V.H. SAFIQUR REHMAN AND ANR. Vs. CC
LAWS(CB)-2000-11-1
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL BANGALORE
Decided on November 27,2000

V.H. Safiqur Rehman And Anr. Appellant
VERSUS
Cc Respondents




JUDGEMENT

S.S.SEKHON,MEMBER (T) - (1.)THE miscellaneous application filed for early hearing is considered. As goods are still under clearance, early hearing is granted. Stay applications taken up, and after granting waiver of duty and penalty in the matter, appeals are taken up and are disposed of with the consent of both the sides.
These two appeals have been filed by the importer and the Managing Director of the Importing Private Ltd. company. The importers had imported two consignments of bushelings scrap from Malaysia at the Port of ICD, Bangalore. While filing the Bill of entries dated 10.5.1999 and 11.5.1999, the appellants have filed a letter dated 10.5.1999 (extracted below) intimating to the Assistant Commissioner of Customs, ICD Bangalore pursuant to filing of the Bill of entries:

Please not that we have been advised by our principle M/s. Syarikat Perkilangan Best Gaya SDN, BHD, Malaysia, that they have shipped Bushelling scrap (6 x 20' & 5 x 20') under two different Bill of Lading.

We request you to kindly authorise open order under Section 46, and assessment of Bill of Entry. We also wish to inform you that the materials are scrap in nature, however, if any big sheets are found the same may please be allowed to be mutilated in the presence of the Customs Officials, the mutilation charges will be borne by us.

After that, an examination order was given on the Bill of Entry to open and examine 100% and check the consignment. This examination order is dated 13.5.1999 which was assigned to Examiner Vijayalaxmi, Inspector (Examination) to comply with. She has given a report that the cargo is "bushelling scrap" and the containers' examination could be done in detail at the time of de -stuffing and a sample was drawn and sent as directed. This report has been countersigned by A.S. Raju, Superintendent of ICD Examination Centre.

(2.)ON 19.5.1999 the DRI officers at Bangalore entered the fray, and investigated about this consignment. They conducted an operation under Mahazar and determined that the consignment consisted majority of copper and brass coated new sheets along with 'busheling scrap', and recorded the statement of various personnel and thereafter a show cause notice was issued by the Additional Director -General, Revenue Intelligence. This show cause notice was replied and adjudicated by the Ld. Commissioner after considering the reply of the appellants, at page 9 para (c); details of the quantity of copper coated non alloy sheets is shown to be 10.5 MTs, Metal sheets 214.941 MT and bushelings scrap as 8 MT; and duties have been worked out in respect of sheets and scraps to be Rs. 13,67,985.70 and Rs. 8,155/ - respectively. However, 'bushelings scrap' in Bill of Entry 7087 was assessed for Rs. 97,220/ - aggregating to Rs. 1,78,790/ - out of which duty of Rs. 81,570/ - was paid on 14.5.1999 as per the endorsement on the Bill of Entry 7083 dated 13.5.1999 and considering the duty payable and duty actually paid, the differential duty of Rs. 12,94,580.70 was found and alleged to be evaded and confirmed in the order impugned. The goods were ordered to be confiscated on the charge of concealment and mis -declaration of quantity and description under Section 111(d), (1) & (m) of the Customs Act, 1962 and were ordered to be redeemed, on payment of a fine of Rs. 10,00,000/ -. The 8 MT bushelings were used as a cover for concealment of metal sheets and the same was ordered to be confiscated under Section 119 of the Customs Act and was given an option to be redeemed on payment of fine of Rs. 12,000/ -. Differential duty of Rs. 12,94,581/ - under Section 28(1) of the Customs Act was determined and demanded along with interest @ 20% and penalty of Rs. 12,94,581 / - under Section 114A was imposed on the importing company and a penalty of Rs. 5,00,000/ - on the Managing Director was also imposed.
(3.)WE have heard Ld. Advocate Shri V. Balasubramanian for the appellants, who has submitted the definition of 'bushelings scrap' as obtained by him through the Internet from American iron and Steel Institute, which reads as follows:
Busheling:

Steel scrap consisting of sheet clips and stampings from metal production. This term arose from the practice of Collecting the material in buhel baskets through World War II.

