2005 (98) ECC 91 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

New Delhi -- Bench-NB(A)

Hon'ble Justice K.K. Usha, President and Shri C.N.B. Nair, Member (T)

Margra Industries Limited

Versus

CC, New Delhi

Appeal No. C/351/2003-NB(A)

[Arising out of Order-in-Original No. AKR/CC/ICD/TKD/35 & 36 dated 7.7.2003 passed by the Commissioner of Customs, ICD, TKD, New Delhi]

Final Order No. 655/2004-NB(A), dt. 29.6.2004, Certified on 2.7.2004

Confiscation and Penalty (Customs)

Redemption fine -- Quantum -- Polished Marble -- Imported without licence -- Merely because the Department has now changed its view on classification the assessee should not be vitiated with penalty. So long as the appellant has not obtained a licence for importing the subject goods confiscation and imposition of redemption fine and penalty are justified. Quantum of redemption fine and penalty be recomputed.

Dutibility (Customs)

Polished Marble -- Import -- If goods are classified as rough marble block under 2515 then there will be no liability for the importer to pay additional duty of customs (CVD) payable under Section 3 of the Customs Tariff Act, 1975 inasmuch as no excise duty is leviable on Marble Blocks of Chapter 25 of CTA.

PRESENT :

Shri V. Laxmikumaran, Adv. for the appellant.

Ms. K.A. Mishra, SDR for the respondent.

Cases Cited :

1. Jai Bhagwati Impex Pvt. Ltd. v. CC, Goa, 2002 (145) ELT 158 (Tri).................... [Para 4]

2. Newsprint Trading & Sales Corpn. v. CC, Mumbai, 1999 (112) ELT 1007 (Tri).... [Para 15]

3. Somjit Enterprise v. CC, 1993 (41) ECC 273 (T).............................................. [Para 15]

Per : Justice K.K. Usha

In this appeal at the instance of the importer challenge is against the order passed by the Commissioner dated 7.7.2003. The issue coming up for consideration is whether Marble Block imported by the appellant from Italy and Oman with one side polished can be considered a polished Marble Block or as rough Marble Block for the purpose of classification and Import Export Policy for the year 2002-2007. If the goods are treated as rough Marble Block their import is restricted under a specific import licence. Admittedly, the appellants had no such licence. Second issue relates to the valuation of the goods.

2. Commissioner has held that Marble Blocks in question are to be treated as rough Marble Blocks classifiable under Heading 2515.12. Rejecting the declared value, he assessed that Marble Block at US$ 305 PMT invoking the provisions of Rule 6 of the Customs Valuation Rules. He further ordered confiscation of the goods under Section 111 (d) & (m) of the Customs Act. A redemption fine of Rs. 11,35,000 in respect of the goods covered under show cause notice dated 5.2.03 and Rs. 29,83,000 in respect of the Marble Block covered under show cause notice dated 15.7.02, was imposed. Apart from the above, a penalty of Rs. 2,50,000 and Rs. 6,00,000 respectively and also imposed under Section 112(a) of the Customs Act.

3. It is contended on behalf of the importer-appellant that the Commissioner has erred both on the issue of classification as well as on valuation. According to the appellant, Marble Blocks at the quarry stage are covered under Chapter 25 of HSN. Referring to Note under Chapter 68, it was submitted that when various products coming under Chapter 25 are further processed than by mere shaping into blocks or slabs or sheets by splitting, roughly cutting or squaring the goods would come under Chapter 68. The impugned products, according to the appellant are worked upon after the quarry stage inasmuch as not only the process of even-surfacing has been done on one side of the imported Marble Block but also the process of polishing has been done. Therefore, classification proposed by the Revenue under Chapter 25 cannot be sustained. Learned Counsel for the assessee further pointed out that classification of the goods has to be decided not on the basis of end use but on the basis of the goods imported as such. Overseas customs department of the country of shipment has also classified the goods as polished marble blocks under Heading 6802.

