2015 (11) TMI 447 - AT - Customs

Availment of concessional rate of duty under Notification No.21/2002-Cus. dt. 1.3.2002 - adjustment of amount of customs duty - import of goods misdeclared as waste paper containing plastic waste/scrap, metal scrap and cloth scrap (rags) - Held that - The period of imports in the present case is from 3.9.2002 to 14.10.2004 whereas the above letter is of 2006 and the same is not applicable. Further, the said communication was issued by Ministry of Environment & Forests in the context of pollution control measures where garbage or municipal waste are brought into India in the name of waste paper. Further, we find the Customs issued standing order dt. 18.2.2006 and subsequently issued addendum to the said standing order on 31.3.2006 based on Ministry of Environment & Forests letter wherein at 6(i) of the said standing order, it is categorically stipulated that the plastic and metallic waste found in the waste paper are to be assessed to merit rate of duty. Therefore the appellants relying the Ministry of Environment & Forests communication is of no relevance for classifying the plastic & metallic waste under respective chapter heading and assessing on merit rate of duty. As per the condition of the notifications in question, the appellant themselves executed an undertaking before the Customs before clearance of goods, binding themselves that the goods shall be used for the manufacture of paper and paper board and they also undertook that in the event of non-compliance they shall pay customs duty on such quantity. Therefore, it is established beyond doubt that the above quantity of plastic waste/scrap, Metallic scrap and cloth waste imported in the guise of waste paper are not eligible for exemption under Sl.No.152 of the Notfn. 21/2002. Therefore, appellants are liable to pay appropriate customs duty on the above items. Condition (ii) (b) of Notfn. 203/92 is similar to condition 20 of Notfn 21/2002. On perusal of the Advance Licence No.0910028933/2/03/00 at page 99 of the paper book, we find that the advance licence was issued to import items as per the list attached to the licence. Sl.No.2 of the list attached covers ITCHS code 47079000 with description of imported item as waste paper . As already discussed above, the goods were cleared as waste paper under advance licence whereas quantity of plastic waste and metallic waste and cloth waste (rags) were not declared by the assessee. Therefore, such items are not covered under advance licence as what was permitted for import under advance licence is waste paper and not plastic waste and scrap and metallic waste and scrap etc. and not covered under the said Advance Licence. Therefore, in terms of condition (ii) (b) of the notification 203/92 and as per the undertaking executed by the appellant before Customs the appellants are liable to pay appropriate Customs duty on the quantity of plastic waste, metallic waste and cloth waste and cleared under 23 Bills of Entry. - concessional rate of duty availed by the appellants under Notification No.21/2002 as well as full exemption availed under 203/92 Cus. is not eligible on the quantity of plastic scrap, metallic scrap and cloth scrap (rags) and these goods are chargeable to appropriate Customs Duty and the duty demand of ₹ 1,06,10,668/- is confirmed. Term used outthrows represents only paper unsuitable for consumption and does not relate to plastic scrap & metallic scrap etc. Similarly, as per European Standards Mixed Paper Grade 5.01 relates to unsorted paper & paperboard. Therefore, we find that as rightly held by the adjudicating authority the plastic scrap and metallic scrap etc. cannot be treated as mixed waste paper and the appellants failed to declare these items before customs clearance. Further, on perusal of the contract/purchase order P.O.No.32/302921 dt. 20.3.2003, enclosed in pages 143 to 152 of Vol-II of Paper Book, we find the appellants have entered into contract with overseas supplier for supply of imported waste paper/ pulp, waste paper co-mingled krebside super mix. Appellants have violated their own terms and conditions of the contract and deliberately not declared non-fibre contraries, plastic scrap and other scraps in their Bill of Entry. Further, on perusal of Bill of Entry No.636370 dt. 31.5.2004, the appellants imported Mixed Paper and on examination it contained waste paper and plastic waste/scrap and the same was classified under Chapter Heading 47079000 and Chapter 39159029 respectively and appellants themselves had paid appropriate duty on plastic scrap whereas in all the subsequent imports of 17 Bills of Entry which are annexed as Sl.No.31 to 52 in the SCN they failed to declare the non-contraries i.e plastic waste and scrap. Therefore, appellants have not only flouted their own terms and conditions of contract and imported the goods by not declaring it as plastic waste and scrap and they are fully aware that the consignments contained plastic scrap and other scrap but they have deliberately declared the goods as waste paper and not paid appropriate duty on the non-fibre contraries and availed the concessional rate of duty under the above notifications. Appellants failed to intimate the Customs authorities on their activity of sorting of the imported goods into fibre and non-fibrous contents through M/s.White Star Fibres Ltd. and the quantity of plastic scraps and other scraps recovered and sold in the domestic market. But for the detection by the investigation agency, this would not have come to the light. Appellant s contention that they have intimated the Central Excise authorities about the quantity of plastic waste and scrap for issuing end-use certificate is not relevant. As per the condition of the notification appellants failed to inform the customs authorities where the appellants availed the benefit. Therefore, the adjudicating authority has rightly restricted the exemption benefit only to the quantity of fibre content of 17,901 MTs of fibre contraries and correctly demanded duty on the non-declared items of plastic waste and metallic scrap and cloth waste (rags) by invoking Section 28 of the Customs Act. - demand confirmed by the adjudicating authority is liable to be upheld. Since the plastic waste and scrap is otherwise a restricted item under Foreign Trade Policy the same are liable for confiscation. The order of confiscation of the seized goods under section 111 (d) of the Customs Act and imposition of redemption fine and penalty under Section 114A of the Customs Act is liable to be upheld. - Decided against assessee.

