2023 (9) TMI 1197 - AT - Customs

Seeking provisional release of seized goods - non-paper materials in waste paper consignments being imported from other countries - review of the policy by issuance of new Office Memorandum (O.M.) - submission of the Appellant that since the new OM has been issued in the midst of the proceedings, application for provisional release and adjudication of show cause notice need to be adjudicated under new OM dated 10-01-2023 - HELD THAT - The Learned Commissioner (Appeals) dismissed the appeal without dealing with the contentions raised by the Appellant. The judgement of Hon ble Gujarat High court in the case of SATGURU POLYFAB PVT. LTD. VERSUS UNION OF INDIA 2021 (3) TMI 1376 - GUJARAT HIGH COURT covers the field and in view of the proposition of law set out in the two constitution bench judgments discussed in prepares viz., COMMISSIONER OF INCOME TAX (CENTRAL) -I, NEW DELHI VERSUS VATIKA TOWNSHIP PRIVATE LIMITED 2014 (9) TMI 576 - SUPREME COURT and KOLHAPUR CANESUGAR WORKS LTD. VERSUS UNION OF INDIA 2000 (2) TMI 823 - SUPREME COURT , the issue is no longer res integra that new OM would be applicable for adjudicating the imported goods which provides for examination and release of the goods container wise, within the overall limits, specified in the said OM in percentage terms, of non paper materials/contaminants and other conditions set out in the said OM dated 10.01.2023. The Department is directed to examine the goods as per terms of the revised OM (F. No. 23/107/2022HSMD dated 10.01.2023) containerwise and to be so done in presence of the importer. The containers of paper waste where the goods are found in conformity with OM dated 10-01-2023, may be provisionally released on Bond/Undertaking. Where paper waste is found to be contaminated in a container, it would be dealt with under the new OM dated 10-01-2023 and such goods would be either re- exported or allowed to be disposed of in terms of the said OM dated 10- 01-2023. The adjudicating authority shall adjudicate the show cause notice after the exercise of provisional release is undertaken, which would be subject to final adjudication. Since new OM would be the governing law which provides for re- export and quantified penalty for local disposal, the Department shall be free to take legal undertaking from the importer to comply with conditions of disposal of the goods under new OM. Needless to mention the Department would be at liberty to supervise such disposal of the goods locally/re export of contaminated container if so found. Appeal allowed.

Summary

Issues Involved:
1. Applicability of Office Memorandum (OM) dated 10th January 2023.
2. Provisional release of imported goods under Section 110A of the Customs Act, 1962.
3. Retrospective application of beneficial legislation.

Summary:

1. Applicability of Office Memorandum (OM) dated 10th January 2023:
The Appellant, engaged in the manufacturing of paper, imported waste paper under the Foreign Trade Policy. The Ministry of Environment and Forests (MoEF) issued a revised OM dated 11th May 2010, prescribing guidelines for non-recyclable material in waste paper consignments. The Appellant contended that the OM dated 11th May 2010 was superseded by a new OM dated 10th January 2023, which relaxed the conditions of import and increased the permissible limit of non-paper items to 5%. The new OM also provided for container-wise examination of goods, unlike the previous OM.

2. Provisional release of imported goods under Section 110A of the Customs Act, 1962:
The Appellant's application for provisional release of the seized consignment was initially rejected by the adjudicating authority based on the guidelines from the OM dated 11th May 2010. The Appellant argued that the new OM dated 10th January 2023 should apply to the pending proceedings, as it is beneficial and does not inflict a corresponding detriment on others. The Tribunal directed the Department to examine the goods container-wise as per the new OM and to provisionally release conforming containers on Bond/Undertaking.

3. Retrospective application of beneficial legislation:
The Appellant relied on the judgments of the Hon'ble Supreme Court in Kolhapur Cane Sugar Works Limited vs. Union of India and Commissioner of Income Tax vs. Vatika Township Private Limited to argue that beneficial legislation should be given retrospective effect. The Tribunal agreed, stating that the new OM would be the governing law for adjudicating the imported goods, providing for re-export or local disposal with quantified penalties.

Conclusion:
The appeal was allowed with consequential relief, directing the Department to examine the goods as per the new OM dated 10th January 2023 and provisionally release conforming containers. The adjudicating authority was instructed to adjudicate the show-cause notice after the provisional release exercise, subject to final adjudication.