TATA IRON AND STEEL CO. LIMITED Vs. CCE

JUDGEMENT

(1.) M /s. Tata Iron and Steel Co. Limited (here in referred to as TISCO) held an advance licence dt. 11.7.96. Under this Licence they imported Low Silica Lime Stone at Paradeep Port and filed a Bill of Entry for home consumption dt. 3.4.97 for the clearance of 19,498 MT of this material declaring assessable value at Rs. 1,29,31,264.00. They claimed the benefit of complete exemption of duty amounting to Rs. 34,91,441 under the Notf. No. 79/95 -Cus. dt. 31.3.95 and DEEC provisions on the basis of the certificate dt. 25.3.97 of size, assay and moisture issued by M/s. Mitra S.K. Limited, Calcutta. This certificate showed CaO contents of Low Silica Lime Stone of 54.52%. On scrutiny of the said advance licence and DEEC Book, the Customs Authorities observed that the condition of import was that the imported Low Silica Lime Stone should contain CaO more than 53%. Before the clearance of the imported material, a representative sample was drawn from the consignment in the presence of the representative of TISCO and sent for chemical test to the Chemical Laboratory of Customs House, Calcutta vide Test Memo dt. 3.4.97. Pending receipt of the test report, the imported material was allowed clearance provisionally on execution of a PD Bond dt. 3.4.97 by the importer. The Chemical Examiner, Calcutta vide his report dt. 14.5.97 intimated that CaO contents of the representative sample was 52.2% by weight. Consequently, a demand -cum show cause notice dt. 28.1.98 followed by a corrigendum dt. 9.9.99 was issued to the importer by the Assistant Commissioner of Customs, Bhubaneswar calling upon them to show cause why the Central Excise duty amounting to Rs. 34,91,441 should not be recovered from them under Section 28 of the Customs Act, 1962 or why an amount equal to customs duty should not be recovered from them by enforcing the bond executed by them under Section 18 and why the interest at the rate of 20% per annum should not be collected by them under Section 28AA of the Customs Act, 1962.

(2.) IN response to the above notice, the noticee asked for a copy of the test report which was provided to them by the Assistant Commissioner of Customs under his letter dt. 23.2.98. TISCO, however, vide their letter dated 2,3.98 addressed to the customs authorities submitted that chemical test conducted by the Custom House, Calcutta was not in conformity with the test result of the goods at the loading Port RAS AL KHAIMAH, U.A.E. by M/s. Mitra S.K. Private Limited an independent surveyor where the analysis showed the CaO content at 54.53%, In these circumstances, they requested for retesting to be conducted by the Chief Chemist, Central Revenue Control Laboratory, New Delhi (CRCL).

(3.) AS per their request, the second set of samples of the imported material along with the other 10 cases duly repacked and resealed in the presence of the representative of TISCO who had signed test memos as well as the repacked covers of the papers, was sent to CRCL, New Delhi vide test memo dt. 15.9.99 by the Assistant Commissioner of Customs, Paradeep. The Director (Revenue Laboratory), CRCL vide his report dt. 28.1.2000 intimated that CaO and of silica contents were found to be 51.8% and 0.19% respectively by weight. The result of this test report was also intimated to TISCO by the Assistant Commissioner of Customs, Paradeep vide his letter dated 11.2.2000. M/s. TISCO replied to the show cause notice under their letter dt. 18.3.98 and appeared for personal hearing before the Commissioner on 6.3.2000. After considering the submissions made by the noticee party, the Commissioner of Customs, Bhubaneswar passed the Order dated 23.377.4.2000, The Commissioner in his order has observed that under Annexure V of the Value Based Advance Licence issued in favour of TISCO, there is a condition that the low silica lime stone to be imported shall contain CaO more than 53% by weight. He has observed that as per the conditions of the licence read with Notf. No. 79/95 -Cus as amended, TISCO were entitled to duty exemption only when CaO content in the imported material was more than 53%. It is observed that the Chemical Laboratory, Custom House, Calcutta and the Director, CRCL, New Delhi on testing the representative samples of the imported material determined the contents of CaO at 52.2% and 51.8% respectively. Both these test results determined CaO contents in the imported material at less than 53% by weight. Thus, TISCO have contravened the provisions of the Value Based Advance Licence and DEEC scheme read with Notf. No. 79/95 -Cus. The Commissioner in his order has rejected the plea of the party that the process of drawing samples by the custom department did not conform to IS standards with the observation that TISCO had not spelt out as to how the process of drawing of the samples by the Customs department did not conform to the IS standards. He has observed that the noticee's contention that the samples drawn were not the representative samples and the test results were erroneous is merely based on assumption; that such contention based on surmise is not acceptable under the law; that these arguments had been put forth only because the test results have gone against TISCO; that the retesting of the samples was undertaken at the request and cost of TISCO; that as per the case record at no time i.e. whether at the original samples drawing stage or at the retest sample stages the party had lodged any complaint that the sample drawn was not of representative character or that the manner of drawing of the samples did not conform to IS standards; that his factual position is also found to have been accepted by the party in their written note submitted at the time of personal hearing on 6.3.2000; that in not having lodged any protest at any stage on drawal of samples, TISCO cannot at this stage put forth the above contentions which are found to be unsubstantiated.