TaxTMI 
TaxTMI 
2015 (1) TMI 489
X X X X Extracts X X X X
X X X X Extracts X X X X
..../61/08 84,167 +int+ equal penalty [116/117] 29/11/99 4/2/99 & 22/3/99 28/2/2007 25/10/2007 2 C/221/05 11,19,721.88+ equal penalty [65(2)(b)]/[116/117] 7/5/2000 12/4/2001 12/2/2002 4/4/2000 24/4/2000 19/7/2000& 10/5/2000 21/7/2004 Common 11/1/2005 3 C/1182/05 6,72,971+ equal penalty [65(2)(b)] [116/117] 16/6/1999 2/7/1998 26/5/1998 1/2/1999 4/8/1999 31/5/2005 31/5/2005 Total 18,76,859.88 1.1 The fact of the case is that appellant engaged in import of round Billets without payment of custom duty for the manufacture of Seamless tubes and pipes in the private bonde....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t is his submission that in the present case, as regard burning loss, no material exist. Accordingly, no clearance takes place of burning loss from the warehouse for home consumption, therefore no custom duty is required to be paid. He also refers Standard Input output norms (SION) prescribed under Foreign Trade Policy in respect of final product Seamless steel pipes and tubes wherein for 1 kg of seamless pipes and tubes, the raw material i.e. alloy, non alloy, round, bar was allowed to be imported is 1.20 kgs, this evident that in the policy as a whole taking in to account the waste and scrap and also burning loss in every process, input-output norms is fixed. He pleaded reliance on following judgments. (i) Western Me....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hin [2011 (267) E.L.T. 397 (Tri-Bang)]. 4. I have carefully considered the submissions made by both the sides. 5. In all the appeals, the common issue is that whether the burning loss arising in the manufacturing process carried out in the custom bonded warehouse is leviable to custom duty in terms of section 65(2)(b) of Customs Act, 1962. As regard the claim of the appellant regarding the nature of burning loss and quantum thereof there is no dispute. The Raw material for manufacturing of Seamless pipe was imported by the appellant under notification no. 20/99 Cus dated 28/2/99 (Sr. NO. 183), which is reproduced below: In exercise of the powers conferre....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r the purposes of this notification, the rate specified in column (4) or column (5), is ad valorem rate, unless otherwise specified. TABLE S.No. Chapter or heading No. or sub-heading No. Description of goods Standard rate Additional duty rate Condition No. (1) (2) (3) (4) (5) (6) 183. 84 or any other Chapter Parts and raw materials for manufacture of goods to be supplied in connection with the purposes of off-shore oil exploration or exploitation Nil Nil 35 35 If, - (a) the parts and raw materials are used in the manufacture of goods in accordance with the provisions of Section 65 of the Customs Act, 1962 (52 of 1962); and (b) a certifi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e manufacturing process is nothing but the consumption in the manufacture, though physically not available, hence, the same does not get cleared from the warehouse. With this fact, the burning loss will not fall under the clause (b) of Section 65(2). Accordingly, no duty can be charged on nonexistent quantity of burning loss. It is very important to note that in any processing industry, apart from recoverable waste and scrap, smaller part of the burning loss is also generated. Keeping this aspect into mind the legislators consciously made explicit provision for levy of custom duty on the waste and scrap, which is physically available and cleared from the warehouse. However, as regard the burning loss, no such explicit provision was made. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ibunal rendered in the case of STI India (supra) holding that imported goods were not cleared from the warehouse and hence there cannot be any demand of duty on the same is the correct view in law." 6.1 Applying the ratio of the above judgment, it is clear that the quantity of burning loss, since, neither cleared out of the custom bonded warehouse for home consumption nor otherwise disposed of, but factually it got consumed in the manufacturing, no custom duty is leviable on the same. As regard the reliance placed by the Ld. Supdt., (AR) on behalf of Revenue on the judgment of Cochin Shipyard Ltd. (supra), on carefully reading, it is observed that the fact of the said judgment is related to physical waste and scrap generated during manuf....