TaxTMI 
TaxTMI 
2015 (11) TMI 446
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.... Central Government issued Circular No.42/2011-Cus(NT), dt.22.09.2011 vide File No.609/82/2011-DBK, and clarified corresponding tariff item/chapter of Drawback Schedule and DEPB Scheme. It is mentioned in the list of the said circular that the corresponding sub-heading for the goods covered under Sr.No.68B of the DEPB scheme is tariff item 732616 of the Drawback schedule. From 01.10.2011, the Appellants manufactured and exported Alloy Steel Forgings (Machined) for use rings for Bearings/Gear Blanks and claimed Drawback benefit under tariff item No.732616 of the Drawback schedule. The competent authority sanctioned and paid drawback as per the claim of the Appellant. On 01.10.2012, the Central Excise Officers of Directorate General of Central Excise Intelligence (DGCEI) initiated summons proceedings for investigation that the Appellants were misclassifying their product during export so as to claim higher rate of Drawback. 2. A show cause notice dt.06.08.2013 was issued, proposing to classify the impugned goods machined rings used for Bearings, manufactured and exported by them under sub-heading No.84829900 of the schedule to the Customs Tariff Act, 1975 (CTA) and under tariff it....
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....he impugned items under Code No.428 as Bearing Races of the DEPB schedule. After thorough investigation, it was decided that as the impugned goods were unfinished form, not fit for ready to use and therefore, it was covered under Item No.68B of DEPB scheme. The Board also clarified that the product under 68B of the DEPB scheme would cover under tariff item No.732616 of the DEPB scheme. The said circular is binding on the Department as held by the Hon ble Supreme Court in case of Ranadey Micronutrients Vs Collector of Central Excise - 1996 (87) ELT 19 (SC). He also submits that the strict interpretation at par with Customs tariff is not required while deciding the export incentive scheme as held by the Tribunal in the following cases:- i) Imperial Thread Co. Vs CC (EP), Mumbai 2002 (139) ELT 221 (Tri-Mumbai) ii) Amiya Commerce & Construction Co. P. Ltd Vs CC (Prev.), West Bengal, Kolkata 2007 (217) ELT 154 (Tri-Kolkata) 4. The learned Advocate further submits that the goods were exported in observance of the procedure as prescribed in Rules 1995. The Customs Officers, examined the documents mainly Central Excise invoices, ARE-1, and shipping bills. As per the pr....
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....edule and the items in questions would be classified under Chapter 84 and 87 of the said Drawback schedule. It is stated that Rule 16 of Rules 1995 is not subject to the provisions of Section 28 of the Customs Act, 1962 as held by the Tribunal in the case of Sun Exports Vs CC(Exp.), Nhava Sheva - 2008 (228) ELT 545 (Tri-Mumbai). He also submitted written submissions with case laws. He also relied upon the following decisions of Hon'ble High Court:- i) Pratibha Syntex Ltd Vs UoI 2013 (287) ELT 290 (Guj) ii) CPS Textiles (P) Ltd Vs Joint Secretary, M.F.(D.R.) 2010 (255) ELT 228 (Mad.) 6. After hearing both the sides and on perusal of the records, we find that the dispute relates to the classification of the impugned goods manufactured and exported by the Appellants would be classifiable under Tariff Item 732616 of the Drawback Schedule as claimed by the Appellant or Tariff Item 848221 and 8708099 of Drawback Schedule as held by he Adjudicating authority. For the purpose of proper appreciation of the case, we reproduce below the relevant portion of the DEPB, Drawback schedule and CETA/CTA as under:- (A) DEPB Schedule (Prior to 01.10.2011) S.No. DEPB S....
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....mpugned export goods are not just forged articles but further worked. It has been observed that the processes carried out at customer s end, a new product does not emerge. These processes are carried out simply for the purpose that they fit into the specific need and requirements of the customers. These processes are not the processes alien to the manufacture of Bearing Rings/Gear Blanks. It has been held that the Appellant was manufacturing and exporting the goods after machining of their product machined Bearing ring or Gear blank. It has been further held that the impugned product machine rings/blank were manufactured and exported by the Appellant, were clearly identifiable as parts of bearing and blank. It is because of these facts that the Appellants themselves have classified the impugned product under Chapter 84 and 87 of CETA in the Central Excise invoices. 8. The learned Advocate submitted that the Appellants were manufacturing and exporting the parts of machinery in finished form classifying under Chapter 84. They claimed drawback benefit under the respective headings of the drawback schedule. In the case of manufacture and export of the unfinished articles of iron and....
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....processing like heat treatment, grinding, lapping, assembly, etc for making complete bearing. The said certificate dt.26.07.2000 is reproduced below:- "M/s Rolex Industries, behind Glowtech Steel Pvt.Ltd, Gondal Road, Village: Kotharia, Rajkot is registered with this office manufacturer for forged & machined rings for producing bearing races from alloy steel materials. On going through the records and information supplied by M/s Rolex Industries, Rajkot certified that export forged and machined condition rings required further process of heat treatment to impart required hardness to bearing races, further process of finishing by grinding and lapping on special machineries, so that bearing races can be assembled as to prepare the bearing complete. Forged and machined rings being exported by the unit, for producing bearing races will require further process at buyer end to make machined rings suitable for bearing assembly. It is also certified that forged and machined rings manufactured and being exported by the unit cannot be assembled or used for producing bearings. All rings require further process like heat treatment, grinding, lapping, assembly etc to ....
