COMMISSIONER, CUSTOMS (PREVENTIVE) Vs. MONARCH OVERSEAS

JUDGEMENT

(1.) By these appeals under section 130 of the Customs Act, 1962, the appellant has challenged the common order dated 09.02.2018 passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench, Ahmedabad (hereinafter referred to as the "Tribunal") in Order No.A/11068

(2.) The respondents-assessees are 100% Export Oriented Units engaged in the manufacture of brass articles. During the relevant period, the assessees had imported brass metal scrap containing other impurities without payment of duty as per Notification No.52/2003-Cus dated 31.03.2003, as amended. Such scrap was later segregated into foundry and non-foundry scrap: foundry scrap was used in the manufacture of brass products, whereas the non-foundry scrap containing other impurities like rubber, plastic, etc. was sold in the DTA on discharge of appropriate excise duty. Demand notices came to be issued to the assessees mainly on two grounds alleging that: (i) since segregation of imported brass scrap into foundry and non-foundry did not result into manufacture, as per CBEC Circular No.62 of 2001 dated 12.11.2001, the clearance of non-foundry scrap in DTA on payment of applicable excise duty is in contravention of Notification No.53/2003-Cus dated 31.03.2003 and, therefore, applicable import duty would be recoverable from the assessees; and/or (ii) the assessees had exceeded the use of laid down ratio/norms of scrap in the segregation activity and/or in the manufacture of brass articles, contrary to the norms fixed by the Norms Committee or limit prescribed under the said notification, consequently, the utilization/clearance of excess scrap, could be said to have been not used for the intended purpose and in contravention of the said Notification No.52/2003-Cus and, accordingly, applicable import duty foregone is recoverable on the said excess quantity.

(3.) Mr. Nirzar Desai, learned Senior Standing Counsel for the appellant in each of the appeals, submitted that the Tribunal was not justified in holding that the segregation activity is a part of manufacturing of brass articles from imported mixed brass scrap. It was submitted that the respondents are liable to pay customs duty on the imported scrap cleared "as such" on the clearance of segregated non-foundry scrap in DTA. Reference was made to the Circular No.62/2001-Cus dated 12.11.2001, which has been issued regarding valuation of certain variety of plastic waste and scrap which is not generated out of the manufacturing operations, but emerges during segregation of such plastic waste and scrap after import, to point out that it has been provided therein that for the purpose of charging duty, such plastic waste and scrap will have to be treated as unutilised material and valuation of such waste and scrap will have to be done on the basis of their CIF value at the time of import. It was submitted that it is this circular which would be applicable to the facts of the present case and hence, the plastic waste which is cleared after segregation is liable to customs duty on goods imported "as such". It was submitted that the Tribunal has wrongly placed reliance upon the CBEC Circular No.1029/2016-CX dated 10.05.2016 despite the fact that the same has been issued in respect of Cenvat Credit Rules, 2004, more so, when the facts and circumstances of this case are identical and properly clarified and covered under Circular No.62/2001-Cus dated 12.11.2001, which has been issued in respect of the EOU/SEZ Units. It was submitted that the maximum waste permitted in case of brass scrap is 2% and, therefore, any waste in excess thereof is required to be cleared by payment of customs duty on import of such articles "as such".