4. In respect of Marble Block of Oman origin under show cause notice the reference value has been taken at US $ 326 PMT (CIF) on the basis of Bill of Entry No. 302631 dated 17.10.2002. As regards marble block of Italian origin the reference value is 305 US $ PMT (CIF) New Delhi on the basis of Bill of Entry 278270 dated 3.8.2002 of ICD, New Delhi. The Commissioner has applied US $ 305 PMT for both the consignments. According to the appellant there was no reason given by the Commissioner for rejecting the transaction value declared by the appellant and there was no material to show that the goods covered by the two bills of entry relied on by the Commissioner are in respect of Marble Blocks of the same quality as imported by the appellants. The Commissioner himself has observed "it is well neigh impossible for the customs to evaluate the quality of each marble block imported in the absence of expertise, and also for time constraint. Besides, the sample from earlier consignment where the value has been accepted is not retained. Thus, it will be quite in order for the Customs to evaluate marble blocks with reference to the country of origin as also the contemporary price as per customs record". The appellant would contend that if the customs have no expertise to distinguish the difference between the imports of Marble Blocks on the basis of its quality for that reason it cannot take the higher value. Therefore, according to the appellant enhancement made by the Commissioner on the value of the goods has to be set aside as it is not supported by any relevant material. Reliance was placed on a declaration of this Tribunal in Jai Bhagwati Impex Pvt. Ltd. v. CC, Goa 2002 (145) ELT 158 (Tri) where it has been held that when the imported marbles have a wide range of pricing depending upon country of original, colour and various other criteria it is not permissible to reject the transaction value declared on the basis of the value of marbles cleared under different bills of entry.

5. It was further contended on behalf of the appellants that redemption fine to the extent of 50% and penalty at 10% of the loaded value is unjustified. It is submitted that in a number of similar cases redemption fine imposed by this Tribunal was at 20% and penalty not exceeding 5%.

6. Learned Departmental Representative submitted that the Commissioner has correctly classified Marble Blocks under Heading 2515.12. The Marble Blocks imported by the appellant cannot be treated as polished Marble Blocks as known in the market. According to the Revenue Polishing of one side of the Marble Blocks has been done with a view to circumvent the restriction imposed in the Exim Policy on the import of rough marble block. In order to come under Heading 68.02 the Marble Blocks should have been further worked. It is also submitted that enhancement of value is fully justified in this case and that no interference is called for in the quantum of redemption fine and penalty.

7. We first deal with the issue relating to classification. The relevant entries read as follows :

25.15 Marble## travertine## ecaussine and other Calcareous monumental or building stone of an apparent specific gravity 2.5 or more## and alabaster## whether or not roughly trimmed or merely cut## by sawing or otherwise## into blocks or slabs of a rectangular (including square shape

-Marble and travertine:

2515.11 -Crude or roughly trimmed 35% --

2515.12 -Merely cut## by sawing or otherwise## into blocks or slabs of a rectangular (including spare) shape 35% --

Heading of Chapter 68 refers to articles of stone, plaster, cement, asbestos, mica or similar materials; ceramic products ; Glass and Glassware. Sub-heading 68.01 and 68.02 read as follows :

Heading No. | Sub-heading No. | Description of article | Rate of Standard | Duty Preferential Areas
(1) | (2) | (3) | (4) | (5)
68.01 | 6801.00 | Setts, curbstones and flagstones, of natural stone (except slate) | 35% | --
68.02 |  | Worked monumental or building stone (except slate) and articles thereof, other than goods of heading No. 68.01, monaic cubes and the like, of natural stone (including slate), whether or not on a backing; artificially coloured granules, chippings and powder, of natural stone (including slate). |  |

8. The main question is whether Marble Blocks of dimension 10'x10'x5' imported by the appellant can be treated as "worked monumental or building stone" for the reason that one side of the block is polished. It is the contention of the assessee that Note (1) under Chapter 25, would take away the imported goods out of Chapter 25. Note 1 reads as follows:

"1. Except where their context or Note 4 to this Chapter otherwise requires, the headings of this Chapter cover only products which are in the crude state or which have been washed (even with chemical substances eliminating the impurities without changing the structure of the product), crushed, ground, powdered, levigated, sifted, screened, concentrated by floatation, magnetic separation or other mechanical or physical processes (except crystallisation), but not products that have been roasted, calcined, obtained by mixing or subjected to processing beyond that mentioned in each heading".

