COMMISSIONER OF CUSTOMS Vs. GARG STEEL

JUDGEMENT

(1.) THE respondents had filed a Bill of Entry dated 16.4.2004 for clearance of imported goods declared as "Non -Alloy Steel Re -rollable Scrap". The price of the goods was declared as US 250 per MT (CIF). The declared description and value of the goods were the same as the respective particulars in the foreign supplier's invoice dated 24.3.2004. The Bill of Entry classified the goods under CTH 7204 49 00 and GET sub -heading 7204.90, claiming the benefit of Customs Notification No. 21/2002 dated 1.3.2002 and Central Excise Notification No. 6/2002 dated 1.3.2002. In terms of these Notifications, the importer need to pay Basic Customs Duty (BCD) @ 15% and Coutervailing Duty (CVD) @ 8% only. On physical examination, the goods were found to be 'Rusted Pitted Pipes of Steel' of various diameters ranging from 2 inches to 20 inches and of approximate length of 19 feet. The Customs authorities took the view that the goods required to be classified as serviceable tubes of iron under CTH 7306 90 11 and GET sub -heading 7306.90 attracting higher rates of BCD and CVD (20% and 16% respectively). They also proposed to reject the declared value on the ground that the description and value of the goods had been misdeclared. The value of the goods was proposed to be enhanced under Rule 8 of the Customs Valuation Rules, 1988 to US 370 per MT (CIF) on the basis of the assessable value determined for similar goods covered by a contemporaneous import. The original authority classified the goods under CTH 7306 90 11 and, after rejecting the declared price, determined the assessable value of the goods on the basis of US 370 per MT (CIF) under Rule 8 ibid on the basis of the assessable value already determined by the department in respect of similar goods imported by the same party from the same supplier vide Bill of Entry No. 609639 dated 1.4.2004. Having found the description and value of the goods to have been misdeclared by the importer, the original authority ordered confiscation of the goods under Section 111(m) of the Customs Act with option for redemption on payment of a fine of Rs. 2 lakhs under Section 125 of the Act. It also imposed a penalty of Rs. l lakh on the importer under Section 112(a) of the Act.

(2.) IN the appeal filed by the importer, learned Commissioner (Appeals) affirmed the finding of misdeclaration but permitted the goods to be cleared as "waste and scrap" after mutilation under Section 24 of the Customs Act. As regards valuation of the goods, redemption fine and penalty, she did not interfere with the decision of the lower authority. In the present appeal, the department challenges the order for mutilation of the misdeclared goods, on the strength of the Supreme Court's judgment in UOI v. Madanlal Steel Industries Ltd. 2001 (132) ELT 526 (SC). it is also pointed out that no rules have been framed for the procedure of mutilation of imported goods under Section 24 ibid. The importer has filed cross -objection challenging the appellate Commissioner's finding of misdeclaration against them. It is contended that the goods i.e. 'rusted and pitted pipes' were only to be treated as "waste and scrap"' and classified as such in terms of Note 8 (a) of Section XV of the CTA Schedule.

(3.) AFTER examining the records, hearing both sides and considering their submissions, we find that, admittedly, the imported consignment contained only "rusted and pitted pipes of steel" of diameter ranging from 2 to 20 inches and of approximate length of 19 feet as found on physical examination. The importer declared the goods in the Bill of Entry as "Non -Alloy Steel Re -rollable Scrap" in the same way as described in the relevant invoice. They classified it under CTH 72.04 comprised in Section XV of the CTA Schedule: Section Note 8 (a) reads thus: