TaxTMI 
TaxTMI 
2024 (12) TMI 1646
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....oms Act, 1962, and imposition of penalty of Rs. 50,00,000 under section 112 of Customs Act, 1962, in order [order-in-original no. 74/2014/CAC/CC(I)/AB/Oil Unit dated 23rd June 2014] of Commissioner of Customs (Import), New Customs House, Mumbai. 2. The impugned order has drawn upon the specificity of sub-heading note 2 of chapter 27 of First Schedule to Customs Tariff Act, 1975 as required by the primary rule for liberal interpretation of statutes, upon the lack of authority to consider 'intended usage' as factor in determining classification and upon the correct method of determination of 'volatile matter' and 'calorific value' - the parameters of distinguishment in the said sub-heading note. 3. Learned Counsel for appellant submitted that an identical dispute before the Tribunal, in relation to imports effected by the appellant between March 2012 and February 2013, was decided in their favour in Reliance Infrastructure Ltd v. Commissioner of Customs (Preventive), Mumbai [2023 (7) TMI 447 - CESTAT MUMBAI]. He further submitted that, though the said decision had been challenged before the Hon'ble Supreme Court, pendency of its disposal should not stand in the way of deciding ....
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....'ble Supreme Court took note of one of the grounds alluded therein and responded thus 'We do not approve of such kind of aspersions being cast on the CESTAT or any other Tribunal/Court. Merely because the matter is pending before this Court as long as there is no direction not to hear similar cases before other Tribunals/ courts passed by this Court, the pendency of a matter before this Court would not come in the way of other Tribunals/Courts deciding similar case.' in Commissioner of Customs (Preventive), Mumbai v. Reliance Infrastructure Ltd while directing [order dated 22nd January 2024 in civil appeal diary no. 47176/2023] notice to be issued. 6. In view of the pendency of appeals in various disputes and that the present appeal pertains to single bill of entry which, for one reason or other, had not been included in the disputed transactions decided earlier even though occurring during the coverage of that decision, we take up this appeal for disposal. The impugned order has relied upon the formula, just as in the earlier dispute that was disposed off, for conversion of 'load port analysis' as appropriate for distinguishment in terms of note supra in chapter 27 ....
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....ee volatile matter percentage - 100 - (Dry, mineral-matter free FC) Moist, mineral-matter free Btu content - 100 (Btu- 50S) / (100- (1.08A +0.55S)) 31.3 I find that the Joint Director, Customs Laboratory, Jawaharlal Nehru Customs House, NhavaSheva, Raigad, Maharashtra vide a letter F.No: JNCH/T.O./2012-12 dated 07.03.2013 confirmed the applicability of the said formulae to the coal imported to arrive at Dry, mineral-matter free volatile matter percentage and Gross Calorific Value (on moist, mineral-matter-free basis). He also confirmed that (he values of Ash content, Sulphur content and Btu are to be applied on Air Dry Basis (ADB).When calculated as per above mentioned formulae, it is seen that in the consignment imported vide Bill of entry No.7715305 dated 21.03.2012 by the Noticee., volatile matter limit (on dry, mineral-matter free basis) works out to be more than 14% and calorific value limit (on a moist, mineral-matter free basis) works out to be greater than 5,833 kcal/kg . xxxxxx 31.8 I find that. M/sPT PROTEKNIKA JASAPRATAMA,in their load port Certificate of Sampling and Analysis Report submitted by the Noticee .have mentioned both ARB as....
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.... Materials (ASTM) standards by rank, according to the degree of metamorphism, or progressive transformation from 'lignite' stage, which, by the range of physical and chemical properties, assist in predicting 'behaviour' of coal at the stage of consumption. The 'certificate of sampling and analysis (CoSA)', in addition to 'gross calorific value (GCV)' for each sample, included moisture content - total and inherent - ash content, volatile matter content and sulphur content. We notice that the 'volatile matter', in each and every sample, varies between 34.98 kcal/kg and 42 kcal/kg leaving no room for doubt that, owing to 'volatile matter (VM)' being more than 14% spelt out in sub-heading note 1 in chapter 27 of First Schedule to Customs Tariff Act, 1975, the impugned goods are other than 'anthracite coal' of sub-heading 2701 11 of First Schedule to Customs Tariff Act, 1975. We also notice that 'gross calorific value (GCV)' varies between 4293 and 5811 kcal/kg and, thereby, appearing to extricate it from the purview of 'bituminous coal' of sub-heading 2701 12 of First Schedule to Customs Tariff Act, 1975, with thre....
