ORDER
Jyoti Balasundaram, Member (Judicial)
1. All three appeals involved common issues and are hence heard together and disposed of by this common order.
Appeal No. C/1305/01
2. The facts of the case are that, on the basis of intelligence collected by the Directorate of Revenue intelligence that certain Delhi based importers including M/s. Goodwill Electronics have imported Ferrite Magnets by misdeclaring the net weight to evade anti-dumping duty leviable from 4.5.99 on hard ferrite ring magnets originating in or exported from China peoples republic at the rate equal to the difference between Rs. 36/- per Kg. and the landed value of the imported goods per kg., in terms of Notification No. 103/99-Cus. dt. 6.8.99, show cause notice dt. 31.7.2000 was issued to M/s. Goodwill Electronics alleging that they had imported one consignment of Hard Ferrite Ring Magnets falling under Customs Tariff Heading 8505.19 under Bill of Entry dt. 13.3.2000 by misdeclaring the weight. (The examination of the goods showed that the quantity declared in the invoice and bill of entry tallied with the quantity of goods but the gross weight of the goods was found to be 114 M.T. while the bill of entry and invoice showed the gross and net weight as 88.340 M.T. and 74.500 M.T. respectively. The statement of Shri Vipinkumar Jain Proprietor of the importer was recorded under Section 108 of the Customs Act, 1962 on 27.4.2000 and 28.4.2000 in which, although he initially stated that the goods were of Taiwanese origin, but later admitted that they were of Chinese origin, he also admitted that the net weight was 107.300 MT. On the basis inter alia of the above the show cause notice was issued, proposing (a) enhancement of the net weight declared in the Bill of Entry from 74.500 MT to 105,634MT, (b) that the country of origin he treated as China P.R. instead of Taiwan, (c) duty of Rs. 18,42,256/- as anti dumping duty, in addition to the normal customs duty leviable and payable. (d) confiscation of the goods under Section 111(m) of the Customs Act, 1962, (e) imposition of penalty on the importer and its proprietor under Section 112 or 114 A OF the Customs Act, 1962. The notice was adjudicated by the Commissioner of Customs who relied upon the report of the Deputy. Chief Chemist that the goods were not Magnets as such buy articles intended to become permanent magnets after magnetization and dropped the proceedings with resultant benefit such as release of the seized goods imported etc. Against this order the Revenue has preferred the above appeal.
Appeal No. E/229 & 230/2002 :-
3. In this case the imports of 9 consignments took place during the period May 1999 and 31.3.2000 wherein show cause notice was issued on 1.12.2000 alleging that M/s. Goodwill Electronics had imported Hard Ring Ferrite Magnets by misdeclaring weight and have evaded anti-dumping duty of Rs. 98,30,968/-, confiscation of the goods detained at the factory premises of M/s. Goodwill Electronics and M/s. Arihant Electronics, imposition of fine in lieu of confiscation of goods already cleared and imposition of penalty. This notice was adjudicated by the Commissioner of Customs (Adjudication), confirming the charges raised on the show cause notice and confirming duty demand, allowing redemption of detained goods on payment of fine of Rs. 25,000/-(in respect of goods detained at M/s. Arihant Electronics) and Rs. 10,000/- (in respect of goods detained at M/s. Goodwill Electronics) and imposing penalty of amount equal to the anti-dumping duty on M/s. Goodwill Electronics, penalty of Rs. 10 lakhs upon its Proprietor, penalty of Rs. 10,000/- M/s. Arihant Electronics and of Rs. 25,000/- on its Proprietrix. The Commissioner held that the goods were Hard Ring Ferrite, that they were of Chinese origin -and that the net weight have been misdelcared with the sole purpose of evade anti dumping duty which is leviable on weight basis. Hence these two appeals.
4. We have heard Shri K.M. Mondal Ld. Consultant four the Revenue and Shri S.N. Kantawala Ld. Counsel for the importers, perused the records including the technical literature and record our findings hereunder.
5. The Standard Handbook for Electrical Engineers states that Permanent magnet materials that are commercially available may be grouped into five classes:
[a] Quench-hardened alloys.
[b] Precipitation-hardened cast alloys.
[c] Ceramic materials.
[d] Powder compacts and elongated single-domain materials.
[e] Ductile alloys.
