Department's case is built only on basis of visual examination report - It does not appeal to common sense or logic that any prudent man would pay price of prime metal for procuring seconds/defective material - Benefit of Notfn. 21/2002-Cus allowed
THE appellant filed a bill of entry for the import of 317.20 MTs of ‘Non - alloy Hot-rolled Cut Steel Sheets' valued at Rs.1,42,03,390/- @ USD 1020/MT and claimed the benefit of notification No.21/2002-Cus dated 01/03/2002 which prescribes ‘nil' basic customs duty on such goods other than seconds and defectives.
The goods were examined by the Docks Staff in the presence of the importer and it was observed that out of 41 bundles ((244) pieces) non-alloy hot rolled steel sheets, only 6-7 bundles were found pasted with removable paper labels bearing the details like description, steel grade specification, coil no., weight, size, dated, etc. and the paper labels did not mention the Heat No. The Steel sheets were found heavily rusted, which was other than atmospheric rust. On visual inspection and the light of the above observation, the goods appeared to be secondary and not of prime quality. The importer requested for provisional release of the goods which was allowed on execution of bond and bank guarantee. The statement of the importer was recorded wherein he agreed that the goods were rusted and the importer also paid the differential duty of Rs. 17,40,863/-.
A show cause notice was issued to the appellant proposing to deny the benefit of notification No. 21/2002-Cus and demand differential duty of Rs. 17,40,863/- and also proposing to confiscate the goods and impose penalties. The adjudicating authority observed that the appellant had submitted manufacturer's Mill Test Certificates for the goods under import as per which the goods were of prime quality. The appellant had also declared a value of USD 1020 per MT for the goods and the contemporaneous imports value of similar goods ranged from USD 1020 to USD 1030 and no prudent person would import seconds/defective by paying a higher price applicable to prime metals. Other than the visual examination report, there was no other evidence led by the Revenue to prove that the goods were of seconds/defective quality. Accordingly, he dropped the proceedings.
The Revenue succeeded in appeal before Commissioner (Appeals) and, therefore, the appellant is before the CESTAT.
The Bench observed -
“5.1 We have perused the import documents such as invoice, packing list, Mill Test Certificate issued by the manufacture of the goods. From these documents, it is seen that the goods under import tally in size, no. and weight of coils, no. of pieces, etc as given in the Mill Test Certificate. We also raised a query with the ld. DR as to whether the details given in the paper labels found on some of the coils matched with those given in the Mill Test Certificate pertained to the goods under import and as per the said certificate, the goods are of prime quality. The department's case is built only on the basis of visual examination report of the departmental officers. No sample of the goods under import were drawn and sent for testing by an independent testing agency to ascertain whether the goods under import were different from those indicated in the Mill Test Certificate or not. Further, it is on record that the price declared for the goods under import match with those for prime material. It does not appeal to common sense or logic that any prudent man would pay the price of prime metal for procuring seconds/defective material. Accordingly, we are of the considered view that the department has not proved the case of mis-declaration with any degree of reliability or acceptability.”
The order of the lower authority was set aside and the appeals allowed with consequential relief.