TaxTMI 
TaxTMI 
2018 (12) TMI 173
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.... Customs Act, 1962. I impose a redemption fine of Rs. 2,00,00,000/-(Rs. Two Crores only) under Section 125 ibid in lieu of confiscation as the goods have been already cleared on furnishing a bond and Bank Guarantee. (iii) I determine and confirm the demand of duty amounting to Rs. 3,56,89,819 (3,17,97,899/- + 38,91,920/-) on the undeclared 2605.480 (2281.112+324.368) MTs HR Plates totally valued at Rs. 13,80,54,382/- (122999765/- + 1,50,54,617/-) under Section 28(4) of the Customs Act, 1962 with interest at applicable rate in terms of Section 28AA of the Customs Act, 1962. (iv) I order to en-cash the Bank Guarantee for Rs. 2,60,000,00/- furnished by them and to appropriate the same against duty and interest liabilities payable by them. (v) I impose a penalty of Rs. 3,56,89,819/- (Rs. Three Cores Fifty Six Lakhs Eighty Nine Thousand Eight Hundred Nine only) and an amount equal to interest payable on the importer, M/s Welspun Corp Limited, District Bharuch, under Section 114(A) of the Customs Act, 1962. However, if the Customs duty and interest confirmed as discussed above is paid by the importer within 30 days from the date of communication of this order, the amount of pena....
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....05.2013, the appellant provided another bank guarantee dated 19.05.2013 for Rs. 2 Crore. After clearance of the goods, the appellant vide their letter dated 18.07.2013 and letter dated 07.08.2013 requested the customs authorities to consider the theoretical weight declared in the Mill Test certificate and bill of lading and to finalize the bills of entry with request to release their bank guarantee. 3. Thereafter, a show cause notice F. No. S/48-147/Import/Misc/MP & SEZ/13-14 dated 06.01.2014 was issued to the appellant proposing confiscation of the goods involving excess weight and to demand customs duty on the undeclared weight of 2281.112 MT of HR Plates. It was also proposed to adjust the duty by encashment of bank guarantee executed by the appellant. A penalty under Section 114AA was also proposed to be imposed. The show cause notice was adjudicated and the charges proposed in the show cause notice were confirmed as per the operating portion of the order reproduced above in Para-1. Being aggrieved by the order-in-original, the appellant filed the present appeal. 4. Shri Vipin Jain, ld. Counsel along with Ms. Dimple Gohil and Ms. Manya Bhardwaj, ld. Advocates appeared on ....
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....inds a mention in the ASTM. The impugned order does not dispute that the international standards provide for computation of weight of steel plates with reference to their length, width and thickness by applying a scientific formula. This accepted basis on which the steel plates are being traded internationally is not in dispute. He submits that the sheets imported by the appellant had a length of approximately 12.5 metres and a width of 3-4 metres. The surface area of the sheets imported by the Appellant was approximately 502 metres. The appellant pointed out that trying to physically weigh each sheet by putting it on a weigh scale was not only a cumbersome and time consuming process, but was neither credible nor reliable as it would require huge weigh scales as also material handling equipments which ought to be capable of holding as also moving around the over-dimensional plates. Considering the fact that the physical weighment was arrived at in a crude and unscientific basis by the custodian, the Respondent was clearly not justified in applying the results so arrived at without conforming to the standards prescribed and without dealing with the Appellant's submission that none o....
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....to IS 1852:1985 with respect to the tolerance limits. As per the said IS, the tolerance with respect to width ranges from -0.0 to +2Omm/+0.5% of width! +0.3% of length. The tolerance for length ranges from -0.0 to +4Omm/+0.5% while the tolerance limit for thickness ranges from -5 to +12.5%. The standard further provides that the consignment weight shall not vary from the theoretical weight specified in Table 3 of IS 1730:1974 which was subsequently revised to 1989 by more than +5% / -2.5%. He submits that it is clear from IS-1852:1985 that the weight of steel plates is always expressed as a theoretical weight and that statutorily a tolerance of up to +5%/-2.5% is within the normal tolerance levels. He submits that it is not in dispute that the difference in the weight declared, as indicated in the import documents vis-à-vis that computed by the authorities was well within the prescribed IS-1852:1985 tolerance limit of +5%. It is his submission that the Adjudicating Authority, without taking cognizance of the said tolerance levels which are themselves prescribed for in the IS specifications, passed the impugned order which is clearly untenable. He further submits that the Adj....
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....ent while taking delivery of the goods, it could not raise such an objection subsequently. 4.3 Ld. Counsel further submits that for steel products, it is a well-accepted practice that if the said steel products are accompanied by Mill Test Certificate issued by the Manufacturer which gives details such as the manufacturer's name, Heat No., dimensions, finish, chemical composition, weight etc., the same are required to be accepted by the customs department. It is not in dispute that the Mill Test Certificate which had been filed along with the import documents stated all the requisite specifications including the length, width, thickness, number of pieces, etc. It is also not in dispute that it has been clarified in Public Notice no.17/2010 dated 13.04.2010 issued by the Kandla Customs, specifically states that in respect of steel products, since all imported goods are covered by Mill Test Certificates issued by foreign manufacturers and the invoices and packing list issued by them contain details about the value and quantity of the goods in number as well as weight, the same have to be accepted on face value unless there is something specifically pointing out to any fraud in thi....
