Steel scrap cannot be reclassified as prime material without testing against applicable BIS standards.

The appellants challenged an adjudication order concerning three consignments declared as stainless-steel scrap under CTH 7204 2190.

Customs reclassified the goods as prime steel under CTH 7220 2090, enhanced their values, ordered absolute confiscation and imposed penalties.

The first consignment—about 99.03 MT—had been examined by Customs and a Chartered Engineer, both of whom recorded it as scrap, and was cleared.

The second consignment—151.69 MT—was the subject of a live bill of entry; the Chartered Engineer recommended laboratory testing, while the Customs laboratory report did not specify the tests or parameters supporting its conclusion that the goods were prime material.

For the third consignment—about 150 MT—no bill of entry had been filed, but Customs examined the goods and proceeded against them.

The adjudicating authority also imposed penalties on the company’s directors.

Whether the evidence justified classifying the three consignments as prime steel rather than scrap, and consequently enhancing their values and ordering confiscation

Whether confiscation or redemption fine could be imposed on the first consignment after it had been cleared and was unavailable for confiscation

Whether penalties on the company and its directors were sustainable, including in relation to the third consignment for which no bill of entry had been filed

Whether the appellants were entitled to relief from demurrage and detention charges for the detained consignments

Foreign Trade Policy para 2.32 permits import of metallic waste and scrap in any form, subject to the stated restrictions; Handbook of Procedures para 2.51(d) governs unshredded, compressed and loose scrap and requires the prescribed pre-shipment inspection documentation, including that the goods qualify as waste, scrap, seconds or defective material under internationally accepted parameters.

Under Customs Valuation Rules 3 and 12, transaction value is the starting point, and rejection of declared value requires a reasoned basis to doubt its truth or accuracy.

A test report relating to one consignment cannot, without evidence, determine the classification of another consignment; the Tribunal relied on Shalimar Paints Ltd. and Commissioner of Customs (Preventive) v. Marks Marketing Pvt. Ltd.

Under Shiv Kripa Ispat Pvt. Ltd., redemption fine cannot be imposed where goods are unavailable for confiscation and were not cleared under bond or undertaking.

Statements cannot establish the truth of their contents unless the procedure under Section 138B of the Customs Act is followed, as explained in G-Tech Industries v. Union of India.

Regulation 6(1)(l) of the Handling of Cargo in Customs Areas Regulations, 2009 prohibits a Customs Cargo Service Provider from charging rent or demurrage on goods seized, detained or confiscated by the proper officer, subject to other applicable law.

The Tribunal held that the first consignment had been examined by Customs and a Chartered Engineer and cleared as scrap; the Revenue produced no corroborative chemical or laboratory evidence to displace that conclusion, and statements not tested under Section 138B could not independently prove that the goods were prime material.

The later consignments could not be treated as prime merely because of their appearance, dimensions or orderly stacking.

For the second consignment, the Chartered Engineer called for laboratory testing, while the Customs laboratory report did not identify the tests or BIS parameters applied; the Revenue therefore failed to establish that the goods met the standards for prime material.

The appellants’ pre-shipment certificates identifying the goods as scrap had not been shown to be false or fabricated.

The Tribunal also found no evidence supporting the enhanced values or establishing that the declared transaction values were inaccurate.

It applied the same evidentiary reasoning to the third consignment.

As to the first consignment, it further held that confiscation and redemption fine could not stand because the goods had already been released and were unavailable for confiscation.

Since the underlying allegations against the company failed and no specific culpable role of the directors was established, their penalties also failed.

Finally, applying Regulation 6(1)(l), the Tribunal directed waiver of demurrage and detention charges for the consignments detained by Customs.

The Tribunal held that all three consignments were stainless-steel scrap classifiable under CTH 7204 2190, set aside the enhanced values, confiscation orders and penalties, and quashed the penalties imposed on the directors.

It permitted the appellants to file a bill of entry for the third consignment and directed the Revenue to issue a complete waiver of demurrage and detention charges for the consignments held with Customs.