Rusted and Damaged Rolls are Scrap and must be Assessed in which Condition it Imported
IN THE CESTAT, PRINCIPAL BENCH, NEW DELHI
[COURT NO. III]
Ms. Archana Wadhwa, Member (J) and Shri Mathew John, Member (T)
COMMISSIONER OF CUSTOMS (ICD), NEW DELHI
Final Order No. C/A/176/2012-Cus.(PB), dated 8-6-2012 in Appeal No. C/771/2007
REPRESENTED BY: Shri Piyush Kumar, Advocate, for the Appellant.
Shri K.P. Singh, AR, for the Respondent.
[Order per: Archana Wadhwa, Member (J)]. - As per facts on record, the appellants imported a consignment of used and old re-rollable scrap from Kristi Corporation, USA. The declaration made in the bills of entry dated 14-9-2006 and 5-9-2006 declared the goods as re-rollable scrap, classifiable under heading 7204 49 00, attracting basic customs duty as 5%, countervailing duty 16%, Educational Cess 2% and special additional duty 4%.
2. The said imported consignment contained in 19 containers was found to be tallied with declared weight of the goods. However, as the goods on examination were found to be used and old rollers appearing to be part of steel sheet/plate bending machines, samples were drawn and sent to CRCL. As per test report dated 16-4-2007 of CRCL, the sample was a circular metallic piece made of steel having uneven flat surface on top and bottom, the sides were rusted and the chromium content was more than 0.3% by weight.
3. The appellants were directed to produce the literature so as to show the origin of the goods. Vide their letter dated 29-9-2006, the appellants submitted that his supplier has denied the availability of any literature inasmuch as the goods were scrap and rejected re-rollable material, which comes from upcountry via local traders.
4. Subsequently the consignment was got examined from Chartered Engineer (CE), govt. valuer. As per his report, all the rolls were solid and none of these was hollow, that these rolls were part of steel sheet/plate bending machines, that all the rolls were having necks but some of these were with threading on the ends, while others were without threading, that these threads were for mounting couplings for power driving the same, while those without threads were the idle rollers (without power driven); that the curvature towards the center of the rolls from both the sides vary in different rolls; that these rolls did not seem to be made of stainless steel, as all the rolls were having corrosions while stainless steel was highly resistant to corrosion (atmosphere oxidation); that the conditions of these rolls were reasonably good, even while the same were rusted; that these rolls seem to be made of induction hardened high carbon steel, as was required for the rolls of plate bending machines; that these rolls were having preform shapes to give the desired radius to the plate which is to be bent; that these rolls cannot be termed as scrap, as the same may be used in the plate bending machine, suitable to bend plates approx 5 mm thick.
5. Based upon the above report of the CE, Revenue entertained a view that inasmuch as the material in question is capable of being used as rollers after small repairing/re-conditioning, the same is classifiable under heading 8455 9000, attracting higher rate of duty. Accordingly, proceedings for confirmation of differential customs duty of Rs. 6,70,080/- were initiated against the appellants by way of issuance of Show Cause Notice (SCN) dated 7-6-2007. The notice also alleged violation of the Para 2.33 of the Handbook of Procedures under Foreign Trade Policy, 2004 and proposed confiscation of the goods.
6. The said SCN stands culminated into impugned order passed by Commissioner of Customs vide which he has confirmed the demand of duty of Rs. 6,70,080/- by treating the goods as part of steel sheet, plate bending machine and rollers. He has also upheld violation of the provisions of Foreign Trade Policy. Accordingly goods stands confiscated with an option to the appellants to redeem the same on payment of redemption fine of Rs. 7 lakhs. Penalty of Rs. 4 lakhs stands imposed on the appellants under the provisions of Section 112 of the Customs Act, 1962.
The said order is impugned before Tribunal.
