TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 389
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....y had wrongly availed the benefit of Notification No. 50/2018-Cus dated 30.06.2018 by misclassifying goods under Chapter Tariff Heading 7220 9022. This Notification exempts duty to the extent of 45% of the applied rate on the goods "Nickel Chromium Austenitic Steel" falling under Chapter Tariff Heading 7220 9022. The appellant had imported Cold Rolled Stainless Steel Coils Grade J-3 which contain more percentage of Chromium and Manganese than Chromium and Nickle. After conducting investigation and recording statements of Shri Dipak Sawlani (G Card Holder), statements of Shri Ashok Kumar, Director of the Appellant Firm, a show cause notice dated 20.05.2022 was issued to the appellant proposing rejection of declared classification and reclassifying the said imported goods under Chapter Tariff Heading 7220 9090, reassessment of the imported goods, confiscation of the said goods valued at Rs. 8,05,40,987/- under Section 111(m) of the Customs Act, 1962, demanding differential duty of Rs. 41,36,129/- and imposition of penalty under Section 112(a), 112(b), 114A, 114AA and 117 of the Customs Act, 1962. Separate penalties were proposed on Shri Ashok Kumar, Director of the appellant firm, M/....
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....72,417/- Rs.87,02,776/- Rs. 29,35,51,630/- Rs.14,30,77,101 /- Differential duty Rs.41,36,129/- Rs.8,81,878/- Rs.4,46,925/- Rs. 1,56,93,535/- Rs.72,82,376/- Penalty U/s 114A Rs.41,36,129/- Rs.8,81,878/- Rs.4,46,925/- Rs. 1,56,93,535/- - U/s 114AA Rs.4,00,000/- Rs.50,000/- Rs.20,000/- - - u/s 117 Rs.1,00,000/- Rs.25,000/- Rs.15,000/- - - Penalty on Directors/ Prop. Rs.4,13,613/- U/s 112 (a) (ii) on Ashok Kumar, Director Rs.88,188/- U/s. 112 (a) (ii) on Ashok Kumar, Director Rs.44,693/- U/s. 112 (a) (ii) on Ashok Kumar, Director Rs.10,00,000/- U/s. 112 (a) (ii) on Mohan Jain, Director Rs.7Lakh U/s. 112 (a)(ii)& Rs.5Lakh U/s. 114 AA on Sri Daksh Garg, Prop. Note : CRSS - Cold Rolled Stainless Steel. 1.3 Aggrieved with the said orders, the appellant(s) filed appeal (s) before this Tribunal. 2. In their appeal, the appellant(s) submitted the following points: * There are no pre-requisites for imported goods to fall under Chapter heading 7220 9022. Further, Nickel Chromium Austenitic Steel is not defined anywhere in the Customs Tariff Act 1975. ....
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.... supplier in Hongkong. The name is mentioned in column 7 of the Country of Origin Certificate instead of column 1. This too is also in respect of some consignments only. On this ground, rejection of Country of Origin Certificate is not proper. Otherwise also, if the importing state had any doubt about veracity of the Country of Origin Certificate, necessary consultation could have been done with the issuing authority as per clause-5 of the Rules of Origin which in these cases, has not been done. 3. During hearing learned Advocate mentioned that their case is squarely covered by the decision in the case of Shah Foils Limited vs CC Mundra vide Final Order No. 10979-10982/2024 dated 01.07.2024. He argued that the imported goods are correctly classifiable under CTH 7220 9022 as "Nickel Chromium Austenitic Type" because there are no prerequisites or conditions prescribed under the Customs Tariff for the goods to qualify as Nickel Chromium austenitic type and the scope of the entry under the Indian Customs Tariff Act is to be seen in terms of the description given in the CTH along with the Section and Chapter Notes. 3.1 'Nickel chromium austenitic steel' has not been define....
