TaxTMI 
TaxTMI 
2017 (11) TMI 1584
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....ing coal, PCI coal" under 19 Bills of Entry at Krishnapatnam Port and claimed exemption from payment of customs duty as "coking coal", in terms of Sl. No.68/68A of Notification No.21/2002-Cus, dated 01.03.2002. The said Bills of Entry were assessed and the cargo was cleared by extending benefit of notification No.21/2002. Subsequently, an investigation was carried out and it was concluded that the main appellant had claimed wrong classification and hence was ineligible for the benefit of exemption notification and the other appellants had a role to play in such improper claiming of exemption notification, hence show cause notices were issued to all the appellants. The adjudicating authority, after following due process of law, confirmed the demands raised with interest against the main appellant and imposed penalties on all the appellants. 4 Ld. Counsel, after taking the bench through records and Sl. No.68/68A of notification No.21/2002-Cus, submits that description of goods mentioned therein which is eligible for exemption from customs duty is "coking coal of ash content below 12%" It is his submission that the impugned order proceeds on a premise that in order to claim benefit....
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....mpugned order be upheld and appeals be rejected. 6. Heard both sides and perused the records. 7. The issue that falls for consideration in all these appeals is whether the coal imported by appellant under 19 Bills of Entry are eligible for exemption of customs duty under notification No.21/2002 or otherwise. 8. The facts are not much disputed as already reproduced herein above. On careful consideration of the submissions made by Ld. Counsel, we do find that identical issue came up before the Bench in Mumbai in respect of the coal imported by appellant for using corex furnace through Port in Goa and the Bench, after considering the entire gamut of the arguments and the findings held in favour of applicants. The relevant paragraphs are reproduced. "10. We have given very careful thought to the submissions made by both sides during extensive hearings in this case when the Ld. Advocate and Ld. Special Counsel took us through the details at length. We have, in paras above, tried to bring on record all the significant contentions made by both sides that would enable us to analyze the issue in a comprehensive manner. The issue to be decided is spelt out in para ....
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..... No.68, in column (3), in Explanation, for the figures and words 0.85 and Swelling Index or Crucible Swelling Number of more than 2 the figures and words 0.60 and Swelling Index or Crucible Swelling Number of more than 1shall be substituted. 11. The first question we address is whether documents relied upon can be taken to reveal that the coal imported was not coking coal. Revenue has relied heavily on statutory documents like the balance sheet and the documents submitted to SEBI for public issue. Revenue has also relied upon the business plans of the company which indicate that the coal imported for Corex technology was non-coking coal. In our view though documents are indicative, the ultimate test would be the nature of the coal actually imported and not what is reflected in the business plan etc. If, in the ultimate analysis, what is imported is held to be coking coal in terms of the notification, then the above documents would certainly support the case of Revenue. We find that the appellant have submitted copies of reports of the Customs Chemical Laboratory, and this is not disputed by Revenue, which indicate that in a majority of the cases what was imported was weak....
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....ereas these documents referred to purchase of coking coal for use in manufacture of Coke, the suppliers have not referred to the coal imported for Corex furnace as weakly coking coal/soft coking coal/semisoft coking coal/Corex coal in the main Contract/MoUs. And these contracts are similar to contracts entered into by JSWEL for purchase of steam/ noncoking/thermal coals for use in generation of power. And the pricing for both contracts is based on thermal value which is a parameter for non-coking coal. But the suppliers commercial invoices showed the coal sold for use in Corex furnace of the varieties namely weakly coking coal/soft coking coal/semisoft coking coal/Corex coal. The defence of the appellant is that the expressions soft/semisoft/weekly coking coal have not been coined by them in connivance with the suppliers, but these expressions are in existence and recognized nationally and internationally. Therefore it would be useful to refer to some of the technical literature on the characterization and categorization of various kinds of coal. From the IS standards 770 1977, we find that in Table 2 of the standards, the bituminous coal is classified into categories such as non-c....
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....d the description of goods as open coal in bulk, whereas the invoices issued by them contained the description of goods as semi soft coking coal. Further that the CSN number and MMR are not reflected in the quality certificates issued in respect of supplies to JSWSL as per the business transaction and requirement of the customer. From this we gather that there is no misrepresentation as such. The description given by the Principals is coal. It cannot be concluded that the coal supplied was not semi soft coking coal. The fact remains that, as also stated by Shri Raju, the company had requirement for inferior quality coal for use in their Corex furnace. Therefore in our view it cannot be held that the coal supplied was not semisoft coking/ weakly coking coal for use in the Corex furnace and that the invoices were manipulated in their description. A case of manipulation would have been made out only if the description in the invoices of the Principals had been non-coking coal. ln addition, it is to be noted that in a majority of cases, the Chemical Examiner himself had determined the imported coals to be weakly coking. 11.4 Revenue has also relied on the contracts and purchas....
