Whether duty is payable by treating the imported goods as scrap materials or as usable things?

PJ/Case law/2014-15/2262

Case:-COMMR. OF CENTRAL EXCISE, MADURAI VS. SRI RENGA STEEL CORPORATION

Citation:- 2014(305) E.L.T. 377(Mad.)

Brief facts:-The respondent herein has been engaged in doing the business of scrap materials, in the course of its business, has imported some scrap materials from Malaysia. But the Additional Director General, DRI, Chennai has given a show cause notice dated 28-6-2001 by stating that the respondent has sent usable articles by way of branding the same as scrap materials and consequently, directed to pay duty on usable goods and also levied redemption fine and penalty. The show cause notice dated 28-6-2001 has been challenged before the Commissioner of Central Excise , Madurai, wherein, the demand made in the show cause notice dated 28-6-2001 has been confirmed and subsequently Appeal No. C/296/2002 has been preferred before the Appellate Tribunal, South Zonal Bench, Chennai, wherein the Order-in-Original has been set aside and thereafter a de nova proceeding has been initiated by the Commissioner of Central Excise, Madurai, wherein, the redemption fine as well as penalty have been reduced. Against the orders referred to supra. Appeal No. C/72/2006 has been filed on the file of the Appellate tribunal, South Zonal Beach, Chennai. The appellate tribunal, south zonal bench, Chennai has confirmed the duty based on scrap materials. Against the order referred to supra, the present Civil Miscellaneous Appeal has been filed at the instance of the commissioner of central excise as appellant. The only point which has to be decided in the present civil miscellaneous appeal is as to whether the respondent is liable to pay duty on the basis of usable things or on the basis of scrap materials.

Appellant’s contention:-The learned counsel appearing for the appellant has vehemently contended that the respondent has attempted to import things involved in the present proceedings by way of branding the same as scrap materials, but, actually usable things are found place. Under the said circumstances, the same have been seized thereafter, a Commissioner has been appointed to note down the things in question and accordingly, he filed his report and further one of the partners of the respondent has given a statement, wherein, it has been clearly admitted about some usable things and the Appellate Tribunal has erroneously come to the conclusion that the respondent is liable to pay tax only on the basis of scrap materials and therefore, the order passed by the Appellate Tribunal is liable to be interfered with.

Respondent’s contention:-The learned counsel appearing for the respondent has contended that only scrap materials are imported and even in the statement alleged to have been given by one of the partners, it has been specifically admitted some things which are not usable. Under the said circumstances, the authorities concerned have allowed to take the goods after making multilation and therefore, the order passed by the Appellate Tribunal is perfectly correct and the same does not require any interference.

Reasoning of judgement:- The entire argument put forth on the side of the appellant hinges upon the report filed by the commissioner as well as the statement alleged to have been given by one of the partners of the respondent.
It has been conceded on the part of the appellant that the Commissioner has not noted down the features of the things which are in question. Of course, it is true that one of the partners of the respondent has given a statement, wherein, he has admitted about the existence of some wires, etc.
At this juncture, the learned counsel appearing for the respondent has contended that those wires are not in cable forms and it is nothing but small wires. Under the said circumstances, the authority has permitted the respondent, to get the goods in multilated form and therefore, the contention put forth on the side of the appellant cannot be accepted.
Even in the statement alleged to have been given by one of the partners of the respondent, complete description as well as length and breadth of the things which are in question have not been mentioned. In fact, in the statement alleged to have been given by one of the partners of the respondent, only small quantity as well as length of wires have been mentioned. Under the said circumstances, the court can come to a conclusion that the things which are in question cannot be couched as usable things
The appellate tribunal, after considering the available materials on record has rightly found that the things in question are nothing but scrap materials. Under the said circumstances, the respondent has been directed to pay duty on the basis of scrap materials and in view of the discussions made earlier, this court has not found any acceptable force in the contention put forth on the side of the appellant and altogether the present civil miscellaneous appeal deserves to be dismissed.
In fine, this civil miscellaneous appeal deserves and accordingly is dismissed without costs.

Decision:- Appeal dismissed

Comment:-The substance of this case is that from the evidences on record it was clear that what was imported was scrap and not usable goods. Consequently, it was concluded that mere statement of one of the partner cannot lead to inevitable conclusion that the imported goods were usable goods. Accordingly, the appeal filed by the revenue was rejected being devoid of merits.

Prepared by: -Lovina Surana

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PJ/Case law/2014-15/2262

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