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....220 9022. b. The website of ASM International mentions the lower limit of Nickel to be not less than 6% for austenitic stability but this conclusion is not supported by any authentic technical basis or even the BIS. The Nickel percentage in some austenitic steels is as low as 1-2% and therefore it is clear that the information mentioned in this website is outdated and cannot be relied upon for its accuracy. c. The User Guide of Salem Steel is also not a statutory guide which can be relied upon to decide whether or not the goods imported by the Appellant are classifiable as Nickel-Chromium austenitic type. 3.4 The Country of Origin Certificate cannot be rejected on the ground that name of the exporter on the Certificate does not match with Exporter's name in the commercial invoice. The name of the exporter issuing invoice is not mentioned in column 1 of the COO which is for 'Goods consigned from', and the said exporter's name is mentioned in column no. 7, which is for 'Description of goods' as a Non-Party Operator. In any case, there are substantial number of consignments where exporter's name is same both in the invoice as well as on COO. Th....
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....said period, is bad in law. 3.8 The commercial parlance cannot be applied in the present case in as much as according to Commercial trade parlance, austenitic stainless steel grades have 4.5%-12% of Nickel, whereas, as per Indian Standards, the new series of austenitic steel have even lower quantity of nickel to the tune of less than 1%. Furthermore, the websites or the technical literature relied upon by the Respondent nowhere state that steel with less percentage of nickel cannot be termed as 'Nickel chromium austenitic type' and therefore, the commercial parlance test cannot be applied. 3.9 Learned Advocate also argued that the statements recorded under Section 108 cannot be relied upon in the present case inasmuch the dispute pertains to classification of steel which in itself is a technical issue and persons whose statements were recorded are not technical personnel or subject experts who can provide an advice on the matter. These statements cannot supersede the meaning, description and literature provided under the statutory Indian Standards on the composition and properties of steel and therefore, reliance placed on the statements is untenable and unfounded. ....
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....ertificate/ Test certificate/ Inspection Certificate produced by the importer at the time of import shows content of Chromium (Cr) as nearly 13% and Nickel as nearly 1% which rules out its classification as Austenitic Stainless-Steel grades. Therefore, the goods imported as Cold Rolled Stainless Steel Coils of Nickel Chromium Austenitic Type by the Appellants are in fact Stainless Steel of other Grades and would be correctly classifiable under CTH 72209090. 4.2 Appellants had availed benefit of Notification No. 50/2018-Customs dated 30.06.2018 on the basis of Country of Origin certificate(s) issued by China based manufacturers in the name of importer, whereas invoices were issued by other supplier based at Hong Kong. In terms of notes for completing certificate of origin, in "Box 1,meant for goods "consigned from", actual exporters name as described in the invoice(s) must appear. The Rules of Determination of Origin of Goods under Asia-Pacific Trade Agreement, Rules, 2006. Notification No. 94/2006-Cus. (N.T) dated 31.08.2006 as amended) has no exclusive provision for accepting a certificate of origin for which invoice is issued by a non-party. Therefore, benefit of exemption fro....
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....the requirements for "Low Nickel Austenitic Stainless-Steel Sheet and Strip for manufacturing of utensil and kitchen appliances". Para 8.1 under the heading of "Chemical Composition" lays out the composition for such steel which is further detailed in Table 1 of the standard. The goods imported by the Appellant most closely correspond to grade N1 of the said Table-1 which was also admitted by the appellant during previous hearing. This clarifies that Low Nickel Austenitic Stainless Steel is a separate subcategory within categorisation of Austenitic Stainless Steel. * Reference was invited to Ministry of Steel's order S.O. 1673(E) dated27th May 2020 issued vide F.No. 1(8)/2019-TD. At serial no. 53 of Schedule 1 of which stated IS standard IS 15997:2012 relating to Low Nickel Austenitic Stainless-Steel Sheet and Strip for Utensil and Kitchen Appliances - Specification have been shown to correspond to ITC(HS) codes inter alia 7220 1290, 7220 2090, 7220 9090. It may be noted that this category of Austenitic Steel, which is different from Nickel Chromium Austenitic Type, does not fall under ITC(HS) Code 72209022 as claimed by the Appellant. This order has since been superse....