We are not able to accept this contention. HSN Heading 2515 reads as follows:

25.15 MARBLE, TRAVERTINE, ECAUSSINE AND OTHER CALCAREOUS MONUMENTAL OR BUILDING STONE OF AN APPARENT SPECIFIC GRAVITY OF 2.5 OR MORE, AND ALABASTER. WHETHER OR NOT ROUGHLY TRIMMED OR MERELY CUT, BY SAWING OR OTHERWISE, INTO BLOCKS OR SLABS OF A RECTANGULAR (INCLUDING SQUARE) SHAPE(-)

-Marble and travertine:

25.15.11 -Crude or roughly trimmed.

25.15.12 -Merely cut by sawing or otherwise, into blocks or slabs of a rectangular (including square) shape.

2515.20 -Ecaussine and other calcareous monumental or building stone: alabaster".

Explanatory Notes under 2515, relevant for our purpose, reads as follows :

"The heading is restricted to the stones specified, presented in the mass or roughly trimmed or merely cut, by sawing or otherwise, into blocks or slabs of a rectangular (including square) shape. In the form of granules, chippings or power, they fall in heading 25.17.

Blocks etc. which have been further worked i.e. bossed, dressed with the pick, bushing hammer or chisel, etc. stand-dressed, ground, polished chamfered etc. are classified in heading 68.02. The same classification applies to blanks or articles".

9. The above would show that Heading 2515 would cover specified stones `presented in the mass'. Going by the size and nature of the Marble Blocks imported by the appellants it would clearly show that the goods were presented in mass. The mere polishing of one side will not take it out of the above class. The distinction is to be made between Marble Blocks cut into the form as imported by the appellant and marble block which are worked as coming under 6802.

"68.02 -- WORKED MONUMENTAL OR BUILDING STONE (EXCEPT SLATE) AND ARTICLES THEREOF, OTHER THAN GOODS OF HEADING 68.01; MOSAIC CUBES AND THE LIKE, OF NATURAL STONE (INCLUDING SLATE, WHETHER OR NOT ON A BACKING; ARTIFICIALLY COLOURED GRANULES, CHIPPINGS AND POWDER, OF NATURAL STONE (INCLUDING SLATE)."

Explanatory Notes under 6802 of HSN reads as follows :

This heading covers natural monumental or building stone (except slate) which has been worked beyond the stage of the normal quarry products of Chapter 25.

The heading therefore covers stone which has been further processed than mere shaping into blocks, sheets or slabs by splitting, roughly cutting, or squaring by sawing (square or rectangular faces). The heading thus covers stone in the forms produced by the stone -- mason, sculptor etc. namely;

(A) Roughly sawn blanks; also non-rectangular sheets (one or more faces triangular, hexagonal, trapezoidal, circular, etc).

(B) Stone of any shape (including blocks, slabs or sheets), whether or not in the form of finished articles, which has been bossed (i.e. stone which has been given a "rock faced" finish by smoothing along the edges while leaving rough protuberant faces), dressed with the pick, bushing hammer, or chisel, etc., furrowed with the dragcomb, etc. planed, sand-dressed, ground, polished, chamfered, moulded, turned, ornamented, carved, etc."

The heading therefore includes not only constructional stone (including facing slabs) worked as above, but also articles such as steps, cornices, pediments, balustrades, corbels and supports, door or window frames and lintels; thresholds; mantelpieces; window sills; doorsteps; tombstones; boundary stones and milestones, bollards; panoramic indicators (enamelled or not); guard posts and fenders' sinks, troughs, fountain basins; balls for crushing mills; flower pots; columns, bases and capitals for columns; statues, statuettes, pedestals; high or low reliefs; crosses; figures of animals; bowls, vases, cups; cachou boxes; writing set; ashtrays; paper-weights; artificial fruit and foliage, etc. Ornamental goods of stone combined with other materials may be classified as jewellery or imitation jewellery, or as goldsmiths' or silversmiths' wares (see the Explanatory Note to Chapter 71); other ornamental goods essentially of stone are, in general, classified in this heading".

