2020 (11) TMI 166 - HC - Customs

Classification of imported goods - goods are old and used rubber tyres reusable as tyres or are old and used rubber tyres scrap being in pressed baled form? - it is contended that petitioner has misinterpreted the description of import items by saying that pressed baled would mean that the tyres are scrap - HELD THAT - Ministry of Environment, Forest and Climate Change, Government of India had issued officer memorandum dated 29th November, 2019 granting permission/no objection to the petitioner for import of 10,000 MT of old and used rubber tyres scrap (multiple cuts/pressed baled/shredded) for manufacturing of crumb rubber. Also, Directorate General of Foreign Trade, Government of India had issued import/export licence (authorisation) dated 28th November, 2019 to the petitioner for importing certain restricted items which has been described as old and used tyres scrap (multiple cuts/pressed baled/shredded). It is evident that seizure of goods is not an end in itself. Goods can only be seized if the proper officer has reason to believe that such goods are liable to confiscation. Further more, seizure cannot also be for an indefinite period. Timeline is provided in sub section (2) of section 110. In case of confiscation, the statute has provided for the requisite procedural safeguards in section 124. As a pragmatic measure, provisional release of seized goods pending adjudication is provided in section 110A. Having regard to the dispute raised and the statutory framework in place, we feel that it may not be proper for the writ court to step in at this stage to render a finding as to whether the seized goods are old and used rubber tyres scrap in pressed baled form or rubber tyre in reusable form; in other words, whether the imported goods fall under the customs tariff heading of 4004000 or under the heading of 4012, which will basically be a finding of fact. Therefore, we are of the view that this aspect should be best left to the adjudicating authority to decide, if it requires adjudication. Pre-empting an adjudication on this issue by the writ court by taking a view one way or the other may not be justified. While respondents have stated that getting the goods examined by a Chartered Engineer is a well established departmental procedure, it is also a well established departmental procedure that in the case of seizure samples are drawn and then sent for testing in accredited laboratory/laboratories. We see no harm in acceding to such a request of the petitioner. Rather it will only facilitate a fair investigation and consequently fair adjudication. Petition disposed off.

Issues Involved:

1. Legitimacy of the seizure of imported goods.
2. Classification of imported goods.
3. Validity of the Chartered Engineer's report.
4. Request for testing of samples by an accredited laboratory.
5. Provisional release of seized goods.

Detailed Analysis:

1. Legitimacy of the Seizure of Imported Goods:

The petitioner sought quashing of the seizure memos dated 26th August 2020 and the release of the seized goods. The court noted that the proper officer under the Customs Act had subjected the goods to 100% examination, assessed them, levied duty, and issued out of charge. However, based on specific intelligence and subsequent examination by a Chartered Engineer, respondent No.3 seized the goods under section 110(1) of the Customs Act, suspecting misdeclaration and undervaluation. The court held that seizure of goods is permissible if the proper officer has reason to believe the goods are liable to confiscation, but such seizure cannot be indefinite and must adhere to procedural safeguards.

2. Classification of Imported Goods:

The core issue was whether the imported goods were old and used rubber tyres scrap or reusable tyres. The petitioner argued that the goods were classified under customs tariff heading 4004000, which covers waste, parings, and scrap of rubber. The respondents contended that 25% to 40% of the tyres were in good and reusable condition, thus falling under CTH 4012, which deals with retreaded or used pneumatic tyres. The court refrained from making a definitive finding on the classification, leaving it to the adjudicating authority to decide if necessary.

3. Validity of the Chartered Engineer's Report:

The respondents heavily relied on the Chartered Engineer's report, which stated that a portion of the tyres were reusable. The petitioner criticized the report, pointing out flaws and arguing that it was prepared perfunctorily. The court stated that it would not comment on the validity of the report at this preliminary stage of the investigation but acknowledged the petitioner's right to question it.

4. Request for Testing of Samples by an Accredited Laboratory:

The petitioner consistently requested that samples from the seized goods be tested by the Indian Rubber Manufacturers Research Association (IRMRA), an accredited laboratory. The respondents allowed the drawing of samples but distanced themselves from the testing process. The court found this stance unreasonable, emphasizing that testing by an accredited laboratory would facilitate fair investigation and adjudication. The court directed the petitioner to submit the samples for testing and for the respondents to consider the test report along with other relevant materials.

5. Provisional Release of Seized Goods:

The respondents offered provisional release of the seized goods upon submission of an appropriate bond and bank guarantee. The petitioner hesitated to accept this offer without a test report, fearing it would hinder the determination of whether the goods were reusable tyres or scrap. The court directed the petitioner to avail the provisional release offer under section 110A of the Customs Act, without prejudice to their claim, and expedited the investigation and consequential steps, including adjudication if necessary.

Conclusion:

The court disposed of the writ petition with specific directions: the petitioner must submit samples for testing to an accredited laboratory, the test report must be considered by the respondents, the petitioner may avail provisional release, and the investigation and adjudication process must be expedited. The court clarified that it had not expressed any opinion on the merits of the case, and all contentions remained open.

← Previous Next →