TOWER STEELS (I) LTD. Vs. CC

JUDGEMENT

(1.) THE appellants imported a consignment of goods declared as "Light Melting Scrap - Misprint sheets, sheet cutting scrap" weighing 193.935 M.Ts, shipped in 7 containers from Malaysia. The Directorate of Revenue Intelligence, on examination of the goods and perusal of the connected documents, found that the goods were described only as "Light Melting Scrap" (LMS) in the Bill of Lading, Invoice, and related documents except the Bill of Entry. The Bill of Entry classified the goods under sub -heading 7204.49 of the First Schedule to the Customs Tariff Act and claimed the benefit of concessional rate of duty in terms of SI. No. 158 in the Table annexed to Notification No. dt. 1.3.2000. The appellants, on the basis of this claim, worked out their duty liability at Rs. 1,57,420/ -. Detailed examination of the goods revealed the contents of the 7 containers as under:

(2.) THE present appeal is against the above order. It is stated in this appeal that the imported goods were correctly declared in the Bill of Entry and there was no misdeclaration. It is also contended that the entire goods were actually melted in furnace and, therefore, the benefit of the Notification was not liable to be denied. The appellants have also relied on the Chemical Test Report to the extent of claiming that most of the goods were in rusted condition and not usable otherwise than as scrap. With regard to the valuation of the goods, the appellants have challenged the reliance placed by the adjudicating authority on EDI data on contemporaneous imports. It is submitted that the prices shown in EDI data pertained to much smaller quantities of goods compared to the subject goods and that the descriptions of goods in EDI data were at variance with the description of the subject goods. The country of origin was also different. Therefore, EDI data were not to be relied on. According to the appellants, the invoice value of the subject goods represented the correct transaction value for the purpose of Section 14 of the Customs Act. These grounds have been reiterated by Id. Counsel. He has filed a synopsis today, which gives a break -up of the goods into those which could be considered as scrap and those which could not. It admits that, apart from 49.201 M.Ts. of scrap already accepted as a scrap in the impugned order, a further quantity of 41.34 M.Ts. for the rest of the consignment could also be treated as scrap on account of the rust found therein. It is argued that the benefit of the Notification is admissible at least in respect of 49.201 + 41.34 : 90.541 M.Ts. of scrap. It is further argued in the synopsis that there is no evidence of contemporaneous imports of identical or similar goods of the same quantity from the same country and, therefore, rejection of the transaction value is without any basis. The goods mentioned in the EDI data were imported from countries other than Malaysia, their description was not the same as that of the goods in question, their quantities were much lower than the quantities imported by the appellants. Counsel has also challenged the confiscation of 49.201 M.Ts. of scrap by relying on the mahazar drawn in this case. English translation of the mahazar has been produced by him. In this Mahazar, the witnesses have stated what they witnessed upon opening of the seven containers. The scrap was found along with circles in one of the containers only, therefore Id. Counsel submits that the finding of the adjudicating authority that the scrap was used for concealing the rest of the consignment is incorrect. Moreover, the scrap had been correctly declared in the Bill of Entry. Therefore, Counsel argues, the confiscation of the above scrap under Section 119 of the Customs Act is bad. The classification of the remaining items under entries other than heading 72.04 of the Customs Tariff has been questioned by Id. Counsel on the basis of the definition of "waste and scrap" under Note 8 (a) to Section XV of the Tariff Schedule. The quanta of redemption five and penalty have also been challenged. Counsel has relied on case law on various points.

(3.) WE have carefully considered the submissions. We find that a quantity of 49.201 M.Ts. of scrap contained in the imported consignment has been accepted as scrap by the adjudicating authority. Its classification under heading 72.04, claimed by the importer, has not under heading 72.04, claimed by the importer, has not been disputed in the impugned order. Thus the department's charge of misdeclaration stands rejected in respect of this party of the consignment. Yet this quantity of scrap has also been confiscated by the Commissioner under Section 119 of the Customs Act. This confiscation is based on the finding of the scrap having been used for concealing the other materials in the consignment. On a close perusal of the impugned order, we find that Id. Commissioner has not categorically found that the 49.201 M.Ts. of scrap were used for physically concealing the remaining goods. The concealment found by the Commissioner appears to be in a sense other than physical. But Section 119 of the Customs Act requires physical concealment to be established before imposition of penalty. This requirement is not met in this case. Apart from this, we find from the mahazar that the scrap was contained only in one container, alongwith circles. There was no scrap in any of the remaining six containers. Hence no part of the scrap imported by the appellants could have concealed the material contained in the said six containers. Thus we find no basis for the confiscation ordered under Section 119 of the Customs Act in respect of 49.201 M.Ts. of scrap. This confiscation is set aside. Consequently, redemption fine in lieu of this confiscation stands vacated.