2023 (9) TMI 1392 - AT - Customs

Classification of imported goods - coloured rubber granules - import policy restrictions - whether the importation of goods are Restricted or Free depending upon classification of the imported goods under the First Schedule to the Customs Tariff? HELD THAT - The description of the heading for 4001 specify that it covers products of natural rubber in primary forms or in plates, sheets or strip ; similarly the description of heading 4002 provides that it covers Synthetic rubber and factice derived from oils, in primary forms or in plates, sheets or strip . Further, heading 4003 covers reclaimed rubber in primary forms or in plates, sheets or strip and heading 4004 covers under its scope waste, parings and scrap of rubber (other than hard rubber) and powders and granules obtained therefrom . The imported goods are to be treated as finished goods instead of raw rubber in any primary forms. Thus by the scope of coverage of the chapter heading 4001 and 4002 and its tariff entries, relative Chapter Note 5(A), inasmuch as there is presence of pigments/colouring matter, carbon black and accelerators in the imported goods, it does not merit classification under heading 4001 as well as 4002. The imported goods is presented in granules of size 2mm to 4mm which is one of the primary form and are being used for outdoor rubber tiles, indoor rubber mats, rubber pavers etc. and thus are covered under chapter heading 4003. The relevant import policy for goods of chapter heading 4003 are Free and there are no restrictions on import. Thus, the impugned order proposing absolute confiscation of imported goods classifying the imported goods under tariff item 4004 0000 is not legally sustainable. From the plain reading of the entry in the restrictions placed under Basel No. B 3080 of Part-B to Schedule III, it is clear that this entry do not cover the granules of rubber derived from truck tyres. The Prior Informed Consent procedure and permission to be obtained by the importer is applicable only to waste, parings and scrap of rubber . Hence, even otherwise, irrespective of the policy condition not being applicable to imported goods of chapter 4003, there is no restriction from the point of HW Rules, 2016. The impugned order passed by the Commissioner of Customs (Appeals), JNCH, Nhava Sheva, Mumbai-II set aside - appeal allowed.

Summary

Issues Involved:
1. Classification of imported goods.
2. Determination if the imported goods fall under the category of 'Restricted goods' as per FTP 2015-20.
3. Applicability of redemption fine for re-export in case of restricted goods.

Issue-wise Comprehensive Details:

1. Classification of Imported Goods:
The appellants classified the imported coloured rubber granules under tariff item 4002 19 90, while the department reclassified them under Customs tariff item 4004 0000. The Tribunal examined the scope of headings 4001, 4002, 4003, and 4004, and relevant Section and Chapter Notes. The Tribunal concluded that the imported goods, derived from used truck tyres and processed into coloured granules, do not fit under headings 4001 or 4002 due to the presence of pigments, carbon black, and accelerators. The Tribunal found that the goods are not merely waste or scrap but are finished products obtained through detailed manufacturing processes. Therefore, the Tribunal classified the goods under heading 4003 0000 as reclaimed rubber.

2. Determination if the Imported Goods are 'Restricted Goods':
The Tribunal referred to the Import Policy and the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016, to determine if the imported goods are 'Restricted'. The Tribunal noted that the description under heading 4004 includes waste and scrap of rubber and powders and granules obtained therefrom, which require authorization from DGFT. However, the Tribunal concluded that the imported goods, being finished rubber granules, are not covered under the restricted category of waste, parings, and scrap of rubber. Hence, the goods are not 'Restricted' under the FTP 2015-20.

3. Applicability of Redemption Fine for Re-export:
The original authority had confiscated the goods but allowed an option for redemption fine for re-export. The Commissioner (Appeals) modified this to absolute confiscation, deleting the redemption fine option. The Tribunal, however, found that the goods are not restricted and thus not subject to absolute confiscation. Consequently, the Tribunal set aside the impugned order, ruling that the confiscation and penalties were not legally sustainable.

Conclusion:
The Tribunal allowed the appeal, setting aside the impugned order, and classified the imported goods under heading 4003 0000 as reclaimed rubber, which is not restricted under the FTP 2015-20. The order for absolute confiscation and penalties was deemed unsustainable.