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....e authorities is out of its own imagination and not backed by any statutory or authentic literature. * The Respondent also submitted that steel imported by the Appellants is Low Nickel Chromium Austenitic Steel more closely corresponding to Grade N1, as provided under BIS 15997:2012. The Respondent has thus inferred that low Nickel Austenitic Steel is a separate category of steel within the sub-categorisation of Austenitic Steel. Indian Standards do not provide for any sub categories within 'Austenitic Steel'. There are different series of austenitic steel based on composition, but no criteria is laid down which could state as to what can be considered as Nickel Chromium Austenitic Steel. It is clear from the standards that even if the Nickel content is low, the product still continues to be Nickel Chromium Austenitic Steel and there is no separate category as Low Nickel Chromium Austenitic Steel. Had that been the case, there would have been such separate classification provided under any of the BIS Standards or the Customs Tariff or any of the Chapter Notes, Section Notes therein or any other statutory literature. In absence of the same, submission of the Respond....
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....ot discernible at all. * The order dated 27th May, 2020 (superseded by Order dated 5th February, 2024) has been issued by the Ministry of Steel to order (vide clause 2) that Steel and Steel Products specified in column (3) of Table 1 shall confirm to the corresponding Indian Standards specified in Column (2) of the said Table with effect from the dates specified in column (5) thereof. The extract of entry at serial no. 53 is given below: Sl No. Indian Standards Steel or steel products Indian Trades Classification (Harmonized System) Codes (ITC(HS)) Date of implementation (1) (2) (3) (4) (5) 53 IS 15997: 2012 Low Nikel Austenitic Stainless-Steel Sheet and Strip for Utensils and Kitchn Appliances Specification 72191300 72191400 72192320 72192390 72192421 72192422 72192423 72192429 72192490 72193220 72193290 72193320 72193390 72193420 72193490 72193520 72193590 72199012 72199013 72199090 72201290 72202090 72209090 With immediate effect &....
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.... 72209022 as cold rolled stainless steel (CRSS) Nickel Chromium Austenitic type. In the bills of entry, the description of the product has been given as "cold rolled stainless steel coils for manufacture of pipes and tubes". The scheme of classification of flat rolled products of stainless steel of width of less than 600 mm as per Customs Tariff, is as under: 6.2 The appellant(s) have relied upon the decision of this Tribunal in the case of M/s Shah Foils (cited supra) to claim that even very low percentage of Nickel in the range of 1%-2% is covered under Chapter sub-heading 7220 9022 as Nickel Chromium Austenitic type. In the decision of M/s Shah Foils, the Tribunal found that the whole case was made out for change of classification on the basis that when percentage of Nickel content in the product is less than 5-6%, the product will not qualify under "Nickel Chromium Austenitic Stainless Steel". The Tribunal in that case discussed the contention of the department including reliance on the information available in website of M/s AALCO Metals Limited (England & Wales) and M/s ASM International Limited but did not find it favourable. They also considered various literature produc....
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....ter described in the invoice. We find that country of origin certificates show name of the exporter as Shenzhen Yuxiangshun Trading Co. Ltd., China Guizhou Zhongrisianghe supply chain Co. Ltd. commercial invoices shows name as Guizhou Zhongruixianghe Supply Chain Co. Ltd Therefore, it is clear that the details filled in these two certificates are not as per the prescribed rules. 6.5 Indian Standards IS 15997:2012 were reaffirmed in 2018 and 2022 which added grades N1, N2 & N3 by providing specification for low nickel austenitic stainless steel sheet and strips for utensils and kitchen appliances. In March 2023, these standards were again amended to include N5, N6 and N7 grade having very low Nickel content for utensils and kitchen appliances. We further find that Serial no. 11 of IS Specification 15977:2012 which is reproduced below, provides nomenclature for various finish grades: 11 SURFACE FINISH The material shall be supplied in one of the standard finishes on both surfaces for mill finishes and one or both surfaces for polished/ground finishes. The different surface finishes are indicated in Table 4. Finish No. 1, 2D and 2B are classified as mill finishes.....