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....hat arises is whether weakly coking coal which was imported can be used so for making coke when blended with other coal. It is conceded that the Corex technology uses 15 20% Coke and 80 85% non-coking coal. Revenue has relied on contracts of Sale for coking coal which contain CSN whereas the contracts for soft coking coal/Corex coal executed by JSWSL do not contain such parameters but are based on thermal value similar to the contracts of JSWSL for purchase of steam/ thermal coal. To address this issue, we have to see whether such coal imported for Corex technology could be termed as soft coking/weakly coking coal. We note that during the course of investigations, the hard disk of Shri Arvind Rajagopalan had been seized and sent to the Central Forensic Science Laboratory, Hyderabad. From the said seized hard disk record, a report dated 29.5.2008 tabulates the CSN of the various coals being used in the Corex process. The same is reproduced herein below for ease of reference: SBW Coal 1.5 Ensham Coal 1.5 Metro olitan Coal 1.5 O timum Coal 1 Poitrel Coal 1.5 Total South African Coal 1 New South African Coal 1.5 Daton Coal 1 ....
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....as not shown any technical reading to dispute this stand. 12.3 Another technical reference presented by the appellant is the extract from the book Elements of Fuels, Furnaces and Refractories by Om Prakash Gupta in which the coking coal classification systems in USA Australia and Japan are given. Although the classification indicates various parameters, the parameter of CSN shows that in Japan the CSN of semi-coking coal is 1 to 2 and of medium coking coal is 2.5 to 4. The present case seems to be entirely built around documents such as the Contracts describing the coal imported either just as coal or as non-coking coal. But the evidence in the form of tests conducted by the Customs Chemical Laboratory in majority of cases indicated the CSN value as one or above and the reports declared the same to be weakly coking or coking coal. Government introduced the criteria of CSN one and above after the period of dispute. Both sides contend that this criteria cannot be applied for the period of dispute. To determine whether a coal imported is coking coal or not, there has to be some technical or scientific parameter to term coal as coking or non-coking. In the present case the onl....
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....anager(Marketing) Mr Vineet Kohli stated that the brand name of coal sold is annotated with the description of the coals. For instance IIIawara Hard Coking coal, riverside Coking coal, Blackwater Weak Coking Coal, Black Water Soft coking Coal, that such annotation or any other reference to the coal as hardsoft, semi soft or weak coal is merely a business description of such coals as is understood in general marketing parlance and developed over the decades by buyers and sellers in the international markets and is merely indicative and not determinative of the technical quality or specification of the coal; that Optimum coal being one such coal whose intrinsic geological properties can find application in metallurgical as well as Energy Markets and when sold to M/s. JSWSL is named Bespoke Optimum Semi soft Corex Coal. According to us, even if it is a business description, it does give an indication of the type of coal imported. It indicates that such coal is produced in the mines from where it is sourced And because no technical specifications are prescribed in the documents, we cannot agree that the coal imported will not be the coal described as produced in those mines. This fact ....
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....ains that the exemption to coking is not linked to any end- use condition. Even the amendment of notification 21/2002 by notification 77/2011-Cus dated 17-08-2011 did not prescribe end-use condition. The appellant have rightly relied on judgements which lay down the law that wherever end use is contemplated, the notification necessarily has to provide a mechanism for the same. Reliance is also placed on the Supreme Court judgement in the case of State of Haryana Vs Dalmia Dadri Cement Ltd - 1988(14) ECR 292 (SC) holding that 10. We are unable to accept the submission of Mr Bana that, in order to get the exemption it must be shown that the goods in question, namely, the cement supplied by the assessee in this case was actually used in the generation or distribution of electrical energy. It must be noted that the important words used in the relevant provisions are goods for use by it in the generation or distribution of such energy (emphasis supplied by us). On a plain reading of the relevant clause it is clear that the expression for use must mean intended for use. If the intention of the legislature was to limit the exemption only to such goods sold as were actually used b....