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....the resultant product. (iii) the material imported corresponds with the specifications applicable of the imported material and that the value and quantity thereof are within the limits of the specified in the authorization. The appellant submits that there is no dispute that it fulfills all the stipulations referred to in the Notification No. 96/2009. This being the case, there is no basis whatsoever to deny the benefit of exemption to the alleged differential quantity. He submits that the Adjudicating Authority has erred in relying upon the Public Notice 17/2010 dated 29.06.2010 as if the same were the law of the land and that what is stated therein was to be applied without any independent examination. The impugned order having been passed without taking cognizance of the provisions of the Customs deserve to be quashed. He submits that the said Public Notice dated 29.06.2010 applies to those cases where duty is payable with reference to the weight of the product and not where variation in the weight of the product on the higher side does not have any impact of the applicable duty payable. By applying the said public notice, the Adjudicating Authority has contended that as l....
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.... extended period of limitation was clearly not invokable. Without prejudice to the above submissions, he also submits that goods procured were to be cleared against the advance license without suffering any duty incidence. The value declared for the goods was true and correct transaction value, therefore, except for the quantity, to be debited against the license for which also there was sufficient balance available, there was absolutely nothing else required to be done. Accordingly, the transaction value in question did not entail any duty liability and consequently there could not be any incidence of payment of duty. He submits that as per the above submissions, duty demand is not sustainable and since there is no mis-declaration of goods as well as value, there is no question of any confiscation and penalty. In support of his submission, he relied on the following judgments:- (a) Eicher Tractors Limited vs. CC, Mumbai - 2000 (122) ELT 321 (SC) (b) Topain Properties Pvt. Limited vs. CC, Nhava Sheva - 2006 (192) ELT 950 (tri. Mumbai.) (c) Bharat Petroleum Corporation Limited vs. CC (Import), Mumbai - 2015 (320) ELT 294 (Tri. Mumbai) 5. On behalf of the Revenue, Shri Je....
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....isions. The relevant observations of the Apex Court are extracted for use of reference. ''13. That Rule 4 is limited to the transaction in question is also supported by the provisions of the other Rules each of which provide for alternate modes of valuation and allow evidence of value of goods other than those under assessment to be the basis of the assessable value. Thus, Rule 5 allows for the transaction value to be determined on the basis of identical goods imported into India at the same time; Rule 6 allows for the transaction value to be determined on the value of similar goods imported into India at the same time as the subject goods. Where there are no contemporaneous imports into India, the value is to be determined under Rule 7 by a process of deduction in the manner provided therein. If this is not possible the value is to be computed under Rule 7A. When value of the imported goods cannot be determined under any of these provisions, the value is required to be determined under Rule 8 "using reasonable means consistent with the principles and general provisions of these rules and sub-section (1) of Section 14 of the Customs Act, 1962 and on the basis of data available i....
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....tment has to apply the valuation rules, sequentially and cannot arrive at the value in an arbitrary and ad-hoc manner. The relevant observations of the Apex court in this regard are extracted herein below for ease of reference. ''8..............................Lastly, it is important to note that in the above decision of this Court in Eicher Tractors (supra) this Court has held that the Department has to proceed sequentially under Rules 5, 6 onwards and it is not open to the Department to invoke Rule 8 without sequentially complying with Rules 5, 6 and 7 even in cases where the transaction value is to be rejected under Rule 4. In the present case, the show cause notice indicates that the Department had invoked Rule 8 without complying with the earlier rules.'' 9.1 Even otherwise, the sole basis on which the Revenue has contended that the assessable value was to be enhanced and the matter taken up for adjudication, is the reliance on Public Notice No.17/2010 dated 29.6.2010 and Public Notice No.10 dated 17.6.2013. The impugned order has in para 19.5, 19.6 and 19.12 placed reliance on the said Public Notice, the relevant extracts of which has been reproduced in the impugned ord....
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....ee bars, bulb angles, round and square bars, flats, plates, strips and sheets rolled from structural steels including medium and high strength steel. Part 7 of the said standard deals with rolling and cutting tolerance for plates. Clause 7.1 stipulates the tolerance with respect to the width of the plates; Clause 7.2 provides for the tolerance with respect to the length of the plates; Clause 7.3 provides for the tolerance with respect to the thickness of the plates. Clause 7.4 provides for the tolerance with respect to the weight of the plates and reads as under: ''7.4 The consignment weight shall not vary from the theoretical weight specified in table 3 of IS:1730 (Part 1)-1974 by more than +5% / -2.5%''. 9.4. It is an admitted fact that the theoretical weight is to be arrived at by taking the density of steel at 7.85 g/cm3. In other words the theoretical weight of the steel plates is to be computed by multiplying its volume (length X breadth X width) with its density. The said formula has been prescribed in Indian Standards specification 1730:1989 for steel plates, sheets, strips and flats for structural and general engineering purposes. The said formula also finds referenc....
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....nd find merit in the appellant's grievance to the effect that the manner of computing the physical weight was not the most scientific one inasmuch as the physical weight was arrived at by first arriving at the tare weight of the truck trailer and thereafter arriving at the weight of the truck trailer with the steel plates loaded on it. It is common knowledge that in addition to the weigh scale calibration error, the direction in which the vehicle is parked on the weigh scale, the breeze factor, the extent of fuel present in the vehicle, etc can all play a role in causing a weight variation. In our view more scientific method could have been by placing the steel plates directly on the weigh scale and arriving at its weight, or verifying the length, breadth and width of the plates i.e. its volume and also verifying whether the density was 7.85 gm/cm^3 as has been mandated in the standards. If there was a difference either in the volume or the density it could have resulted in variation from the declared weight. In any case as long as the variation is within the permissible limits prescribed in the relevant standards the same cannot result in any customs proceedings for alleged mis-de....