7. After hearing both the sides duly represented by Shri Piyush Kumar, Id. Advocate appearing for the appellants and Shri K.P. Singh, Id. AR appearing for the Revenue, we find that the issue required to be decided in the present appeal is as to whether the goods imported by the appellants and declared by them as re-rollable scrap is actually parts of steel sheets/plate bending machines or not? Admittedly, the imported consignment consists 'of old, used, rusted and corroded parts of various machines and as such goods are bound to be parts of machines. The question required to be decided is as to whether the same had become unusable on account of being old and used parts of machines. The description as contained in invoices issued by M/s. Kristi Corporation, USA is to the effect that the goods are MS re-rollable scrap. The bill of lading also describes goods as re-rollable scrap. To the same effect is the packing list as also the certificate of CE. To the same effect is the pre-shipment certificate accompanying the goods.
8. The Commissioner in his impugned order has dealt with the said pre-shipment inspection certificate submitted by the appellants and has held that the same is prescribed mainly for the purpose to ensure that the consignment does not contain any type of arms, ammunition, mines, shells, corrosion, radio active contaminated or any other explosive material for the purpose of clearance of scrap. The said certificate is based on visual inspection during loading process, as mentioned in the certificate itself. As such he has discarded the said certificate and proceeded ahead to rely upon the Chartered Engineer's certificate given in India on examination of the goods.
9. It is seen that CRCL, report prepared by the Revenue does not indicate whether the goods are re-rollable scrap or not. The Chartered Engineer's report is to the effect that the goods in question are corroded and most of the rollers do not have threading on the neck. He has further observed that the rolls with threading are for mountain coupling for power driving whereas those without thread are ideal rollers without power driven. Admittedly Chartered Engineer has observed in his report that rolls are having corrosion and have uneven surface, apart from being very rusted. The Commissioner has adopted the pinion of the said certificate of Chartered Engineer whereas he has stated that the rollers can be used after small repair/re-conditioning and hence cannot be treated as re-rollable scrap.
10. We do not find any merit in the above stand of the Revenue. Admittedly the appellants have ordered for re-rollable scrap, the goods stand described is re-rollable scrap in the supplier's invoice as also in all other connected documents including the pre-shipment inspection certificate. There is no deviation in the weight declared by the appellants. The price of the goods also stand paid by treating the same as scrap inasmuch as there is no evidence on record produced by the Revenue indicating that the goods were valued as rollers. Even we find that the Chartered Engineer's certificate does not fully advance the Revenue's case inasmuch as there is no dispute that the goods were rusted, old and damaged. The observations of the Chartered Engineer are to the effect that such rollers after repairing/re-conditioning are capable of being used as rollers. It is well settled law that the goods have to be assessed in the condition in which they are imported. Even if some of the rollers can be put to use after some re-conditioning, the said fact will not make the imported goods as rollers to be used is parts of the machine.
11. The decision of the Hon'ble High Court of Punjab & Haryana in the case of Patiala Castings P. Ltd. v. Union of India reported in 2003 (156) E.L.T. 458 (P & H) fully covers the appellants' case. While dealing with an identical case where the imported consignment consisted of old and used, rusted and waste & scrap, the Hon'ble High Court observed that inasmuch as admittedly the consignment was of non-usable pipes, mere fact that they can be used as pipes in some of the cases by itself will not lead to the conclusion that what has been imported was not scrap but pipes. By observing that it may be possible that one person considers the goods as scrap which may appear different or reusable to another. The Hon'ble High Court rejected the Revenue's contention that the consignment was to be considered as import of pipes and not scrap. To the same effect is the decision of the Tribunal in the case of Quick Car Wash P. Ltd. reported 2007 (214) E.L.T. 517 (Tri.).
12. Apart from above, we find that the appellants have issued invoices to various re-rolling units describing goods as re-rollable goods. Revenue has not conducted any investigation to show that the purchaser of the goods in question have not used the said goods as re-rollable but have used the same as parts of steel sheet/plate bending machines. There is virtually no evidence on record to indicate that the goods in question stand utilised as parts of plate bending machines and not as scrap.
13. In view of the foregoing discussion, we find no reasons to agree with the conclusion arrived at by the adjudicating authority. Accordingly the impugned order is set aside and appeal is allowed with consequential relief to the appellants.
(Pronounced in the open Court)