2005 (4) TMI 131 - AT - Customs

Imports of goods declared to be 'Copper Concentrate' - Demand of duty - Limitation - Suppression or misrepresentation of the facts - Confiscation of goods - HELD THAT - No doubt, in the present case, the Revenue has not obtained the Test Results from private persons. Further there is no reason as to why they dispensed with the Departmental Laboratory. The appellants had been importing similar goods earlier. The Revenue used the present Test Reports of EPTRI and NMDC to demand differential duty on past consignments. Unless it is proved that the test results of the earlier consignments by the Chemical Examiner, Chennai were wrong, they cannot be brushed aside. In other words, on the basis of NMDC report, the classification cannot be changed when the goods were classified as copper concentrate on the basis of test results. Every officer of the Laboratory has a minimum qualification of Masters Degree in Chemistry. It is very hard to believe that the personnel of the Customs Laboratories are not capable of testing whether a given sample is a copper concentrate or otherwise. The foreign suppliers have also declared that the goods as copper concentrate. The Revenue has not produced any evidence to show that there is a collusion between the appellants and the foreign suppliers to declare that the goods are copper concentrate. The NMDC Report is not very conclusive to hold that the impugned goods have not originated from naturally occurring copper. In case of doubt, these points could have been ascertained from the Chemical Examiner, Chennai and also from the Chief Chemist, New Delhi. Thus, the Order-in-Original No. 21/2002 dated 21-8-2002 has no merit. There are no grounds for imposition of penalty on the appellants. The goods, in these circumstances, are not proved as hazardous and they may be released treating them as copper concentrate. We allow all these 09 (nine) appeals.

Issues Involved:

1. Classification of imported goods.
2. Determination of whether the goods are hazardous waste.
3. Compliance with Hazardous Waste (Management & Handling) Rules, 1989.
4. Validity of test reports from EPTRI and NMDC.
5. Allegation of mis-declaration and suppression of facts.
6. Time-barred demands and applicability of extended period.
7. Adherence to principles of natural justice.
8. Imposition of penalties under Section 112(a) of the Customs Act, 1962.

Detailed Analysis:

1. Classification of Imported Goods:
The appellants imported goods declared as 'Copper Concentrate' through Chennai Port. The Customs initially accepted this classification, but later, based on intelligence and subsequent tests by NMDC and EPTRI, the Revenue proposed reclassification under Chapter Heading 2620.30, indicating a higher duty rate. The Tribunal noted that the appellants had followed the proper procedure in clearing the goods provisionally and that the final assessments were based on the Chemical Examiner's report from the Chennai Customs Laboratory, which classified the goods as copper concentrate.

2. Determination of Whether the Goods are Hazardous Waste:
The Revenue argued that the goods were hazardous waste under the Hazardous Waste (Management & Handling) Rules, 1989, requiring a license from DGFT. The EPTRI report suggested that the goods could be hazardous, but the Tribunal found that the reports were not conclusive. The EPTRI report indicated the presence of various inorganic elements but no organic substances, which contradicted the classification under Class B3 of Schedule 2 of the Hazardous Waste Rules, which pertains to wastes containing principally organic constituents.

3. Compliance with Hazardous Waste (Management & Handling) Rules, 1989:
The Tribunal examined the definition of hazardous waste under Rule 3(i) and found that the EPTRI report did not conclusively prove that the goods fell under Class B3. It also noted that the goods did not exhibit any hazardous characteristics listed in Schedule 3, Part B of the Rules. The Tribunal concluded that the reliance on the EPTRI report to classify the goods as hazardous was misplaced.

4. Validity of Test Reports from EPTRI and NMDC:
The Tribunal questioned the reliance on test reports from EPTRI and NMDC instead of the Customs Laboratory, Chennai, which had previously tested similar consignments and classified them as copper concentrate. The Tribunal emphasized that the Customs Laboratory's test reports should not be lightly brushed aside unless proven erroneous, citing the Supreme Court's ruling in Reliance Cellulose Products Ltd. v. Collector of C. Excise, Hyderabad.

5. Allegation of Mis-declaration and Suppression of Facts:
The Revenue accused the appellants of mis-declaration and suppression of facts. However, the Tribunal found no evidence of collusion between the appellants and the foreign suppliers. The Tribunal also noted that the goods were cleared provisionally and assessed based on the Customs Laboratory's test reports, which did not support the allegation of mis-declaration.

6. Time-Barred Demands and Applicability of Extended Period:
The Tribunal held that the demands for consignments cleared earlier were time-barred. It noted that all facts were available when the first show cause notice was issued on 21-8-2002, and no new facts were brought on record to justify invoking the extended period. The Tribunal cited relevant case laws to support this conclusion.

7. Adherence to Principles of Natural Justice:
The Tribunal found that no personal hearing was granted for the appeals in Sl. Nos. 4, 5, and 6, violating the principles of natural justice. This procedural lapse further weakened the Revenue's case.

8. Imposition of Penalties under Section 112(a) of the Customs Act, 1962:
The Tribunal set aside the penalties imposed on the appellants, including M/s. Magus Metals, Shri K. Ravi Babu, and Smt. Latha Rani, under Section 112(a) of the Customs Act, 1962. It concluded that the goods were not hazardous and that the appellants had not committed any mis-declaration or suppression of facts.

Conclusion:
The Tribunal allowed all nine appeals, setting aside the impugned orders and penalties. It directed the release of the goods, treating them as copper concentrate, and emphasized the importance of adhering to procedural fairness and relying on conclusive evidence.

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