The items in dispute are Ceramic magnet material. The basic raw material used in these magnets is iron oxide in combination with either strontium carbonate or barium carbonate. The iron oxide and carbonate mixture is calcined, and then the aggregate is ball-milled to a particle size of about
1.0 am. The material is compacted in dies using the dry powder or a water-based slurry of the powder. High pressures are needed to press the parts to shape. In some ceramic grades, a magnetic field is applied during pressing to orient the material in order to obtain a preferred magnetic orientation. Parts are sintered at high temperatures and ground to finished size using diamond-grinding wheels with suitable coolants. Ceramic magnets are hard and brittle, exhibit high electrical resistivities, and have lower densities than cast magnet alloys. Ferrite is a piece of iron which is made by dissolving Hydrated Ferric Oxide concentrated Alkali solution by fusing Ferric Oxide with Alkali Metal Chloride, Carbonate, or hydroxide or by simply heating metal oxides with Ferric Oxide. Ferrite magnets, which are more commonly referred to as ceramic magnets, are widely used for loudspeakers, small motors, generators and rotors. Ferromagnetic materials have atomic magnetic fields that align themselves parallel to externally applied magnetic fields, HSN Explanatory Notes to Heading 85.05 states that Permanent magnets consist of piece of hard steel, special alloys or other materials which have been rendered permanently magnetic, while articles intended to become permanent magnetization are recognizable as such by their shape and composition, generally being cubes or discs (tags) of metal or of agglomerated ferrite. It is the contention of the Revenue that goods in question are ‘magnets’ because they contain basic raw material having magnetic properties. It is also their contention that the such goods are imported in a de-magnetized condition for easy transportation and storage and that hard ring ferrite magnets imported anywhere will always in de-magnetized condition.
6. Going by the meaning of the word magnet in dictionaries such as Webster’s, Colliers and S.B. Sarkars’ “Words and Phrases of Customs & Excise” a magnet is a piece of metal that has been magnetized and is therefore surrounded by a magnetic field. The goods in question have been tested and found to be articles intended to become permanent magnets after magnetization. This would clearly show that they have not been magnetized. Therefore the hard ferrite imported cannot be considered as hard ferrite ring magnet. It has not been brought out by the Revenue that the goods in question are capable of attracting or repelling objects which property is vital in a magnet. Once the Deputy Chief Chemist has opined that the goods are articles intended to become permanent magnets after magnetization, he has over stepped his limitation by further opining that the goods may qualify as hard ring ferrite magnets, and therefore this part of his report cannot be relied upon. The revenue has placed reliance on certain downloaded material from the website of manufacturers of hard ring ferrite magnets, and in particular literature of group Arnold of Understanding and Using Permanent Magnets that a magnet is any object that exhibits an external magnetic field, but this does not necessarily make it a permanent magnet. However we see force in the submission of the importers counsel that such down loaded material is not authentic or acceptable technical literature on which reliance can be placed for the purpose of deciding the issue in dispute. We also note that with the issue of Notification No. 124/2001 dt. 12.12.2001, Notification No. 103/99 dt. 6.8.99, which is the subject matter of interpretation, in these appeals, was rescinded and anti-dumping duty came to be levied on hard ferrite ring magnets including those in unmagnetized form. This clearly indicates that prior to 12.12.2001, it is only magnets, and not articles intended to become magnets after magnetization, which were leviable to anti dumping duty. We therefore agree with the importers that the goods imported were not Hard Ring Ferrite Magnets attracting levy of anti dumping duty under Notification No. 103/99.
7. The further contention of Shri Mondal in the appeal of the Revenue is that even if it is held that the provisions of Notification No. 103/99 are not attracted against the goods in dispute, the goods were still liable to confiscation under Section 111 (d) and 111 (m) of the Customs Act, 1962, as they did not tally in respect of particulars of weight and the country of origin had been wrongly declared.
8. We have carefully perused the appeal filed by the Revenue and find that the only challenge to the Commissioner’s order No. S/10-148/2000 Adj. DRI/BZU/C/25/2000/2709 dt. 27.1.2001 is to the dropping of the demand of anti dumping duty under Notification No. 103/99. No separate ground has been raised in the appeal that the provisions of Section 111(d) and 111(m) are attracted, independent of the applicability of notification No. 103/99. We are not in agreement with plea raised by the Revenue that the appeal memorandum should be read as having independently challenged the dropping of proceedings under Section 111(d) and 111(m) of the Customs Act. Further the provisions of Section 111 (d) do not appear to be attracted in the absence of any prohibition. As for the provisions of Section 111(m), although the country of origin has been misdeclared (the finding of misdeclaration of goods of Chinese origin as goods of Taiwanese origin has not been challenged by the importers in theirappeals,) the misdeclaration is only relevant for the purpose of Notification No. 103/99 as careful reading of the show cause notice dt. 1.12.2000 clearly shows that Section 111(m) has been invoked only with reference to Notification No. 103/99 under which the country of origin is very relevant.
9. In the light of the above discussion, we hold that the provisions of Notification No. 103/99 are not attracted against the importers, the goods are not liable to confiscation and penalty is not sustainable. In the result we reject the Revenue’s appeal by upholding the Commissioner’s order challenged by the Revenue, and allow the appeals of the Importer (Goodwill Electronics) and trader (Arihant Electronics), by setting aside the order impugned in these two appeals.