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....nvoices and other documents. The defence of the appellant is that in the price of coal in the contracts with IMR metallurgical which was linked to the API-4 index, there was a specific markup on the base price and the coking coal price was higher than that of the thermal coal. Argument of Special counsel is that the price difference between coking coal and thermal coal should be much higher in any case. Learned Special Counsel also drew attention to the fact that the coal was supplied to the appellant and steam non-coking coal supplied to JSEWL at the same prices. The response of Ld. advocate is that this is only one solitary instance. And that no evidence has been shown that the coal supplied was from the same source or the dates of contracting were the same; therefore the comparison is untenable. Reliance was placed by Ld. advocate on the cross-examination of Shri Raju who stated that there were differences in technical specifications of some parameters in the case. And the coal supplied to JSWSL is not necessarily mine specific. In our view no matter the high price difference, comparison cannot be made between prime/hard coking coal and soft/semisoft/weakly coking as the two are....
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....e wherever the CSN is less than 1, he has concluded the coal to be non-coking. The opinion of the Customs Chemical Examiner cannot be simply wished away without any substantial evidence to the contrary. The fact is that he has tested the coal to be weakly coking. Therefore we reject the appeal of the Department that the Commissioner dropped demands wrongly. Tribunal in the appellants own case Commissioner of Customs Vs JSW Steel Ltd - 2012(284) ELT 680(Tri-Chennai) held that in order to be eligible for the exemption, the criteria is not the actual use of the coking coal in Coke making but its suitability for such use. We find similar facts in that case. The allegation there was that the contract with the supplier namely CC Carbon Pvt Ltd Singapore was only for supply of Jellinbah PCI coal and not for supply of coking coal whereas the respondent (in that case) showed the description of the said coal as semi soft coking coal in all relevant records with the sole intention of claiming it is as coking coal to take benefit of exemption under notification 21/2000 dated 1-03-2002. It was held by the Tribunal that 18. ?ln the absence of a clear definition, we should go by natur....
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....ines as well as Ministry of Steel, while retaining the exemption for coking coal, a definition of coking coal was provided in the Budget 2011-12, whereby coking coal was defined to mean coal having mean reflectance of more than 0.85 and Swelling Index or Crucible Swelling Number of more than 2 (Sl. No.68 of Notification No.21/2002-Customs ibid). (ii) On getting further representation from the domestic steel industry that manufacturers using Corex, Fines & PCI fuel injection technology could not avail of the benefit of exemption since they use certain weak varieties of coking coal (having lower technical specifications compared to those prescribed), a separate entry was created during post-budget stage of 2011-12 to grant full exemption from basic customs duty to Coal having Swelling index or Crucible Swelling Number of 1 and above and mean reflectance of above 0.60, for use in the manufacture of iron or steel using Corex, Finex or PCI technology (S. No.66 A of Notification No.21/2002-Customs ibid). This exemption was based on end use. This was notified on 24.03.2011. (iii) Thereafter, a representation was received from New Zealand High Commission seeking full exem....
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....ll Dictionary of Scientific and Technical Terms and appended his dated signature on the same in token having perused the same; that the above dictionary contained the two different words and they are Coking and Coking Coal; that as per the dictionary, Coking Coal means the coal a very soft Bituminous Coal suitable for Coking; that as per the dictionary, Coking means destructive distillation of coal to make Coke; that from the above definition of Coking coal, coal used in manufacture of coke in Coke Ovens is called as Coking Coal; that in terms of the above definition also gives meaning of all coals which can form coke irrespective of the coke strength produced from the coal and other values can be termed as coking coals including the coals which they use in Corex Furnace. When enquired specifically as to whether coke is manufactured in the Corex Furnace or not, Shri Dasu stated that in Corex Meltergasfier where the coal is fed from the top similar kind of reactions happening which are similar to that of Coke Oven and the coal is degasified in the absence of air and at an elevated temperature of greater than 1000 Centigrade; that after degasification, the carbon and ash only remains....
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....tute based on technical characteristics(other than ash content) nor any intention to deny the exemption ostensibly to weakly coking/ soft coking/ mildly coking coals during the period in dispute. Therefore the benefit of the exemption would be available. 15. We have held, in respect of the demands dropped by the Commissioner, that the coal imported by the appellant which is soft coking coal or mildly coking coal will get the benefit of notification which grants exemption to coking coal. As regards the 21 bills of entry in respect of which the demand has been confirmed by the Commissioner on the basis that the CSN was found to be between 0 and 0.5, the contention of the learned advocate is that the criterion of CSN one cannot be given retrospective effect. We agree with this contention as already held by the Tribunal in the appellants own case in Commissioner of Customs Vs JSW Steel Ltd - 2012(284)ELT 680(Tri-Chennai). The other contention is that the test reports were never furnished to the appellant till the adjudication stage. Therefore the appellants never had the opportunity to rebut the findings of the tests. The results were communicated after many years during the c....