2016 (3) TMI 297 - AT - Customs

Re-export of entire goods - Prohibition on import of goods - Goods involves Toxic and Hazardous Contamination - Held that - the goods are free from Toxic and Hazardous Contamination results in no absolute prohibition for import of the goods and hence the goods are eligible to be cleared from customs charge, on payment of redemption fine in lieu of confiscation. Therefore, the entire goods are not liable to be re-exported. Payment of Redemption Fine and Penalty - Plastic scraps imported with and without Bar codes - Held that - the imported goods are not put to any use whatsoever and are virgin new material, as per the certificates of the manufacturer suppliers submitted alongwith the consignment at the time of customs clearance. Also the appellants have drawn sample on their own from the consignment and sent the same to CIPET, Chennai, who certified the goods to be plastic scrap virgin. Therefore, the portion of goods which contains the bar codes or stickers needs to be segregated and re-exported and the balance portion to be cleared on payment of reduced redemption fine and penalty. - Decided partly in favour of appellant

Summary

Issues:
1. Interpretation of conditions under Letter of Permission (LOP) for import of plastic scrap.
2. Validity of test reports and sample drawl in determining the nature of imported goods.
3. Conflict between redemption fine under Customs Act and re-export direction under Hazardous Waste Rules, 2008.

Analysis:

Issue 1 - Interpretation of LOP conditions:
The appellant, an established manufacturing unit, imports plastic scrap for manufacturing final products. The LOP issued by the Development Commissioner specifies conditions for import, including the material being free from Toxic and Hazardous Contamination, virgin, and not used. The test report confirmed compliance with these conditions but mentioned the material as "virgin used waste." This discrepancy led to confiscation of goods and imposition of fines. The appellant argued that the goods were new and unused, with only a small portion bearing bar codes. Despite the Department's re-testing of the remnant sample, the goods were deemed non-compliant. The Tribunal noted that most of the consignment was new material, certified as virgin, and not put to any use. The appellant's request for re-drawal of sample was disregarded, leading to the current appeal.

Issue 2 - Validity of test reports and sample drawl:
The appellant contested the accuracy of the initial sample drawl, highlighting the predominant inclusion of bar code portions leading to an incorrect test report. The Tribunal acknowledged the appellant's efforts to prove the goods' compliance, including independent sample testing and manufacturer certificates. Despite previous directions to draw a fresh sample, the Department re-tested the remnant sample, resulting in a similar report. The Tribunal found no absolute prohibition on importing the goods, as they were free from contamination and intended for manufacturing final products for export. The decision in a similar case supported segregating bar code portions for re-export and allowing clearance of the remaining goods on reduced fines.

Issue 3 - Conflict between redemption fine and re-export direction:
The Revenue argued that the goods were "virgin used," violating LOP conditions and justifying re-export. However, the Tribunal emphasized that the goods were new and not used, eligible for clearance on payment of redemption fine. The conflict arose between the Customs Act's redemption fine and the Hazardous Waste Rules, 2008, necessitating re-export. The Tribunal concluded that since the goods were not hazardous and intended for export-oriented manufacturing, re-export was unwarranted. The final directive was to segregate bar code portions for re-export and allow clearance of the rest with reduced fines and penalties.

In conclusion, the Tribunal upheld the impugned order with modifications, emphasizing the importance of accurate sample drawl, compliance with LOP conditions, and distinguishing between used and new goods for customs clearance.