2024 (8) TMI 911 - AT - Customs

Classification of imported goods - Re-testing of samples - hazardous waste in terms of legal provisions under the Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008 and the C.B.I. C. Circular No. 33/2001-Customs, dated 4-6-2001 or not - confiscation - imposition of consequential penalty - HELD THAT - In the sample test results for all 12 disputed consignments Acidity is NIL; Ash content is less than 0.10; Sediment is less than 0.25% and Water content is NIL. However, it is reported in the Test report that further testing is being done. The further test reports also indicate that the parameters are within the limits prescribed; and there is no presence of heavy metals such as Polychlorinated Biphenyls (PCB), Poly Aromatic Hydro carbon (PAH); Lead, Chromium, Cadmium, Nickel; Arsenic as the results state that these have not been detected. Thus, we are of the considered opinion that the facts in terms of test results of these 12 samples taken from the imported goods in 12 containers cannot be treated as hazardous goods . In fact, these products fall appropriately under the category of used oil suitable for recycling. It is found that the authorities below did not examine the various parameters for determination of the issue of classifying the imported goods as off-specification furnace oil/waste oil or hazardous waste in a systematic and detailed manner. Rather they simply went by the wordings mentioned in the test reports, without referring to the specific factors. The appellants on coming to know about the test results had applied for re-testing of samples vide their letter dated 11-7-2022 addressed to the Joint Commissioner, JNCH. However, it is found that the Customs authorities and both the authorities below during adjudication of the case, without even recording the date of communication of the first test results by the department to the appellants importer; then the date of receipt of the request letter from the appellants by the Customs authorities, should have taken a reasoned view on allowing the facility of second test or retesting as per procedure. However, in complete disregard to the above provisions, the authorities below have simply dismissed the request for re-testing sought by the appellants. Thus, by not following the principles of natural justice and in complete disregard to the CBI C instructions, the impugned order has been passed by the Learned Commissioner of Customs (Appeals). Thus, it is made clear that none of the evidences relied upon by the department, to allege the mis-classification as 'fuel oil' and for resorting to classification of the goods as hazardous waste , stand the scrutiny of law - the department had failed to substantiate the grounds for confiscation of the imported goods and for imposition of redemption fine and penalty. Hence, there are no hesitation in setting aside the impugned order and allowing the appeals in favour of the appellants. The impugned order passed by the Learned Commissioner of Customs (Appeals), Jawaharlal Nehru Customs House (JNCH), Nhava Sheva, Taluka Uran, District Raigad, is set aside and the appeals filed by the appellants are allowed.

Summary

Issues Involved:
1. Classification of imported goods as 'hazardous waste' under the Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008.
2. Confiscation and imposition of penalty under the Customs Act, 1962.
3. Request for re-testing of samples.

Issue-wise Detailed Analysis:

1. Classification of Imported Goods as 'Hazardous Waste':
The primary issue was whether the imported goods, declared as 'fuel oil', were actually 'hazardous waste' as per the Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008, and the C.B.I. & C. Circular No. 33/2001-Customs, dated 4-6-2001. The appellants imported 'fuel oil' from Spain, which was intercepted by the DRI on suspicion of being misdeclared 'diesel oil'. Upon testing, the goods were found not to be diesel oil. However, the customs authorities treated the goods as hazardous waste, citing density exceeding 0.95% as a key factor.

The Tribunal found that the goods passed the minimum screening tests for acidity, ash content, sediment, and water content. Further tests indicated no presence of heavy metals such as Polychlorinated Biphenyls (PCB), Poly Aromatic Hydrocarbon (PAH), Lead, Chromium, Cadmium, Nickel, and Arsenic. The Tribunal concluded that the goods were not hazardous waste but 'used oil' suitable for recycling, as per the test results and legal provisions.

2. Confiscation and Imposition of Penalty:
The original authority had confiscated the goods under Section 111(d) of the Customs Act, 1962, and imposed a penalty under Section 112(a) of the same Act. The Commissioner of Customs (Appeals) upheld this order, stating that the goods did not meet the density requirements for used oil suitable for re-refining, thus classifying them as hazardous waste.

The Tribunal, however, noted that density is not a statutory requirement under the relevant rules for classifying goods as hazardous waste. The Tribunal emphasized that the goods met other significant parameters and should be classified as 'fuel oil' under IS 1593:1982 standards. Therefore, the confiscation and penalty imposed were deemed unsustainable in law.

3. Request for Re-testing of Samples:
The appellants requested re-testing of the samples, which was denied by the original authority on the grounds of not adhering to the ten-day time limit prescribed in Circular No. 30/2017-Cus., dated 18-7-2017. The Commissioner of Customs (Appeals) also rejected this request, citing the same reason.

The Tribunal found that the authorities failed to record the date of communication of the first test results and the receipt of the re-testing request. The Tribunal stressed the importance of adhering to the principles of natural justice and the guidelines for re-testing under the WTO's Trade Facilitation Agreement, which mandates an opportunity for a second test in case of adverse findings. The denial of re-testing was thus considered unjustified.

Conclusion:
The Tribunal set aside the impugned order, concluding that the imported goods were not hazardous waste but 'fuel oil' suitable for recycling. The confiscation and penalties imposed were deemed unsustainable, and the appeals were allowed with consequential relief as per law. The Tribunal emphasized the need for adhering to procedural fairness and the guidelines for re-testing, thereby upholding the principles of natural justice.