Denial of exemption on coal for ash content more than 12%.

PJ/Case Law /2016-17/3296

Case- FAIRDEAL SUPPLIES (P) LTD. VERSUS COMMISSIONER OF CUSTOMS, JAMNAGAR

Citation- 2016 (339) E.L.T. 124 (Tri. - Ahmd.)

Brief Facts:-When the matter was called, none appears for the appellants. None also appeared for the appellants on the last two occasions when it was listed on 1-9-2015 and 18-11-2015. It is observed that the appeal is an old one, pertaining to 2007. Therefore, they take up the appeal for disposal on the basis of records available.

Briefly stated, the facts in the present appeal, arethat M/s. Fairdeal Supplies (P) Ltd., Kolkata, the appellant herein, imported coking coal of Chinese origin at Pipavav Port and filed 4 bills of entry in July and August, 2002 to clear the consignments. The ash content was declared less than 12 per cent and exemption under the Customs Notification No. 21/2002 was claimed. The bills of entry were provisionally assessed for want of original documents and test result. Only one representative sample was drawn (which related to the Bill of Entry No. 26/2002-03, dated 17-7-2002) because the consignments covered by all the four bills of entry were for the same importer, of the same commodity and imported in the same vessel. The sample was drawn on 18-7-2002 in presence of the manager of the appellant-company, who stated in writing on the sample-drawal form, “the sample was drawn in their presence and they were perfectly satisfied with the manner of sampling and one sealed sample was given.” The test result showed ash content at 15.1%. The importer was asked (vide ACC's letter dated 1-8-2005) to inform why the bills of entry should not be finally assessed at effective rate of duty. The course of final assessment was then followed after hearing the importer. The ACC observed that two test results confirmed that the ash content was more than 12%, and hence denied exemption under the Customs Notification No. 21/2002 and ordered final assessment of all the four bills of entry at 15% rate of duty.

Aggrieved by the same, the appellants filed an appeal with the Commissioner of Customs (Appeals), who vide his impugned OIA, dated 31-3-2007, dismissed their appeal. Hence, the appellants are before us in the present appeal.

Respondents Contention:-Heard the learned Authorised Representative for theRevenue, who reiterates the findings of the Commissioner (Appeals) in the impugned Order-in-Appeal.

Reasoning Of Judgement-On careful examination of the records andconsideration of the arguments of the learned Authorised Representative, they observe that the main contention of the appellants as seen from the grounds of appeal are that the drawal of samples was not proper, and testing of second sample was done without their consent. On perusal of the impugned Order-in-Original, dated 8-1-2007, it is observed that the adjudicating authority has recorded; “sample was drawn in presence of the authorized representative of the importer/CHA (who did not object about the method of sampling). After payment of Customs duty, the out of charge was given on 18-7-2002. During the examination of imported goods in respect of the remaining B/Es no sample was drawn as the sample already drawn in earlier B/E, being same party, same commodity and same vessel.” He also observed that on testing the sample, the Chemical Examiner, Central Excise & Customs, Regional Laboratory, Vadodara, certified that the ash content is 15.1%. In the light of the test results, the importer, vide letter dated 1-8-2005 of the Assistant Commissioner, was requested to inform why the bill of entry should not be assessed finally. The importer, subsequently requested for testing of the remaining two samples lying with the Customs (one already handed over to the importer). It is also observed that later, Shri S. Suriyanarayanan, Consultant, vide letter dated 21-8-2006, submitted that method of drawing samples and that of testing samples did not match the proper IS standards and therefore, the test result drawn by the Chemical Examiner, Vadodara cannot be relied upon. The same was forwarded to the Chemical Examiner who, vide letter dated 6-9-2006, submitted that the only factor affecting the rate of duty is “Ash Content” and for determination of the same, the quantity of sample was sufficient as the quantity required for determination of ash content of coking coal is 1-2 grm. as per IS No. 1350 and testing was done as per the prescribed method. He has also recorded that subsequently, the Joint Commissioner, CRCL, New Delhi vide his letter dated 3-1-2007, communicated the test report that the sample is in the form of black coloured small lumps and coarse powder having percentage of ash content 15.62 (as on dry basis) which have been communicated to the importer vide letter dated 5-1-2007 through their CHA.

It is also observed that the Commissioner (Appeals) in the impugned Order-in-Appeal has held as follows :-

I have carefully considered the grounds of appeal. It is on record that at the time of taking sample on 18-7-2002 the manager of the appellant-company was present and he stated in writing on the sample-drawal form, “the sample was drawn in their presence and they were perfectly satisfied with the manner of sampling and one sealed sample was given.” So, it cannot be complained now at the appellate stage that the sampling was wrong or the sample was not representative because it was drawn only for one bill of entry. The reason stated in the impugned order, for drawing the sample for one bill of entry was that the consignments covered by all the four bills of entry were for the same importer, of the same commodity and imported in the same vessel. This is acceptable reason and does not vitiate the representative character of the sample.”

It is on record that the sample was tested twice and each time, the ash content was found more than 12%. Merely because no correspondence was made with the appellant while testing the sample second time, does not vitiate the result of the second test. After all, the CHA, who was the agent appointed by the appellant company itself, was kept informed about the second test. It was the duty of the CHA to have informed their principal. Having found the ash content, in both the tests more than 12%, denial by the lower authority of the exemption under the Customs Notification No. 21/2002 was justified.”

In view of the above analysis, we find that the impugned orders are unassailable, under the facts and circumstances of the present case. We do not find any reason to interfere with the said orders, which are therefore upheld. The appeal is dismissed.

Decision- Appeal dismissed.

Comment:- The substance of the case is that since the ash content in coal on testing found to be 15% and exemption is admissible for coal wherein ash content is less than 12%, the exemption was deniable.The contention raised by the appellant assessee that tests reports are not reliable as samples were not drawn properly and testing also not done as IS standards was not acceptable as the samples were drawn in presence of assessee who also certified their satisfaction to manner in which samples were drawn. Further, the chemical examiner certified that quantity of samples is enough to determine ash content which was done according to IS standards. Moreover, even on re-testing same results emerged. Thus, exemption was denied.

Prepared By- Neelam Jain

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PJ/Case Law /2016-17/3296

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