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....ent according to the state of the sample. 20. It would, however, be misconception and, indeed, presumptuous for customs authorities to convince that standards, such as American Society for Testing and Materials (ASTM) and Indian Standard (IS), have been devised for ease of tax administration. The standards have existed, and guided by commercial imperatives, for decades in an uncoordinated trading universe and its availability for the customs tariff to draw upon for elaboration of the hierarchy of enumeration in the chapter for coal is only fortuitous. There is no formulation for 'steam coal' in the First Schedule to Customs Tariff Act, 1975 and, though, one does for 'bituminous coal', dichotomizing of 'steam coal' within that is not readily apparent thus opening up possibility for dispute for that very reason. And it has done so in this very instance. 21. Coal is a bounty of Nature that occurs as localised concentrations and, by its very remoteness from places of deployment, implies voluminouos shipments with appropriate commercial stake. Coal draws worth from its combustion capacity - by direct application of heat in manufacturing process ....
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.... of definition of 'steam coal' in the tariff and unavailability of policy inputs on intent of incorporating separate entry for 'steam coal', supposedly of impliedly low 'gross calorific value (GCV)' below sub-heading corresponding to 'others' in heading 2701 of First Schedule to Customs Tariff Act, 1975, it would appear that vagaries of distribution in coal formation, involving logistical complexities and deployment uncertainty, necessitated establishment of standards for contractual compliance in high stake commercial negotiations. We are, here, concerned with 'bituminous coal' and its most significant commercial characteristic, as incorporated in the tariff too, is 'gross calorific value (GCV)' or the heating potential. Traditionally designated as Btu, it is the heat required to raise the temperature of one pound of water by one degree Fahrenheit and is expressed as 'Btu/lb' or as 'kcal/kg' in the metric system. The accepted test procedure, known as 'proximate analysis' of a sample is expressed as 'fixed carbon', 'ash', 'volatile matter' and 'moisture' content with 'ultimat....
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....b-heading notes without considering relevance to the 'certificate of sampling and analysis (CoSA)' or the significance of formula, and more especially, in conversion. Doubtlessly, the investigation, and we use the word advisedly as there has been no scrutiny of the tabulated information by the adjudicating authority who has merely approved the arrangement in Annexure B to the show cause notice, are happy with their mathematical reformulation which carries that derived 'gross calorific value (GCV)' beyond the threshold to reaches of higher duty liability. 25. A measure is no indication of the measuring system and to believe that all parameters in a test report emanate from a single test, amenable to cross-computation for deriving results, is delusional. Values are not the same as composition. This adjuring is necessary when an adjudicatory determination has, apparently, proceeded conversely. 'Gross calorific value' has a definitional standard that is not performed easily and, even if possible, lacks precision; for a kilogram or pound of water to be heated through a degree in Celsius or Fahrenheit scale for determining heating potential would be test ....
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....ree Btu = 100(Btu-50S)/(100-(1.08A+0.55S)) Where Btu = Gross calorific value, Btu/lb FC = Fixed carbon, % VM = Volatile Matter, % M = Moisture A = Ash content, % S =Sulfur, % *The quantities are all on inherent moisture basis. 12. The values of Ash content, sulphur and Btu are to be applied on Air Dry Basis (ADB) as confirmed by the Joint Director, Customs and Central Revenue Control Laboratory (CRCL) vide letter F. No. JNCH/T.o./2012-12 dated 7-3-2013.' narrated in the show cause notice, that the 'conversion formula' for 'gross calorific value (GCV)' has been applied by deploying values post 'certificate of sampling and analysis (CoSA)' to arrive at the revisions. 27. However, the adjudicating authority has not ventured to consider the 'chicken and egg' analysis of the method adopted for measuring 'gross calorific value (GCV)' of coal. That this is a 'mathematical value', expressed in per kilogram terms to a specific outcome, viz., the raising of temperature of a kilogram of water by one degree on the Celsius scale - a theoretically....
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....a superfluous exercise beyond 'gross calorific value (GCV)' on 'air dry basis (ADB)' to contrive a measure that has no rationale. 30. All that was required to be done was to convert 'moisture free mineral matter free' 'gross calorific value (GCV)' - obtained on bomb calorimeter to inclusion of 'inherent moisture' to qualify in the manner expressed in the sub-headings without having to convert to the British (BTU) system and to be reversed subsequently. The formulae, sourced from the World Coal Institute, intended for conversion of moisture factor among available measure - on air dry, dry and as received basis - without the need for the supplementary formulae in Annexure B to the show cause notice that the investigators have, incorrectly, presumed to be a chain of computations to arrive at the correct, as it were, heating value. 31. Without ascertaining the method by which 'gross calorific value (GCV)' was determined for inclusion in the 'certificate of sampling and analysis (CoSA)' issued at load port and in the absence of any finding that this was not directly deduced from bomb calorimeter and as content of ....