1990 (3) TMI 208 - AT - Customs

Summary

Issues Involved:
1. Classification of imported goods under the Customs Tariff Act.
2. Allegation of misdeclaration under Section 111(m) of the Customs Act.
3. Determination of whether the goods were "disposal goods" under import regulations.
4. Applicability of Section 19 of the Customs Act for duty determination.

Issue-wise Detailed Analysis:

1. Classification of Imported Goods:
The appellants imported a consignment of "Low Density Polyethylene" (LDPE) but found discrepancies in the description of the goods, which were described as "L.D.P.E. Virgin off Specs Natural Film Grade by Dupont with small amount of Surlyn and Ava Melt Index approximately 2.0, Density 0.922". Customs examination revealed the goods were wet, mixed with impurities, and not in conformity with the import documents. The Collector classified the goods under sub-heading No. 3901.90, while the appellants argued for classification under sub-heading No. 3901.10. The Tribunal noted that "Surlyn" is a co-polymer of ethylene and methacrylic acid, predominantly polyethylene. Applying Chapter Note 4 to Chapter 39, the Tribunal concluded that the goods should be classified under sub-heading 3901.10, as LDPE has a density of 0.922.

2. Allegation of Misdeclaration:
The appellants declared the goods on the bills of entry as per the import documents. The Tribunal found that the appellants' actions, including contacting suppliers and arranging surveys, demonstrated no intent to defraud customs. The Tribunal held that the charge under Section 111(m) of the Customs Act had not been proved, as the appellants' declaration matched the import documents.

3. Determination of "Disposal Goods":
The Collector alleged that the goods were "disposal goods" not covered by the import license, based on the packaging, mixture of polyethylene types, and lower price. The Tribunal found no evidence to support the higher price of LDPE or the claim that the goods were "disposal goods." The Tribunal referred to previous judgments, including Abdul Husein Mohammedally Master v. Union of India, which clarified that new goods purchased in a lot are not necessarily "disposal goods." The Tribunal concluded that the goods were not "disposal goods" as claimed by the Collector.

4. Applicability of Section 19 of the Customs Act:
The Collector invoked Section 19 of the Customs Act, which deals with goods consisting of articles liable to different rates of duty. The Tribunal noted that Section 19 applies to sets of articles, not mixtures. The Tribunal applied Rule 2(b) and Rule 3 of the Rules for Interpretation of the Customs Tariff Schedule, concluding that the mixture of LDPE and Surlyn should be classified under sub-heading 3901.10, as LDPE is the predominant constituent.

Conclusion:
The Tribunal set aside the Collector's order, holding that the goods should be classified under sub-heading 3901.10, the charge of misdeclaration under Section 111(m) was not proved, and the goods were not "disposal goods." The appeal was allowed with consequential relief to the appellants.