd. and M/s Man Industries India Ltd. respectively. A uniform view on the issue is required to be taken by the appropriate authority under Foreign Trade Policy provisions whether Advance Authorizations issued to the importers in these proceedings can be cancelled ab-initio or can be modified/ amended ab-initio. In case it is held by the appropriate Appellate Authorities under the Foreign Trade Policy that Advance Authorizations issued to the importer appellants deserve to be cancelled ab-initio then in that situation revenue also will be empowered to recover the duty amounts and interest according to the Customs Bonds executed by the importer appellants and demands will not be time barred as held by the adjudicating authority. It has been laid by Hon'ble Supreme Court in Para 17 of the judgment in the case of Atul Commodities Pvt. Limited vs. CC Cochin [2009 (235) ELT 385 (S.C.)] that if any doubt or question arises in respect of interpretation of Foreign Trade Policy or in the matter of classification of any item of the ITC (HS) or in the Handbook, the said question or doubt shall be referred to DGFT, whose decision thereon....
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....mprove the Revenues case or plight. The Revenues allegation was that the appellants had violated conditions (vii) and (viii) of Notification 30/97 and similar conditions of Notification 51/2000. But, in this regard, the DGFTs order has taken the wind out of the Revenue's sails. In the result, the charge of breach of conditions of the Customs Notifications does not survive. An identical view was held by this Tribunal in the case of Bharath Steel Corporation v. Commissioner of Customs, Chennai, and Ashok Enterprises v. Commissioner of Customs, Chennai, cited supra. A similar issue came up for consideration before this Tribunal in the case of Kukar Sons (Indo-French) Exports Ltd. v. Commissioner of Customs, Jaipur. In that case the Revenue alleged violation of conditions of Notification No. 204/92-Cus. by the appellants as they failed to realise the sale proceeds of exported goods. The DGFT, which is the competent authority in the matter of advance licences, had already redeemed the bank guarantee and legal undertaking furnished by the appellants after considering the fulfilment of export obligation by the assessee. This Tribunal held as follows : &nb....
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.... the classification or suppress any information with intention to evade duty, from the Assessing Officers to claim an ineligible exemption when there was a longstanding practice of classifying the same grades of steel under CTH 7208. In several imports even after examining the MTCs produced/obtained from the importer appellants also Assessing Officers have not affected any change in the classification of steel or raised any objection that Advance Authorization does not cover the imported grades. The audit checks available with the Revenue cannot be considered to be insufficient to hold that non payment of hundred of crores worth of duty liability will not be subjected to any verification even after the clearances are made under a self-removal procedure. No action seems to have been proposed against the Assessing Officers who have classified the imported grades under CTH 7208 even where the MTCs were either produced by the appellants or were called for from the appellants. Further, from the plain language of Chapter Note 1(f) of Chapter 72 of the CTA it may be very convenient to say that imported steel grades in these proceedings were 'Other alloy steel' as even admitted by Shri B.K....