Per Mr. VASA SESHAGIRI RAO

The present appeal is directed against Order-in Original No. 101806/2023 dated 12.05.2023 (hereinafter referred to as “Impugned Order”) passed by the Principal Commissioner of Customs, Chennai. The appellant, M/s. Taeyang Metals India Pvt. Ltd., Chennai (hereinafter referred to as “the Appellant/Importer”) is engaged in the manufacture of bolts, nuts and fasteners used in engineering applications and imports raw material described as “Cold Heading Quality Alloy Steel Wire in Coils” of grade SCM435. The appellant filed Bills of Entry declaring the imported goods as “Wire of other alloy steel – Cold Heading Quality Steel Wire” and classified the same under Customs Tariff Heading (CTH) 7229 9090 while claiming the benefit of the applicable exemption Notification No. 152/2009-Cus. dated 31.12.2009 (Sl.No. 576) which attract BCD @5%.

1.2 During the scrutiny of the import documents, the department formed a view that the imported goods were not “wire” but “wire rods” classifiable under CTH 7227, observing that the goods were imported in irregularly wound coils and had not undergone substantial cold drawing process. Relying upon the Mill Test Certificate indicating JIS G4053 grade and SCM435, the department alleged misclassification under CTH 7229 for wrongful availment of exemption under Notification No. 152/2009-Cus. A show cause notice was therefore issued proposing reclassification under CTH 7227 9040 of the Customs Tariff Act, 1975, denial of exemption, recovery of differential duty of Rs. 11,53,83,925/- with interest under Section 28AA, confiscation of the goods under Section 111(m) and imposition of penalties under Sections 112(a) and 114AA of the Customs Act. After adjudication, the Principal Commissioner confirmed the demand with interest, ordered confiscation of the goods with option for redemption on payment of fine and imposed penalties on the appellant.

2. Aggrieved by the said order, the appellant has filed the present appeal before this Tribunal.

3. The Ld. Advocate Mr. E. Ramesh appeared for the appellant and advanced detailed submissions in support of the appeal. The Ld. Authorized Representative Mr. Anoop Singh appeared for the Revenue and defended the impugned order.

4. The Ld. counsel for the appellant made the following submissions which are summarised as below: -

4.1 The impugned order has erroneously classified the imported goods as “wire rods” ignoring the manufacturing process and the technical characteristics of the product.

4.2 It is submitted that the product imported by the appellant is Cold Heading Quality Steel Wire, which is a specialized material used in the manufacture of fasteners such as bolts, nuts and screws. The product undergoes multiple metallurgical processes including pickling, coating, spheroidized annealing and cold drawing before being supplied as cold heading quality wire.

4.3 The learned counsel submits that the SAIP (Spheroidized Annealing in Process) mentioned in the mill test certificate is a heat treatment process intended to modify the microstructure of alloy steel to enhance ductility and reduce hardness, thereby making the material suitable for cold forging operations. This process results in a change in physical properties and also reduces the diameter of the material through cold drawing.

4.4 It is further submitted that the BIS certification issued to the supplier clearly describes the product as steel wire and not as wire rod. The BIS certificate issued under the relevant Indian Standards acknowledges the imported product as wire conforming to the applicable quality standards.

4.5 The appellant also submits that the department has relied upon the specification JIS G4053, which relates to chemical composition of chromium molybdenum steel and does not determine the form of the product. The said standard deals with the grade of steel and cannot be used to conclude whether the product is rod or wire which is the iss