10. A reading of the above Note would make it clear that to come under 68.02 monumental or building stone the roughly cut stone had to undergo further working. Different examples given therein would give an idea as to the nature of the working that is required for being brought under Heading 6802. We are of the view that the rough Marble Blocks imported by the appellant will not qualify to travel out of Heading 2515 and find place in Chapter 6802 by mere polishing of one side of the block. We, therefore, find no hesitation to hold that the Commissioner was fully justified in classifying the Marble Blocks imported by the appellant under Heading 2515.

11. ITC HSN Classification of Export & Import Items (April 2002-March 2007) shows that Marble Blocks coming under Heading 2515 is restricted. Admittedly, the appellants have no licence to import the subject goods. If that be so, the import is in violation of Import Policy.

12. Coming to the issue of valuation, we find merit in the complaint of the appellants that there are no material placed on record by the Revenue which would justify rejection of the transaction value declared. None of the legal grounds required for rejecting the transaction value is available in the present case. The only reason given in the show cause notice as well as in the order for rejecting the transaction value is the value shown in Bills of Entry dated 3.8.2002, 15.1.2003 and 7.10.2002. Relevant particulars are given as follows:

Sl. No. | B/E No. & Date | CIF Value (declared) | CIF Value (Proposed) | Contemporary Import
1. | 102745 dt. 18.4.02 | US $ 103.30/MT | US $ 305 MT | B/E No. 278270 dt. 3.8.02 value US $ 305 MT CIF N. Delhi.
2. | 102747 dt. 18.4.02 | US $ 302.28/MT |  | B/E No. 295841 dt. 15.1.03 Value : US $ 308.99/MT CIF Mumbai.
3. | 102894/24.4.02 | US $ 238.36/MT |  |
4. | 103066/2.5.02 | US $ 178.61/MT |  |
5. | 103067/2.5.02 | US $ 178.59/MT |  |
6. | 103069/2.5.02 | US $ 180.23/MT |  |
7. | 103070/2.5.03 | US $ 178.96/MT |  |

Table for imports covered by show cause notice dated 5.2.03 regarding goods from Oman.

S.No. | B/E No. & Date | CIF Value (declared) | CIF Value (Proposed) | Contemporary Import
1. | 295606/14.1.03 | US $ 128.45/MT | US $ 305/MT | B/E No. 30263/ 17.10.02 Value: US $ 326/MT CIF Mumbai.

13. As can be seen from the above Chart that the Commissioner has loaded the value of the goods imported under Bills of Entry dated 18.4.2002, 24.4.2002 and 2.5.2002 on the basis of value shown in the Bill of Entry dated 3.8.2002, four months after the import. In the second table, while the Bill of Entry to be assessed was dated 14.1.2003, the Commissioner loaded the value on the basis of the Bill of Entry dated 3.8.2002. It is not alleged in the show cause notice nor any material placed by the revenue before the Commissioner that they were of similar quality. The Commissioner himself points out that Department has no expertise to go into the quality of the Marble Blocks imported and therefore they have adopted the procedure classifying the goods on the basis of country of origin and contemporaneous import. According to us, the above test may not be fully incorrect. The quality of the Marble Blocks quarried for different places even from the same country may vary. It is for the department to adopt a legally acceptable procedure for assessing the quality and value of the Marble Blocks imported. With the available modern technology it will not be difficult for the Department to get expert opinion on this aspects. It should be the serious concern of the department to equip itself with suitable methodology to assess the quality and value of the rough Marble Blocks imported in large quantities in violation of EXIM Policy as has come out from the submissions made in this case itself. In the absence of a satisfactory basis to make comparison between the goods imported under different Bills of Entry, we are of the view that the transaction value declared by the appellant cannot be rejected on that basis. We, therefore, set aside the finding of the Commissioner in rejecting the transaction value declared by the appellant.

