2014 (10) TMI 229 - AT - Customs

Tribunal reclassifies imported goods under Customs Tariff Act based on intended use and exporter's certificate.

M/s Mclloyds & Company, Shri Harshad Dayalal Vadodaria Versus CC., Ahmedabad

The Tribunal allowed the appeal, setting aside the impugned order and determining the correct classification of the imported goods under Chapter 3915.00 ... Classification of goods - import of Plastic Waste and Scrap - Classification under SH 3915.90 of Customs Tariff or under SG 5702.32 of the Customs Tariff Act 1975 - revenue contended that, the test result showed that the import goods were ‘Carpet of which pile are made of Polyamide Yarn. These yarns are woven with a woven based fabric made of polypropylene yarn and adhesioned on woven fabric of jute/polypropylene. It is not a plastic scrap. - Held that:- the Dy Chief Chemist has categorically stated that the product imported would fall under 5702.32 which itself indicates that the Dy Chief Chemist’s report is travelling beyond the duty and cannot be relied upon by the Adjudicating Authority or the First Appellate Authority to classify the product imported by the appellant. The appellant had produced certificate from the exporter which indicates that the material shipped to the main appellant is post processed industrial material from manufacturing process which is rejected. Such a certificate is accepted by the First Appellate Authority to come to a conclusion that the Carpet is sent to appellant for conversion into granule form for reuse in USA. If the certificate given by the exporter is accepted and the appellant being a unit situated in a SEZ, the question of duty liability, if any, may not arise. LOP permits the appellant to import various plastic materials for conversion and re-exporting. The said LOP also indicates that they can import any other category of plastic/wastes like flake, powders, pieces of irregular sheets. - the basic material of the so called carpet is nothing but plastic and the said wastes and scrap is consumed by the appellant for crushing them into granules for re-exporting. In our view, the goods which are imported cannot be classified under 5702.32 but can be classified under Chapter 3915.00 only. - Decided in favour of assessee. Issues: Classification of imported goods under Customs Tariff Act, Duty liability of 100% EOU, Authority of Chemical Examiner in classification, Acceptance of exporter's certificate, Interpretation of LOP for importClassification of Goods:The appellant, a manufacturing unit in SEZ, imported Mixed Plastic Scrap classified as Carpet by Chemical Examiner. The First Appellate Authority upheld this classification under Chapter Heading 5702.32 based on the examiner's report. However, the Tribunal found the examiner's classification beyond their mandate, emphasizing they should only provide findings, not classification. The appellant argued the goods were for conversion into plastic granules, supported by an exporter's certificate. The LOP granted to the appellant allowed import of plastic materials for conversion and re-export, indicating the goods should be classified under Chapter 3915.00, not 5702.32.Duty Liability of 100% EOU:The appellant, being a 100% EOU, claimed no duty liability on the imported goods. Despite communication to take back the seized goods, they remained with the appellant. The Tribunal considered the duty liability issue in light of the appellant's EOU status and the purpose of importing the goods for conversion and re-export.Authority of Chemical Examiner:The Tribunal highlighted that the Chemical Examiner's role is limited to providing findings, not classifying the products. In this case, the examiner's classification of the goods as Carpet under 5702.32 was deemed beyond their scope. The Tribunal emphasized the need for proper classification based on the nature and purpose of the imported goods, not solely on the examiner's report.Acceptance of Exporter's Certificate:The Tribunal noted the certificate from the exporter indicating the material was post-processed industrial material for conversion into granules. This certificate supported the appellant's claim that the goods were intended for conversion and re-export, aligning with the purpose stated in the LOP. The Tribunal considered this certificate in assessing the classification of the imported goods.Interpretation of LOP for Import:The LOP granted to the appellant permitted the import of various plastic materials for conversion and re-export. The Tribunal analyzed the LOP terms, which included importing plastic wastes like flakes, powders, and irregular sheets. Based on the chemical analysis indicating the goods were made of Polyamide yarn, the Tribunal concluded that the goods should be classified under Chapter 3915.00, suitable for crushing into granules for re-export.In conclusion, the Tribunal set aside the impugned order, allowing the appeal based on the correct classification of the imported goods under Chapter 3915.00 of the Customs Tariff Act 1975, considering the appellant's EOU status, the purpose of import, and the exporter's certificate.