He submitted that their consignment under import is consisting of sheet clips and old and rusted sheets and stampings of various sizes and dimensions and the charges arrived at that sheets being new and their quantities determined are only visual estimates has been admitted in the impugned order as well as the show cause notice. The entire consignment was never verified and only visual test/check was carried out by the assessing officers. He further submitted that as per the Madras High Court order in the case of Madan Lal Steels as reported in : 1991 (56) ELT 705, the Tribunal's order in the case of Antartic Industries Ltd. : 1999 (108) ELT 496 thereof, the Tribunal has relied upon the decision of CBEC Clarification issued by Chambers of Commerce & Industries dated 16.6.1995 that whenever serviceable goods are noticed in a consignment of scrap, they are ordered to be mutilated to such an extent to become steel scraps and benefit under the relevant Notification should be extended and the consignment should be assessed as steel scraps. He submitted that on 10.5.1999 experiencing the difficulties encountered by the imports in the earlier consignment, while filing the Bill of Entry they had filed a letter intimating the Proper officer that in the consignment if serviceable items (i.e. big sheets) are found, the same may be ordered to be mutilated. He relied upon the decision of CC, Bombay v. Hardik Industrial Corporation : 1998 (97) ELT 25 (SC) para 7, wherein it has been held as follows:

7. The point of time at which the respondent made the offer of mutilation is relevant. If, at the very outset, the respondent had asked for mutilation of the goods, that might have been a different matter... .

Hence, he submits that there was no decision taken on this letter by the Proper officer. He points out to the findings of the Commissioner on this aspect arrived at in para 43 of the impugned order and submitted that the observation of the Collector that no such letter was given as recorded is without due verification. He submits that a photo copy to the letter which was submitted to the proper officer of Customs is at page 136 of the Paper Book filed by the present appellants and should be considered and should have been decided as a bona fide request by them to have mutilation of serviceable goods which are routinely found in consignments of scrap. He submits that the entire case has been made by a pre judged mind against the present importers and the benefit of the Supreme Court decision on mutilation under Section 24 of the Customs Act, 1962 has been denied without any case or cause. He submitted that the entire determination of demand of duty and penalties under Section 114A and 112A on the Managing Director are required to be set aside. Along with the Redemption Fine and goods should be allowed to be mutilated by putting them in the furnace in their factory as they are actual users of the goods and have executed an end -use verification bond as provided for in the Notification 20/99.

Ld. D.R. submits that the Collector has given a clear -cut finding regarding the absence of the letter dated 10.5.1999 on the question of request for mutilation. The bona fide of the appellants are not established in as much as two -thirds of the consignment has been found to be in the form of sheets which are apparently new and are admitted, can be re -rolled and re -worked and used as sheets. They should, therefore, pay the duty as determined in the adjudication order. He relied on the decision of Hardik Industrial Corporation to submit that mutilation is not a right, when the appellants tried to clear a consignment which is predominantly of sheets by declaring it as bushelings. Therefore, the consignment is required to be confiscated for mis -declaration and for avoiding the payment of duty at the higher rate on sheets. The values for the sheets and the quantities of the sheets as determined and arrived at by the Commissioner are correct in law and his orders for confiscation and Redemption Fine should therefore be upheld along with the duty demands determined vide para (c) at page 9 of his order. He submitted that the Collector has come to clear -cut finding as regards the mens rea on the part of the Managing Director. The very fact that a bond was given for end -use of scrap and also the letter dated 10.5.1999 has been established, not to be on the Customs record they should induce the Tribunal to confirm the order of penalty, duty and Redemption Fine on the goods as well as the importing company and the Managing Director.



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