TaxTMI 
TaxTMI 
2023 (4) TMI 356
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Bills of Entry No. 259764, 259765, 259766 and 259767, all dated 01.10.2008 by declaring the goods as re-rollable plate scrap of CTH 72044900. They also imported another consignment declaring the goods as Re-rollable plate scrap & pipes in respect of Bill of entry No. 259768 dated 01.10.2008. On examination of the imported cargo, it was found that the goods were mis-declared and the same were second and defective plates/ pipes/ waste. Plates of width more than 600 mm are classifiable under CTH 7208 and Plates of width less than 600 mm are classifiable under CTH 7211. As per the licensing note 4 of chapter 72 of the EXIM Policy, such seconds and defective are allowed for imports only through the Sea Ports of Mumbai, Chennai and Calcutta, and the same cannot be imported at Kandla. Appellants have classified the subject items under the Heading 7204 49 00. The Department wants to classify the same under the Heading 7208 /7211 as "plates". The assessee-Appellants have claimed the benefit of Notification No. 21/2002-Cus., dated 1-3-2002 at Serial No. 190B. But the Department has denied the same. It was alleged that the importer has mis-declared the goods for evading Customs duty as subje....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rein it was reported that the sample meet the requirement of mild steel and it was confirmed that sample was mild steel. It therefore appears that the Appellant mis-declared the subject goods in respect of value, classification, description and duty structure in the said Bill of entry. Accordingly SCN dated 17.06.2009 was issued in respect of which Order-In-Original No. KDL/ADC/PMR.49/2016-17 dated 15.11.2016 was passed wherein second and defective MS Plate having width more than 600 mm and less than 600 mm were classified under CTH 7208 and 7211 respectively. Second and defective pipe were classified under CTH No. 7206. Differential duty amount of Rs. 8,40,609/- was confirmed after re-determining value of the goods in question under Customs Valuation (Determination of Value of Imported goods) Rules 2007. Goods was ordered to be released on payment of redemption fine amounting to Rs. 19,11,000/- in lieu of confiscation under Section 125 of the Customs Act, 1962. Penalty amounting to Rs. 16,74,221/- was imposed under Section 112 of the Customs Act, 1962. Being aggrieved with the order appellant filed appeal before the Commissioner (Appeals), Ahmedabad, who vide impuged Order-In-Appe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d that the best test differentiation between scrap and second/defective is the end use. Seconds/ Defectives can be used for the same purposes for which it was manufactured albeit at as lower efficiency than non-defectives. Scrap can never be used as such by very definition. The goods herein, were on provisional release transferred to their sister concern where they have not been used as such, but have been used for further manufacture of CTD bars etc., in this case, by the process of heat melting and slitting etc. 3.4 He further submits that Re-rollable steel scrap has been classified by IS 2549:1994 under clause 13.1. However this has been amended by BIS Notification dated 02.08.2008. Therefore, there is no reason to accept Second and Defective rejected Shapes and Sections of flat rolled products suitable for re-rolling without melting. There is no bar to consider them as other than Prime Quality Goods known to persons dealing in such goods or using the same as raw material after heating, softening, melting them and converting them to CTD bars. 3.5 He also submits that Ferrous waste /scrap has been defined in note 8 to Section XV, applying the same there is no mis-declaratio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion of any additional payment over and above the transaction value. The transaction value has been rejected without having any reason. It is also well -known commercial reality that scrap material contents cannot be uniform they are sold in 'Lots' of different weight. As it has been found that such scrap of plates, pipes, smaller cut pieces have been supplied have the same valuation. 3.8 He further submits that there can be no charge of violation of Section 111(m) for reasons of undervaluation and confiscation and penal liabilities thereunder in the facts of the case. He relied on the decision of Apex court in the case of CC Vs South India Television (P) Ltd. 2007(214)ELT 3 (SC). 04. Shri Vijay G. Iyengar, learned Assistant Commissioner (AR) appearing on behalf of the revenue reiterates the findings in impugned orders. 05. We have heard both sides and perused the records of the case. We find that the appellant filed Bills of Entries for clearance of the imported goods and declared as Re-rollable plate & Pipe material scrap under CTH 72044900 of the Customs Tariff Act. They claimed the benefit of concessional rate of duty under Notification No. 21/2002-Cus., dated 1-3-2002 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tes having width of less than 600 mm as well as more than 600 mm and second and defective pipes. However the documents submitted by the appellant during the import of goods nowhere mentions that the goods are seconds and defective plates and pipes. In our view second and defectives means the goods have prime material but have some defect and can be used as a prime material. However in the present matter there is no dispute on the facts that the disputed goods were used as re-rollable scrap/ melting scrap. Further we also noticed that the test report issued by the National Test House, Ghaziabad has determined the composition of the impugned goods which confirms that it is material of Mild Steel. The said test report nowhere confirms that the impugned goods are second and defectives. The revenue has not considered the disputed goods as scrap on the basis test report. The test report does not specify that the subject goods are scrap. However on the basis of test report it cannot be decided that the disputed goods were not scrap. Scrap whether used or cut pieces by virtues of its physical properties will contain composition of its prime material. Merely by using or cutting the material....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sidered not as scrap or segregated within serviceable and scrap. In the present matter department nowhere disputed that the consignment imported has not indeed been used in the manufacturer of rolled products. In these circumstances, it cannot be said that the appellant has mis-declared the goods and consequently the goods are not liable for confiscation. 5.5 We observed that in the present matter the revenue did not adduce any evidence except the test report and chemical examiner report to support the allegation that the goods is not re-rollable plate & pipe material scrap but an article of steel. It may be possible that the goods appear to be article of steellike plate and pipe but if it is not usable in their original form and the same has been used as re-rollable scrap / Melting Scrap, merely because the scrap is in the form of used article of steel it is not sufficient to deny the classification as Scrap. Further in the present matter, the supplier treated the same as scrap only. It is a matter of fact that the said scrap was utilized as re-rollable/ melting scrap only. Therefore, denying the classification and the exemption are bad in law. 5.6 In the present case revenu....