2021 (4) TMI 83 - HC - Customs

Classification of imported consignment - two-sided coated paper in rolls - one-sided coated paper in rolls - goods freely importable or not - second respondent entertained a doubt that the imported goods are stock lots and seized them - petitioner seeking their clearance on the ground that the consignments cannot be considered as 'stock lots' - seeking release of seized goods. Whether the goods imported by the petitioner can be termed as a stock lot? - HELD THAT - This expression in normal parlance refers to those goods whose transaction value is less than the market value as they were purchased during clearance sale or distress sale. But in the case on hand, the expression bears a different connotation altogether. The Director General of Foreign Trade has ascribed a particular meaning to this term in their trade notice No. 8/2020-2021. Like Humpty Dumpty in Lewis Carroll's 'Through the Looking Glass', when DGFT uses a word, it means just what it chooses it to mean-neither more nor less - The imported paper consignment will qualify to be a stock lot, if it is without description for each category of the paper or if papers of different descriptions have been bundled together. In the case on hand, one consignment contains one sided coated paper rolls and the other consignment contains two sided coated paper rolls. The respondents have categorised the imported paper as falling under different heads only based on GSM dimensions. This is evident from the particulars set out in the mahazar. Classification of goods - HELD THAT - Classification is based on description of goods - If the imported goods can be demonstrated as falling under different codes and the importer has failed to describe each category of paper or if paper of different descriptions have been bundled together, then they would constitute a stock lot. In this case, the petitioner has classified the goods in question under eight digit ITC (HS) 4810 13 90. If the respondents are asked to classify the goods in question, they cannot come up with a different classification. Yet by introducing an impermissible yardstick namely, GSM variation, the respondents have arrived at a finding that the imported goods constitute a stock lot. This is patently illegal. The seizure and detention of the petition-mentioned goods is not warranted - Petition allowed.

Summary

Issues:
Import of paper consignments classified as 'stock lots' under Notification No.45/2015-2020 - Provisional release of seized goods - Interpretation of 'stock lot' - Classification based on GSM variations - Legality of detention and seizure.

Analysis:

1. Import Classification and Seizure: The petitioner, an importer of paper, imported two consignments from Canada classified under Heading '4810 13 90'. The second respondent seized the goods suspecting them as 'stock lots'. The petitioner sought clearance or provisional release, leading to the writ petitions.

2. Interpretation of 'Stock Lot': The Director General of Foreign Trade clarified the term 'stock lot' in Trade Notice No.8/2020-2021, emphasizing correct description and classification of imported paper. The judgment delves into the specific requirements for goods to be considered as 'stock lots'.

3. Classification and Description of Goods: The judgment scrutinizes the classification of imported goods under Chapter-48 of ITC (HS) 2017 SCHEDULE 1-IMPORT POLICY, emphasizing the importance of accurate description at the eight-digit level. It explains the significance of each code representing goods of a particular class.

4. GSM Variations and Classification: The judgment highlights that GSM variations are not a criterion under code 4810 13 90. It distinguishes between goods in rolls and sheets, emphasizing that GSM variations are irrelevant for goods classified under 4810 13. The judgment critiques the respondents' reliance on GSM variations for classification.

5. Legal Findings and Directions: The court rules that the imported goods do not qualify as 'stock lots' based on the classification and description provided by the petitioner. It deems the detention of goods as unwarranted and directs the respondents to release them, granting the petitioner a corresponding waiver. The judgment concludes by allowing the writ petitions without costs.

In conclusion, the judgment provides a detailed analysis of the classification, interpretation of 'stock lot,' and the legality of detaining imported goods based on GSM variations. It emphasizes the importance of accurate description and classification in determining whether goods constitute 'stock lots,' ultimately ruling in favor of the petitioner and ordering the release of the seized goods.