1987 (1) TMI 284 - AT - Customs

Summary

Issues Involved:
1. Classification of imported goods as "woollen waste" or processed woollen products.
2. Eligibility for duty exemption under Customs Notification No. 240-Cus., dated 2-8-1976.
3. Validity of ITC licenses for import of wool waste.
4. Adherence to principles of natural justice in adjudication proceedings.

Detailed Analysis:

1. Classification of Imported Goods:
The primary issue was whether the imported consignments described as "woollen waste" were indeed woollen waste or processed woollen products. The customs authorities, based on the findings of a technical panel, concluded that the goods were not woollen waste but processed woollen products. The panel found that the goods contained long lengths of slivers/tops, which could be directly used for spinning, and therefore did not qualify as wool waste. The Additional Collector held that the goods were classifiable under heading 53.01/05(1) of the Customs Tariff Schedule, which pertains to processed woollen products other than wool tops/raw wool.

2. Eligibility for Duty Exemption:
The appellants contended that the goods were woollen waste and thus eligible for duty exemption under Customs Notification No. 240-Cus., dated 2-8-1976. The notification exempts woollen waste falling under Chapter 53 of the Customs Tariff Schedule. The Additional Collector rejected this claim, stating that the goods were not woollen waste and thus did not qualify for the exemption.

3. Validity of ITC Licenses:
The appellants sought to clear the goods against ITC licenses specifically valid for the import of wool waste. The Additional Collector held that since the goods were not woollen waste, the licenses produced were not valid to cover their import. Consequently, the goods were confiscated but allowed to be redeemed on payment of a fine and proper duties.

4. Adherence to Principles of Natural Justice:
The appellants argued that the findings in the impugned order were beyond the scope of the allegations in the show cause notice, thus violating the principles of natural justice. They also contended that the evidence produced by them was arbitrarily rejected without justification. The Additional Collector relied on the CCCN headings and explanatory notes, which the appellants argued was improper as the Indian Customs Tariff Schedule does not follow the CCCN pattern in toto.

Tribunal's Findings:

Classification of Imported Goods:
The Tribunal observed that there was no authoritative definition of "woollen waste." The evidence on record, including reports from the Customs Laboratory and the initial examination by the customs staff, indicated that the goods could be considered woollen waste. The Tribunal noted that the majority report of the expert panel was not based on precise and accepted criteria, and the validity of the report was diluted by the depositions in cross-examination.

Eligibility for Duty Exemption:
The Tribunal held that the goods were appropriately classifiable as soft woollen waste based on the definitions and technical opinions provided by the appellants. The evidence pointed to the conclusion that the goods were woollen waste, and the department had not shown otherwise. Therefore, the goods were eligible for duty exemption under Customs Notification No. 240-Cus., dated 2-8-1976.

Validity of ITC Licenses:
Since the goods were held to be woollen waste, the rejection of the licenses on the basis that the goods were not woollen waste was also deemed incorrect. The Tribunal allowed the goods to be cleared against the licenses for the import of wool waste.

Adherence to Principles of Natural Justice:
The Tribunal found that the Additional Collector's reliance on the CCCN headings and explanatory notes was improper. The findings in the impugned order were beyond the scope of the allegations in the show cause notice, violating the principles of natural justice. The evidence produced by the appellants was not given due consideration, and the reliance on the Board's Tariff Advice was also found to be improper.

Conclusion:
The Tribunal set aside the impugned orders, declared the goods to be eligible for duty exemption under Customs Notification No. 240-Cus., dated 2-8-1976, and allowed them to be cleared against the licenses for the import of wool waste. If fines and duties had been paid, they were to be refunded to the respective appellants. The Tribunal also observed that the cases were fit for consideration of the issue of detention certificates by the customs authorities to enable the appellants to get relief in the matter of demurrage charges.