2010 (9) TMI 409 - AT - Customs

Kraft paper (recycled) Exemption under advance licence - The kraft paper and kraft paper (recycled) are not the same. The Advance Licence benefit is admissible to the kraft paper (recycled) . The original authority had denied the benefit for the reason that the impugned goods failed the chemical test for the kraft paper . - In the absence of technical definition of kraft paper (recycled) on which basis the Revenue could canvass its case, we do not find any interference in the impugned order is justified. The DGFT had clarified that the word recycled is only a technical characteristic. From this clarification itself evident it is that the kraft paper and recycled kraft paper are not the same goods. - As the consignment imported is kraft paper recycled , we find that the respondents eligible for the exemption under advance licence. Revenue appeal rejected

Summary

Issues:
Entitlement of duty-free clearance for imported recycled kraft paper under Advance Licence based on technical characteristics and interpretation of relevant Customs Tariff notes.

Analysis:
1. The appeal before the Tribunal concerned the entitlement of a consignment of "recycled kraft paper - testliner3" imported by the respondent under an Advance Licence provisionally. Initially, the Commissioner (Appeals) had denied the exemption for the paper as it did not match the description of "kraft paper" as per the Advance Licence.

2. The Tribunal remanded the matter for re-adjudication by the original authority based on a clarification from DGFT that the term "recycled" was a technical characteristic and should be read as "kraft paper (Recycled)." The original authority, in the remand proceedings, relied on a chemical test report showing that the imported item did not meet the criteria for "kraft paper" as per Customs Tariff Chapter Note 5 of Chapter 48.

3. The Commissioner, in the subsequent order, noted the specificity of the remand terms and the DGFT clarification, stating that the imported item should be treated as "Kraft paper (Recycled)." The Commissioner allowed the appeal, emphasizing that the chemical test report was not verifiable, and the benefit of the Advance Licence should not be denied.

4. The Revenue, in the appeal before the Tribunal, argued that the imported paper did not qualify as "kraft paper" as per Customs Tariff notes due to the chemical wood pulp content being less than 50% of the total fiber content. The Revenue highlighted the importance of the Chemical Examiner's test report in the case.

5. After hearing both sides, the Tribunal found that the lower appellate authority's decision to grant the benefit of the Advance Licence for the imported "recycled kraft paper" was justified. The Tribunal emphasized the distinction between "kraft paper" and "kraft paper (recycled)" and upheld the decision that the benefit was admissible for the latter category. The Tribunal rejected the Revenue's appeal, citing the lack of technical definition for "kraft paper (recycled)" to support the Revenue's case.

In conclusion, the Tribunal upheld the entitlement of the respondent to the exemption under the Advance Licence for the imported "kraft paper (recycled)" based on the technical characteristics and the clarification provided by DGFT, rejecting the Revenue's appeal.