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TMI Blog2013 (11) TMI 342X X X X Extracts X X X X X X X X Extracts X X X X ..... by the officers of Customs in compliance to Board's instructions. The liability to confiscation under Section 111(j) of the Customs Act, 1962 therefore cannot be upheld. 6. In this view of the matter, when no conclusive evidence would be available for upholding the confiscation under Section 111(j) as regards the liability of duty of sludge/sediments, the marketability of the said item & use, has to be established and duty can be determined once it is found to be commercial quantity and was not manifested and not declared, then liability to confiscation of the vessel and the goods could be determined along with duty on such sludge/sediments. For this purpose, the orders are set aside and the matter is remitted back to determine the liability to duty and consequent confiscation and penalty on the two appellants could be determined. In this view of the matter, the order is set aside and the matter remitted back to re-determine the issue of liability from the sludge/sediments as arrived at thereon above and thereafter the question of confiscation and penalty to be determined after hearing the assessee importer." However two appeals filed by the appellants No. C/613, 614/99 rema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of the Commissioner in para 26 wherein he has discussed in details about marketability. Further he also drew our attention to para 27.1 of the order of the Commissioner wherein he has observed that the appellant have been giving different versions about the disposal of sludge/sediments before different authorities. Further even before the CEGAT in their cross-objections, assessees have submitted that sludge/sediments cannot be dumped out in the open. Further he also drew our attention to the observations of the Commissioner wherein Shri S.P. Mehta in his statement dated 26-3-1997 had stated that the contents in Tank No. 8 (product under dispute) were drained into the sea for maintenance of ballast while breaking the ship. Once the ship is safely beached for breaking, question, arises where is the need for maintenance of ballast. 4. We have considered the rival submissions. We feel that the contention of the Revenue that the product is marketable has to be upheld in view of the following :- (a) The product cannot be let out to the sea which is contrary to the pollution control law and therefore it has to be necessarily sold or disposed of as per th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vessel in which sludge was found under Section 115 is not justifiable and accordingly set aside. As regards penalty, we find that penalty has been imposed under Section 112 of the Customs Act on the appellants and the Managing Director. However, we find that penalty of Rs. 50 lakhs on the company and Rs. 20 lakhs on the Managing Director is excessive when we see that the total customs duty amounted to only Rs. 13,83,543/- and the value of the goods was only Rs. 26,70,933/-. Accordingly, we reduce the penalty on the appellant-company to Rs. 50,000/- (Rupees fifty thousand only) and on Shri Sanjay P. Mehta, Managing Director to Rs. 20,000/- (Rupees twenty thousand only). 7. All the appeals are disposed of on above terms. 8. [Per : Archana Wadhwa, Member (J)]. - As is clear from the order proposed by my ld. Brother, the dispute revolves around the question of marketability of sludge and sediments in the tank of the vessel, which stands imported by the appellant for breaking. Before arriving at a conclusion, we have to keep certain facts in mind. The vessel brought for breaking was a "tanker vessel" used for the transportation of crude oil. The sludge/sediments, which are p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation in the test report as to how physical properties of the thick free flowing liquid oil as indicated in the report can match with the properties of the crude oil/Hydrocarbon. Inasmuch as the said Chemical Examiner was not offered for cross-examination, not much reliance can be placed on the above report, which on the face of itself seems to be self-contradictory. 12. I have seen from the order proposed by my ld. Brother that sludge and sediments have held to be marketable on the ground that the same are being sold to recyclers as also some of the importers have filed bills of entries showing duty payment on the same. My ld. Brother has also referred to the fact that the product cannot be let out in the sea being contrary to Pollution Control Law and as such it is necessary to sell or dispose of the same. Apart from the fact that in the present case, appellants have taken a clear stand that they have not sold the said sludge, it is well settled law that the marketability of a product does not depend upon the stray sales in the market. The test of marketability requires the product "as capable of being bought and sold in the market as a routine" and the same must be having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... my ld. Brother has recorded that the appellants have not disputed the value of the same and therefore, it is being upheld. However, I note that the appellants have strongly contented that the value of the sludge adopted by the Revenue as the rate of US $ 420 PMT is erroneous and there is no reasons given by the Revenue to adopt such a high value. In any case having held that such import of sludge is not leviable to duty as sold cannot be held as marketable, I give no findings on the disputed issue of valuation. 15. I agree with my ld. Brother as regards the issue of CVD or the confiscation of the vessel. As regards the penalty on the company and the Managing Director, having held that no duty liability arising against the appellant, I hold that no penalty is required to be imposed upon them. 16. Accordingly by, I set aside the impugned order in its totality and allow the appeals with consequential relief to the appellant. DIFFERENCE OF OPINION (i) Whether the sludge/sediments, in the present case are required to be held as marketable and hence classifiable under Chapter 27 and consequently dutiable, as held by Member (T) or they have to be held as non-marketable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommercial value and for which purpose he would rely upon the gas free certificate issued by Oil Lab and Marine Surveyors Company Limited, which indicate that sludge/sediment cannot be considered as cargo and are of no commercial value. Besides being relying upon various other decisions, as were placed before the Bench at first place, he would rely upon the decision of this Bench in the case of Dhakad Metals Pvt. Limited - 2008 (229) E.L.T. 402 (Tri.-Ahmd.) which has been upheld by the Apex Court on an appeal by the department against the judgment of the Hon'ble High Court, which examined the marketability of the waste and has held that distinct identifiable of the commodity does not mean it is marketable and marketability needs selling of the commodity to the commerce. 20. Senior authorized representative of the department, on the other hand would submit that the similarly placed ship breakers in the same Commissionerate had filed Bill of Entry for the very same product which was found in the hold of the ship which they imported for breaking. He would rely upon the bill of entry dated 29-5-1998 filed by M/s. G.N. Ship Breakers and bill of entry dated 28-5-1998 filed by M/s. K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of entry dated 28-5-1998 and 29-5-1998, as mentioned hereinabove. If that be so, the marketability of the said product imported, may not be required, but has been proved to be marketable by the trade or commerce of the industry in which the appellant is operating. I also find that there are Government licensed recyclers who are permitted to procure this kind of oil and recycle the same, have given the certificate that said sludge/sediment oil is procured by them and recycled. In my view, though the marketability question does not arise for the goods imported, the Revenue has discharged the said burden. 24. The judgment relied upon by the learned counsel in the case of Dhakad Metals Pvt. Limited (supra) as upheld by the Apex Court will also not carry the case of appellant any further as in that case, the department had failed to produce any evidence to substantiate their charge that the goods are marketable and marketable commodities. In my view, there is sufficient evidence to hold that the products which were imported along with the ship for breaking can be considered as marketable. 25. As regards the valuation of the sludge/sediment oil, I find though the learned Mem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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