Summary

Issues Involved:
1. Misdeclaration of imported goods.
2. Eligibility for concessional duty under Notification No. 21/2002-Cus.
3. Eligibility for exemption under Notification No. 203/92-Cus.
4. Classification of imported goods.
5. Invocation of extended period for demand under Section 28 of the Customs Act.
6. Imposition of penalty and confiscation of goods.

Detailed Analysis:

1. Misdeclaration of Imported Goods:
The appellants imported consignments declared as "Mixed Waste Paper" but included plastic waste, metallic waste, and cloth scrap, which were not declared. The investigation revealed that the appellants had entered into a contract to sort out the imported goods into fibre and non-fibre contraries. The presence of non-declared items was established through detailed scrutiny and investigation, proving that the appellants had not fulfilled the mandatory condition of the notification to declare all imported items.

2. Eligibility for Concessional Duty under Notification No. 21/2002-Cus:
The appellants claimed concessional duty under Notification No. 21/2002-Cus for importing waste paper. The notification exempts goods for use in the manufacture of paper or paperboard. However, the appellants imported quantities of plastic waste, metallic waste, and cloth waste, which were not used in manufacturing paper and paperboard. The tribunal found that the appellants did not comply with the condition of the notification, making them ineligible for the concessional rate of duty on the non-declared items.

3. Eligibility for Exemption under Notification No. 203/92-Cus:
For 23 Bills of Entry, the appellants claimed exemption under Notification No. 203/92-Cus using DEEC advance licenses. The notification requires that the imported materials be used in the manufacture of specified goods. Since the imported consignments included non-declared items not covered under the advance licenses, the appellants failed to comply with the notification's conditions. Consequently, they were liable to pay customs duty on the non-declared items.

4. Classification of Imported Goods:
The appellants argued that the imported goods should be classified under Chapter Heading 47079000, which includes unsorted waste and scrap. However, the tribunal held that the heading pertains only to unsorted waste paper and not to mixed materials like plastic and metallic waste. Therefore, the non-declared items were rightly classifiable under their respective headings in Chapters 39, 73, etc., of the Customs Tariff.

5. Invocation of Extended Period for Demand under Section 28 of the Customs Act:
The tribunal found that the appellants deliberately misdeclared the imported goods and suppressed facts to avail concessional duty. The appellants' failure to declare non-fibre contraries in subsequent imports and their knowledge of the contents of the consignments established wilful suppression of facts. Consequently, the invocation of the extended period under Section 28 of the Customs Act was justified.

6. Imposition of Penalty and Confiscation of Goods:
The tribunal upheld the adjudicating authority's decision to impose a penalty under Section 114A of the Customs Act and to confiscate the seized goods under Section 111(d) of the Customs Act. The appellants' actions demonstrated a deliberate intent to evade customs duty, justifying the imposition of penalties and confiscation.

Conclusion:
The tribunal confirmed the demand of customs duty amounting to Rs. 1,06,10,668 on the non-declared items, upheld the confiscation of goods, and imposed a penalty under Section 114A of the Customs Act. The appeal was dismissed, and the impugned order was upheld.