Hon’ble High Court of Kerala at Ernakulam Order WO(C) No. 29872/2011(H) dated 01.12.2011–Clarification regarding the conversion formula to be applied while converting timber quantity in Hoppus Ton to Cubic Metre -reg. - Customs - 21/2012

OFFICE OF THE COMMISSIONER OF CUSTOMS NEW CUSTOM HOUSE: PANAMBUR: MANGALORE-10 C.No. S-34/16/2010 Cus Refunds Date: 11.05.2012 PUBLIC NOTICE NO. 21/2012 SUBJECT: Hon ble High Court of Kerala at Ernakulam Order WO(C) No. 29872/2011(H) dated 01.12.2011 Clarification regarding the conversion formula to be applied while converting timber quantity in Hoppus Ton to Cubic Metre -reg. The order issued by the Board under the provisions of Section 151A of the Customs Act, 1962 with regard to the conversion of Hoppus Ton to Cubic Metre is brought to the notice of trade. 2. Through the Hon ble High Court of Kerala at Ernakulam s order dated 01.12.2011 in Writ Petition (C) No. 29872/2011(H), Board s attention has been drawn to the fact that various Custom Houses are following divergent practices for converting the timber quantity in Hoppus Ton(HPT) to Cubic Metre (CBM). These divergent practices have created complications at the time of sanctioning SAD refund and the Hon ble High Court of Kerala has directed the Central Board of Excise and Customs to issue a clarification under section 151A about which conversion factors are to be adopted by the Custom Houses while converting volume of Timber in Hoppus Ton to Cubic Metre, so that there is uniformity of practice throughout the country. 3. Accordingly the issue has been examined by the Board in consultation with the various Custom Houses. In this regard a personal hearing was also granted to the petitioner M/s. National Timber. On detailed examination of the facts emerging from discussions and the information available in public domain that Hoppus Ton is a measure of wood still prevalent in Myanmar though the measure has become obsolete in most of the countries in the world. Hoppus Ton is also a measure for determining the volume of usable wood from the log after accounting for the wastage while converting round logs into square logs. 4. It is found that two different factors are used to convert Hoppus Ton to Cubic Metre depending on whether the Roundwood volume is to be determined or the Sawnwood volume is to be determined. The conversion factor for Roundwood is ; 1 Hoppus Ton = 1.8027 CBM while for the Sawnwood it is 1 Hoppus Ton = 1.416 CBM. These conversion factors are based on two different ways to calculate the volume of the timber: (i) By treating the logs as having perfect cylindrical shape: In this case the diameter of the ends of the logs is measured, average it, and use the r l formula to calculate the volume; where, r is the radius and L is the length of the log to arrive at the volume of log. (ii) By using quarter girth method: The formula used in this case is (G 4) x L , where L is the Length of the log, G is the mid girth of log. 5 It is also found that the Forest Departments of different states follow different practices, while calculating the volume of the log. While the Karnataka State Forest Department appears to be using 1 Hoppus Ton = 1.416 CBM, the permits issued by the Gujarath Forest Department for movement of imported logs indicate the formula is 1 Hoppus Ton = 1.8027 CBM. However, from the Customs point of view, the main factor to be taken into account while considering refund claims of Special Additional duty of Customs is whether the importer has accounted for the entire volume of logs declared on the Bill of Entry and the documentary evidence for the sale of same on payment of VAT is produced while claiming refund of SAD. This is especially so when the importer sells round logs per se without any change in form. 6. Accordingly, in compliance of the directions of the Hon ble of High Court of Kerala at Ernakulam, in exercise of the powers under Section 151A of the Customs Act, 1962, the Board hereby directed that when round timber logs are imported on payment of SAD whose refund is claimed subsequent to their sale on payment of VAT, the log volume based on conversion factor 1 Hoppus Ton = 1.8027 CBM may be adopted by the all the Customs formations to determine the quantity imported and quantity sold on payment of VAT. In other words, an importer would be entitled to refund of the full amount of SAD paid on the Bill of Entry only if he produces invoices indicating the sale of round Timber logs for the full quantity determined in Cubic Metre (CBM) based on this conversion factor. Pending cases shall be disposed of in this manner. (M.V.S. CHOUDARY) COMMISSIONER