2017 (6) TMI 840 - AT - Customs

Import of restricted item - second hand tyres - requirement of valid licence issued by DGFT for import - confiscation - redemption fine - penalty - Held that - It is not in dispute that all second hand goods except second hand capital goods are restricted for imports in terms of para 2.17 of the Foreign Trade Policy, 2009-2014 - the Government of India vide Notification dt. 07.04.2006 had included used tyres as a restricted item - This being so, the appellant would require a specific licence for the import of such used tyres which has not been produced. The authorities have held that the goods have been imported in violation of condition that tyres must have a BIS certification except for tyres imported by Original Equipment Manufacturer (OEM) - We, however, find that this requirement is restricted only to newly manufactured tyres and are not applicable to used tyres. Hazardous waste nature of the imported goods - Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008 - Held that - there is no doubt that waste pneumatic tyres has been listed as a hazardous waste which can be imported only with the permission of MOEF. At the same time, the said entry excludes such waste pneumatic tyres which do not lead to resource recovery, recycling, reclamation or direct reuse - impugned goods will surely have to be considered as those capable of direct reuse, hence excluded from the purview of Entry B 3140 and consequently, falling in the category, which do not require permission of MOEF for importation - the imported tyres are used tyres, capable of direct reuse, accordingly they will fall in the categories excluded one 3140, they cannot be then treated as hazardous waste and hence their import will not require MOEF permission. Confiscability and imposition of penalty - Held that - The goods being restricted and there being no specific licence for the import, the goods were rightly confiscated and penalty imposed in the impugned order - However, as we have found that imported goods cannot be treated as hazardous waste , redemption fine under Section 125 of the Act but only for the purpose of re-export will not sustain. They can very well be permitted clearance for home consumption on imposition of redemption fine under Section 125 ibid. Also, considering that the goods were imported in April 2011 and have been lying in the customs custody ever since with demurrage and other charges mounting up, not to mention the deterioration in quality of the goods, toned down suitably. We therefore order that redemption fine under Section 125 ibid will be limited to 15% (fifteen percent) of the penalty under Section 112 ibid to 10% (ten percent) of the redetermined value. Appeal allowed - decided partly in favor of appellant.

Summary

Issues Involved:
1. Classification and importability of used tyres.
2. Requirement of BIS certification for imported tyres.
3. Applicability of Hazardous Waste (Management, Handling and Transboundary Movement) Rules, 2008.
4. Confiscation and imposition of penalty under the Customs Act, 1962.

Detailed Analysis:

1. Classification and Importability of Used Tyres:
The appellants imported used tyres classified under ITC (HS) code 4012 2090, which they argued were freely importable. The Department contended that used tyres are restricted for import under para 2.17 of the Foreign Trade Policy 2009-2014 and require a valid licence from DGFT, which was not produced by the importer. The Tribunal upheld that used tyres are restricted items and require a specific licence for import, validating the confiscation under Section 112 (d) of the Customs Act, 1962 read with Section 3 (3) of the Foreign Trade (Development and Regulation) Act, 1992.

2. Requirement of BIS Certification:
The Department argued that BIS certification was required for the imported tyres. However, the Tribunal found that the requirement of BIS certification applies only to newly manufactured tyres and not to used tyres. This was supported by the Ministry of Commerce & Industry's clarification under the RTI Act, 2005, and the Tribunal's decision in the case of Universal Trading Co. The Tribunal set aside the part of the order holding that the imported goods were liable for confiscation and penalty on the grounds of not having BIS certification.

3. Applicability of Hazardous Waste (Management, Handling and Transboundary Movement) Rules, 2008:
The Department argued that the imported tyres were hazardous waste under Entry B3140 of Schedule-3 (Part-B) of the Hazardous Waste Rules, requiring MOEF permission. However, the Tribunal noted that the imported tyres were capable of direct reuse and thus excluded from the definition of hazardous waste under Entry B3140. This was supported by the Chartered Engineer's and TNPCB's reports, and the Tribunal's decision in Jibran Overseas. The Tribunal concluded that the imported tyres did not require MOEF permission and set aside the findings of the lower authorities.

4. Confiscation and Imposition of Penalty:
The Tribunal upheld the confiscation of the goods and the imposition of a penalty under Section 112 (a) of the Customs Act, 1962, due to the import of restricted goods without a specific licence. However, since the imported goods were not considered hazardous waste, the Tribunal allowed the clearance of goods for home consumption upon payment of redemption fine, penalty, and applicable duties. The redemption fine was limited to 15% of the penalty under Section 112, and the penalty was set to 10% of the redetermined value, in line with the Tribunal's decision in Jibran Overseas.

Conclusion:
The Tribunal allowed the appeal, permitting the clearance of goods for home consumption upon payment of the specified fines and duties, and set aside the findings regarding the requirement of BIS certification and the classification of the imported tyres as hazardous waste. The detailed analysis considered the legal precedents and the specific facts of the case, ensuring a comprehensive resolution of the issues involved.