2009 (9) TMI 859 - AT - Customs

Confiscation - unsorted waste paper in six containers being heavily contaminated with domestic waste - Held that - . When the other waste material is of domestic waste origin and 2/3rd part by weight is under OGL and l/3rd part by weight is under non-OGL, the domestic waste falls under Chapter Heading 38.25 of the Customs Tariff/EXIM Code 3825 10 00 of the Foreign Trade Policy and thus is not freely importable. Goods in question have thus rightly been held liable to confiscation under the Customs Act/Foreign Trade Policy/Hazardous Wastes Rules - Since liability to confiscation of goods is upheld, penalty is also sustainable, however, penalty reduced to ₹ 10,000/- - appeal allowed - decided partly in favor of appellant.

Summary

Issues:
Import of waste paper containing domestic waste/municipal waste, liability to confiscation, penalty imposition, interpretation of Customs Act and Foreign Trade Policy.

Analysis:
The case involved the import of waste paper for the paper-making industry, which upon examination was found to contain a mixture of waste paper, polythene carry bags, PP cans, crushed metal/PET containers, with fungus and bad odor, meeting the definition of 'municipal waste/domestic garbage.' Subsequently, a show-cause notice was issued for re-export of the contaminated cargo. A joint inspection later revealed unsorted waste paper, old newspapers, magazines, and scrap, satisfying the definition of 'domestic waste/municipal waste.' The cargo was recommended for re-export by the Pollution Control Board. The adjudication held that while the unsorted waste paper was heavily contaminated with domestic waste, it was not directed to be confiscated but imposed a penalty of Rs. 25,000 on the importers as a deterrent measure.

Upon hearing both sides, the judge noted that the cargo indeed contained unsorted paper and scrap, meeting the definition of 'domestic waste/municipal waste.' The judge referred to the Customs Tariff and Foreign Trade Policy, highlighting that certain materials within the cargo were not freely importable when part of domestic waste. The judge upheld the liability to confiscation under the Customs Act and Foreign Trade Policy due to the presence of leaching and foul smell during customs examination. The penalty imposition was deemed sustainable, although it was reduced to Rs. 10,000 considering the circumstances of the case.

In conclusion, the judgment affirmed the liability to confiscation of the goods due to the presence of domestic waste within the imported cargo. The penalty imposition was upheld but reduced in light of the case's specifics. The judge's interpretation of the Customs Act and Foreign Trade Policy played a crucial role in determining the outcome of the appeal, emphasizing the restrictions on importing materials classified as domestic waste under relevant regulations.