2013 (11) TMI 856 - AT - Customs

Import of old and used tyres - Misdeclaration of goods - Goods declaraed as Old and used discarded tyres - Assessee contenda that goods were classifiable under CTH 40122010 and 40122020 whereas Revenue contends that goods were classifiable as waste and scrap of CTH 40040000 - Absolute confiscation of goods - Imposition of redemption fine and penalty - Held that - nearly a time of one-and-half year has passed from the date of import and being live consignments appellants may have to incur additional expenditure on account of litigation, demurrage and other port expenses. Looking to the facts and circumstances of the present appeals, it will be appropriate to order that the declared assessable value should be enhanced by 100% and allowed clearance by imposing a redemption fine of 15% on the enhanced value and by imposing a penalty of 10% of the enhanced value. For the waste and scrap tyres, being in the nature of hazardous waste, the exact quantity may be determined during allowing clearances and re-exported at the expense of the importers. The redemption fine and penalty with respect to waste and scrap of tyres, ordered to be re-exported, is deemed to be included in the redemption fine and penalties already imposed as no separate quantity and value of the waste and scrap of tyres, classifiable under 40040000, is available on record. there is no evidence with the Revenue that extra amounts have been remitted by the appellants for the current imports to the supplier of the goods. Appellants have also given correct description of the imported goods that old and used tyres are not fit for use for fast moving vehicles or heavy duty vehicles. In spite of that if some of the users in India make use of those tyres for fast moving vehicles or heavy duty vehicles, then appellants cannot be faulted with. It is not a fit case for holding that there was a mis-declaration of value or description of goods and accordingly provisions of Sec 111(m) of the Customs Act 1962 cannot be invoked - Decided in favour of assessee.

Issues Involved:
1. Classification of imported tyres.
2. Application of BIS standards.
3. Import restrictions under Pneumatic Tyres and Tubes for Automotive Vehicles (Quality Control) Order, 2009.
4. Classification of scrap tyres as hazardous waste.
5. Valuation of imported tyres.
6. Consequential actions against the notices.

Detailed Analysis:

1. Classification of Imported Tyres:
The adjudicating authority classified the old and used tyres with residual life under CTH 40122010 and 40122020, and the remaining tyres as waste/scrap under CTH 40040000. The appellants initially contested this classification but later focused on other issues.

2. Application of BIS Standards:
The adjudicating authority held that the imported tyres must comply with BIS standards based on references from BIS authorities and the Department of Industrial Policy and Promotions. However, the appellants argued that BIS standards are not applicable to old and used tyres, citing letters from relevant authorities. The tribunal observed that old and used tyres are restricted but not absolutely prohibited under the Import Policy, and similar imports at other ports were cleared without insisting on BIS standards.

3. Import Restrictions under Quality Control Order, 2009:
The adjudicating authority held that old and used tyres are not allowed for direct use without complying with the Quality Control Order, 2009. The tribunal noted that the import policy classifies old and used tyres as restricted items, and any violation of the Quality Control Order does not make them liable for absolute confiscation under the Customs Act.

4. Classification of Scrap Tyres as Hazardous Waste:
The adjudicating authority classified tyres with defects as hazardous waste under the Hazardous Waste (Management, Handling and Trans-boundary Movement) Rules, 2008. The tribunal acknowledged that a certain percentage of tyres could be classified as waste/scrap and hazardous waste, requiring NOC from the Ministry of Environment and Forests. However, tyres capable of being reused as such or after retreading cannot be considered hazardous waste.

5. Valuation of Imported Tyres:
The adjudicating authority rejected the transaction value and re-determined the value based on a government-approved valuer's report, which lacked clear evidence of market data. The tribunal found no evidence of mis-declaration or extra remittance by the appellants and noted discrepancies in the valuation method used by the Revenue. The tribunal suggested enhancing the declared assessable value by 100% and allowing clearance with a redemption fine of 15% and a penalty of 10% of the enhanced value.

6. Consequential Actions Against the Notices:
The tribunal set aside the Orders-in-Original and directed the completion of assessments in line with the observations made, including the re-export of waste/scrap tyres classified as hazardous waste.

Conclusion:
The tribunal allowed the appeals to the extent indicated, setting aside the Orders-in-Original and directing the completion of assessments with enhanced values, redemption fines, and penalties as specified. The order emphasized the need for consistent treatment of similar imports across different ports and the proper classification and valuation of the imported tyres.

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