14. We will now come to the contention raised by the appellant on the quantum of redemption fine and penalty. It is the case of the appellant that in similar cases under different orders the Tribunal has imposed redemption fine to the extent of 20% of the value of the goods and penalty at 5%. We are not able to agree with the above contention. It is relevant to note even in Jai Bhagwati Impex Pvt. Ltd. relied on by the appellant, the Tribunal has imposed penalty of an amount which would come to 50% of the value of the goods. Appeal filed from the above decision was dismissed by the Hon'ble Supreme Court in 2002 (146) ELT A-313 (SC). Therefore, we do not find any reason to deviate from the principle adopted by the Commissioner.

15. Regarding penalty the appellant would contend that merely because the Department has now changed its view on classification the appellant should not be visited with penalty. In support of the above contention, reliance was placed by the learned Counsel on the decision of the Tribunal in Somjit Enterprise v. CC, 1993 (41) ECC 273 (T) : 1993 (63) ELT 119 and Newsprint Trading & Sales Corpn. v. CC, Mumbai, 1999 (112) ELT 1007 (Tri). We are not able to apply the ratio of the above decisions in the facts of the present case. The contention of the appellant that it is a case of change of opinion of the department does not seem to be correct. The assessee itself has referred to large number of cases where the Tribunal had occasion to decide issue relating to confiscation and imposition of redemption fine where the rough Marble Blocks were sought to be imported under the guise of polished marble without licence. Recently the Bombay Bench of this Tribunal had occasion to consider a similar issue in C/368/2003 filed by M/s. Sophisticated Marble & Granite Industries Final Order No. 3051-3052/WZB/2003 dated 18.12.2003. In the above case the assessee referred to number of decisions of the very same issue-Marmo Classic v. CC Nhava Sheva final order dated 16.4.2002 Mahalaxmi Tile & Marble Co. Pvt. Ltd. v. CC, Ahmedabad final order dated 12.11.2001 and Askash Stone Industries & Ors. v. CC, Mumbai, Nhava Sheva, Goa final order dated 17.5.2002 and contended that in all these cases the Tribunal had imposed only a redemption of 20% and penalty of 5% of the CIF value determined and therefore the redemption fine and penalty imposed by the Commissioner are to be reduced. While the learned Member (J) accepted the contention, the learned Member (T) differed. It had come out in the facts of the above case itself that the importer therein had repeatedly made imports without license. Redemption fine imposed by the adjudicating authority in that case was 48% of the value determined. It was observed that the profit margin would came to 52%. Therefore, the quantum of redemption fine and penalty was upheld. The Third Member to whom the matter was referred agreed with the view taken by the Member (Technical). Ultimately the appellant took up the matter by a writ petition before the Bombay High Court. The above writ petition was dismissed by the Hon'ble High Court on 22.1.2004 upholding the view taken by the majority in the order of the Tribunal. These proceedings would also show that import of rough Marble Blocks required specific license. We do not find any merit in the contention raised by the appellant that no penalty can be imposed in this case as the proceedings arise out of change of opinion by the customs authorities. So long as the appellant has not obtained a licence for importing the subject goods confiscation and imposition of redemption fine and penalty are justified.

16. In the light of the above, we hold that the goods imported by the appellant are to be classified under 2515 and assessed on the basis of transaction value declared by the importer, namely, Rs. 40,17,896. We do not find any reason to reduce the percentage applied by the Commissioner in arriving at the quantum of redemption fine and penalty. The same percentage will be applied on the assessable value arrived as above and the quantum of redemption fine and penalty will be fixed on that basis. The duty liability, redemption fine and penalty will be recomputed as above.

17. The appellant also made a submission that if goods are classified as rough marble block under 2515 then there will be no liability for the importer to pay additional duty to customs (CVD) payable under Section 3 of the Customs Tariff Act, 1975 inasmuch as no excise duty is leviable on Marble Blocks of Chapter 25. While re-computing the duty liability of the above contention will also be taken into consideration. On such recomputation of the duty and the redemption fine and penalty as reduced in this order if any further amount has to be paid by the importer, it will be paid as soon as the computation is made. On the other hand, if the assessee has already deposited/paid more than the liability as computed above, the excess amount will be refunded to the assessee.

The appeal stands disposed of as above.

………………………..