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....ly cups & cones, i.e. green rings received from the vendors are quality checked for visual damage etc, are sent for heat treatment in furnace at a relatively high temperature, then sent to quench press for sizing and washed. The heat treated, washed materials are sent for tempering operation in tempering furnace for about couple of hours and taken out and sent to metallurgical lab for testing and certification for grinding operations, in 4 stages. The face of cone and cups materials cleared for grinding operation, are ground in a Face grinding machine; the outer diameter of cups and cones are ground in the Outer dia grinding machine; the rib of the cone are ground with Rib grinding machine; and the inner dia meter of the cups and cones are ground in the Inner grinding machines, the operations necessitating for the required parameters of sizes of Timken USA standards. During the course of each operation the materials are sent for quality test and inspected with high precession lab as well as physical, visual tests. Then the QC approved materials are sent for laser marking in the Laser marking machine, sent for de-magnetization, and the resultant product ma....
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....ing machined, supplied by the vendors require further operations, such as hardening, quenching, tempering, face/id/od/grinding, honing, laser marking, which are done at Timken making it as bearing race fit for use as part of roller bearing and hence, the classification of alloy steel forging machined under product code 61/68B appears more appropriate rather than under product code 61/428 or 61/530A, WHICH IS MORE SPECIFIC inasmuch as the alloy steel forging machined are neither rough or attained the character bearing race or machine part fit for ready use. Regarding the classification of the components received, namely alloy steel rings machined and carburized, the appropriate classification appears under CT 7325." 12. The Appellant also submitted the certificates of the customers in the present appeal to substantiate that the impugned exported goods were further processed to produce the bearing races in the customers premises. In this context, the certificate dt.10.05.2013 of M/s SKF is reproduced below. "This is to inform that, We, SKF India Ltd, Chinchwad, Pune, procure Alloy Steel Forgings (Machined) rings from ROLEX RINGS PRIVATE LIMITED, RAJKOT INDIA. ....
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....product is finished nature are without any substance. 15. The learned Authorised Representative strongly relied upon The Rules for the Interpretation of the First Schedule in the Customs Tariff Act. He submitted that the impugned product had attained essential character of the finished product under Chapter 84 or 87 of the tariff. On perusal of the certificates of various authorities, it is evident that the impugned product cannot be treated as Bearing Rings or Gear Blank and therefore, it would cover in the respective headings under Chapter 73 of Drawback Schedule. 16. The other aspect of this matter is that after abolition of export incentive of DEPB scheme, CBEC issued a Circular No.42/2011-Cus, dt.22.09.2011, vide F.No.609/82/2011-DBK, for taking into consideration that the items under DEPB, were included in the Drawback Schedule. It has been clarified as under:- "3. The drawback schedule this year incorporates items which were hitherto under the DEPB scheme. Thus, the total number of items in the drawback schedule now number approximately 4000. While incorporating these DEPB items in the Drawback schedule, care has been taken to classify them at the appropriate ....
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....eproduced below:- "14. We reject the submission to the contrary made by? learned Counsel for the Revenue and in the affidavit by M.K. Gupta, working as Director in the Department of Revenue, Ministry of Finance. One should have thought that an officer of the Ministry of Finance would have greater respect for circulars such as these issued by the Board, which also operates under the aegis of the Ministry of Finance, for it is the Board which is by statute, entrusted with the task of classifying excisable goods uniformly. The whole objective of such circulars is to adopt a uniform practice and to inform the trade as to how a particular product will be treated for the purposes of Excise duty. It does not lie in the mouth of the Revenue to repudiate a circular issued by the Board on the basis that it is inconsistent with a statutory provision. Consistency and discipline are of far greater importance than the winning or losing of court proceedings." In view of the Board s circular, the Appellant had rightly classified the impugned goods under tariff item 732616 of the Drawback Schedule, which was earlier covered under Sr.No.26B of DEPB Scheme. 19. The Adjudicating authori....
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....er confirmed the classification under the Drawback Schedule and not under DEPB Scheme. 20. The learned Authorised Representative strongly relied upon the classification of the goods as declared by the Appellant under Chapter 84 or 87 of CTA/CETA in the Central Excise invoices. But, they have mentioned Chapter 73 of CTA/CETA in Shipping Bills. It is seen from the record that the Appellant followed the similar practice, while claiming DEPB benefit prior to 01.10.2011. It is noticed that after 01.10.2011, as there was different Sub-heading No. in the Central Excise invoices, ARE-1, and shipping bills, the Assistant Commissioner of Customs, Pipavav raised a specific query on this issue. The Appellant filed replies to the Assistant Commissioner of Customs with the various documents. The customs authorities, after satisfaction, allowed export and finally assessed shipping bill No.6308848 dt.05.12.2011 on which specific query was raised and also sanctioned duty drawback as claimed by the Appellant. The goods were exported under the supervision of the customs officers and an enquiry was made. But, no dispute was raised. Thereafter, the officers of the DGCEI stopped the payment of drawba....
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....ter forging." In that case, the Tribunal observed that from the description of goods given in the purchase order as also the coverage of CTA 87.08 of the Customs Tariff, it is abundantly clear that there are motor vehicle parts suitable for use as such and had been subjected to various processes after forging. In the case of M/s Bharat Forge Ltd (supra), the Tribunal strongly relied upon the purchase orders for the product from the foreign buyer, given the description of the goods such as Spindle-Wheel, I Beam, Spindle Assembly, Steering Krunches and so on. Therefore, the Tribunal rejected the claim of Drawback of the Appellant. In the present case, we find that the foreign buyers categorically certified that the impugned exported goods are not useable as such and subjected to various processes. This is supported by the certificates of Central Excise officers and officers of Special Economic Zone. Hence, the said case law is not applicable herein. 22. The learned Authorised Representative also relied upon the judgment in the case of In the case of Sun Exports (supra), it has been held that there was no evidence submitted regarding functional utilities of items viz. cake save,....