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....ns such as mechanical working, surface treatment such as Annealing, Descaling, Pickling, Scraping and surface finishing treatment etc. Further from the Explanatory Notes Vol-IV, Chapter 7174 of the World's Custom Organization 7th Edition (2022), it is noted that Chapter heading 7220 borrows and applies provisions of Explanatory Notes of Heading 72.1109, 72.12 & 72.10 which in turn borrows Explanatory notes of 72.08 and 72.09 mutatis mutandis. Therefore, multifarious processes are getting included in expression 'not further worked' to the products of heading 7220. We also find that Chapter Heading 72.11 permits certain processes and allows the same to be worked (for example corrugated, ribbed, chequered, embossed, bevelled or rounded at the edges) and heading 72.12 allows the products to be subjected to more than one type of coating, plating or cladding. Thus, there are processes which are allowed to be further carried out by heading 72.20. Similarly Heading 72.08 to 72.10 by virtue of borrowing, the products can be subjected to hot flattening, annealing, hardening, tempering, case-hardening, nitriding and similar heat treatments to improve the properties of metal. It also p....
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....d and applied by the Customs Authorities of all the nations. We find that the infraction noted by the department in the show cause notice need to be viewed properly from the angle as to whether the same is only a procedural infraction or has led to a substantive lapse which would lead to denial of benefit to the party. This standard as being laid down by us need to be properly applied by the department. 6.9 We are therefore, inclined to remand the matter to the adjudicating authority in following terms: 1. To determine classification of Cold Rolled Stainless Steel strips in coil with indicated grade. While doing so, the adjudicating authority shall be mindful of various permitted processes under various heads as per borrowing chain of processes of Explanatory Notes, which are borrowing and further borrowing from various other heads of Chapter 72. 2. To determine whether discrepancy pointed out by the department in commercial invoices Vs Certificate of Origin has led to a mere procedural infraction or is something of substantive discrepancy, which deserves to deny concessional duty benefits, despite dealing with a trade promotional law, where liberal constructio....
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....00 4.300 3,827.00 2D 0.26*500 890.00 5.050 4,494.50 2B 0.26*510 890.00 10.586 9,421.54 2B 0.25*440 890.00 2.540 2,265.94 2B 0.26*565 890.00 8.656 7,703.84 TOTAL : 53.542 47,652.38 Descriptn of Goods &for Services STAINLESS STEEL COLD ROLLEO COILS EX-STOCK GRADE J3,SURFACE - 2B CIF MUNDRA INDIA AS PER PROFORMA INVOICE NO FSTT 170504 DATED 20 AUG.JST 2018 OF GUIZHOU ZHONGRUIXIANGHE SUPPLY CHAIN CO , LTD CHINA IMPORT LICENSE NUMBER 0505000251 FOR THE VALUE NOT EXCEEDING THE ORAFT AMOUNT GOODS ARE FREFLY IMPORTABLE UNDER FOREIGN TRADE POLICY OF INDIA 2015-2020 AND NOT IN THE NEGATIVE LIST OF THE SAID POLICY. LC NUMBER: 18542FLCOU00086, ISSUANCE DATE: 100305 éŸ©å¾·å‹ ORIGINAL 1. Goods consigned Irors Exporter's business anmo, cudmou, country] SHENZHEN YUXIANGSKJK TRADING CO. , LTD, CHEHA OVE GUIZHOU ZONGRUIXTANGHE SUPPLY CHAIN CO. , LTD ADMINISTRATIVE BUILDING OF MANAGEMENT CONNITTET OF SHITYUR INDUSTRIAL PARK, 2HOURSHAN DESERICT, L'IRANSHJI CUTE, GUEZHUS PROWINCH, CHINA. Reference No B104702037880037 CERTIFICATE OF ORIGIN Asia-Pacific Trada Agreement mbisten Doci [Combined Declaration and Certificate) Issued in The People's Rep....