Per Mr. VASA SESHAGIRI RAO

This Appeal is directed against Order-in-Original No. 01/2015 dated 10.09.2015 passed by the Commissioner of Customs, Tiruchirappalli, whereby the benefit of exemption under Notification No. 21/2002-Cus dated 01.03.2002 (as amended by Notification No. 12/2012-Cus dated 17.03.2012) was denied in respect of coal imported under Bill of Entry No. 5919332 dated 06.02.2012, differential duty of Rs. 1,06,43,194/- was demanded under Section 28 of the Customs Act, 1962 along with interest under Section 28AB read with Section 28AA, while proceedings in respect of the remaining five Bills of Entry were dropped.

1.2 The facts briefly stated are that the Appellant is engaged in manufacture of iron and steel and had imported Hard Coking Coal of Australian origin through Karaikal Port under six Bills of Entry during the period 30.08.2011 to 28.03.2012. The goods were declared as “Coking Coal” under CTH 2701 19 10 and exemption from Basic Customs Duty was claimed under Sl. No. 68 of Notification No. 21/2002- Cus as amended. The goods were provisionally assessed under Section 18 pending test reports.

1.3 Samples were drawn and sent to the Chemical Examiner, Custom House, Chennai. The Chemical Examiner reported Crucible Swelling Number (CSN) above 1 in all cases but did not report Mean Reflectance (MR) for want of facility. The Assistant Commissioner finalized the provisional assessments accepting the classification as Coking Coal and extended exemption based on CSN reported by Customs Laboratory and MR as per load port surveyor’s certificate.

1.4 Thereafter, the Commissioner issued Show Cause Notice dated 13.06.2013 proposing denial of exemption for all six Bills of Entry primarily on the ground that MR had not been ascertained from Customs laboratory and that CSN values as per load port reports were not reliable. Subsequently, remnant samples were sent to CIMFR, Dhanbad, which reported MR of 1.59 and CSN of 0.5 in respect of Bill of Entry No. 5919332 dated 06.02.2012. Relying on this report, the Commissioner denied exemption only for that Bill of Entry while dropping proceedings for the remaining five.

2. Aggrieved by the order, the Appellant is in Appeal before the Tribunal.

3. The Ld. Advocate Mr. M.S. Nagaraja appeared on behalf of the Appellant and advanced detailed submissions in support of the Appeal and the Ld. Authorized Representative Ms. O.M. Reena, appeared for the Revenue and defended the Impugned Order.

4. The Learned Advocate appearing for the Appellant made the following submissions which are summarized as below: -

4.1 The impugned order is beyond the scope of the Show Cause Notice. The SCN neither relied upon nor referred to the CIMFR reports, which were obtained much later. It is contended that reliance upon material not forming part of the SCN vitiates the adjudication. Reliance was placed upon Caprihans India Ltd. v. CCE 2015 (325) ELT 632 (SC), CC v. Toyo Engineering India Ltd. 2006 (201) ELT 513 (SC), and CCE v. Ballarpur Industries Ltd. 2007 (215) ELT 489 (SC).

4.2 It was further submitted that the Chemical Examiner had reported CSN of 3. The load port certificate issued by ACIRL Quality Testing Services Pty Ltd reported CSN of 1.5 and MR of 1.75. These satisfied the twin parameters under the Notification, namely MR above 0.60 and CSN above 1. There was no reason to reject these reports. Reliance was placed upon TATA Chemicals Ltd. v. CC 2015 (320) ELT 45 (SC) to contend that chemical testing by the department must be supported by valid reasons.

4.3 The CIMFR testing was conducted more than two years after drawal of samples and after issuance of SCN. It is contended that coal properties deteriorate over time due to oxidation and weathering, which affects CSN. Reliance was placed upon Ruchi Soya Industries 2006 (193) ELT 499 (Tri.), Godrej Industries 2017 (357) ELT 899 (Tri.) and Dunlop India Ltd. 1983 (13) ELT 1566 (SC) to submit that goods must be assessed in the condition in which they are im