2017 (3) TMI 1018 - AT - Customs

Imported goods deemed hazardous waste due to mis-declaration & undervaluation, penalties imposed under Customs Act.

The Tribunal upheld the Commissioner (A)'s findings that the imported petro-chemical products were hazardous waste due to mis-declaration and ... Classification as hazardous waste under the Hazardous Waste (Management, Handling and Transboundary Movement) Rules, 2008 - goods as prohibited goods - confiscation under Section 111(d) & 111(m) of the Customs Act, 1962 - requirement of prior informed consent and DGFT licence for import of listed hazardous wastes - penalty under Section 112 and Section 114AA of the Customs Act, 1962Classification as hazardous waste under the Hazardous Waste (Management, Handling and Transboundary Movement) Rules, 2008 - classification based on laboratory test reports (CRCL) - The detained goods described as Calcium Grease and Heavy Alckeys are hazardous waste as per the CRCL test reports and relevant Hazardous Waste Rules. - HELD THAT: - The Tribunal upheld the appellate authority's finding that samples sent to CRCL showed PAH concentrations and other analytical parameters exceeding prescribed limits and that the composition and characteristics indicated organic residual/waste streams. CRCL reports specifically concluded that the samples merit classification as hazardous waste under Schedule-II/Class-A (A12-A15) of the Hazardous Waste Rules, 2008. The Commissioner (A) considered these reports along with seized documents and supporting statements and concluded that the goods are hazardous; the Tribunal agreed with that conclusion. [Paras 11]Findings that the goods are hazardous waste are upheld.Goods as prohibited goods - requirement of prior informed consent and DGFT licence for import of listed hazardous wastes - Once classified as hazardous waste, the impugned goods became 'prohibited goods' for import without prior permissions, and the statutory conditions for lawful import had not been complied with. - HELD THAT: - The Commissioner (A) observed that items listed in Part A of Schedule-II are restricted and require prior informed consent under the Basel Convention framework as implemented by the Hazardous Waste Rules, as well as permission from the Ministry of Environment & Forests and a DGFT licence. The appellate authority found no compliance with these conditions in respect of the impugned consignments; the Tribunal accepted that non compliance renders the imports unlawful and the goods prohibited under Section 2(33) read with the Hazardous Waste Rules. [Paras 11]Goods were correctly treated as prohibited for import in the absence of prescribed permissions.Confiscation under Section 111(d) & 111(m) of the Customs Act, 1962 - penalty under Section 112 and Section 114AA of the Customs Act, 1962 - Confiscation of the detained goods and imposition of penalties on the appellants under the Customs Act were validly sustained. - HELD THAT: - The Tribunal agreed with the Commissioner (A) that, having found the goods to be hazardous and imported/possessed in violation of the statutory requirements, the goods were liable to confiscation under the provisions cited. The finding that documents and statements connected the consignments to the appellants supported the imposition of penalties under Sections 112 and 114AA. The appellate authority's detailed reasoning on evidentiary material and legal consequences was endorsed by the Tribunal. [Paras 11, 12, 13]Confiscation and penalties imposed by the authorities are upheld; appeals are rejected.Final Conclusion: The Tribunal upholds the Commissioner (A)'s conclusion that the seized Calcium Grease and Heavy Alckeys are hazardous waste requiring prior permissions, that they amounted to prohibited goods when imported without compliance, and that confiscation and penalties under the Customs Act were rightly imposed; the appeals are dismissed. Issues Involved:1. Mis-declaration and undervaluation of imported petro-chemical products.2. Classification of goods as hazardous waste.3. Confiscation of goods and imposition of penalties.Issue-wise Detailed Analysis:1. Mis-declaration and Undervaluation of Imported Petro-chemical Products:The case originated from an intelligence report leading to the investigation by the Delhi Zonal Unit of DRI into the import activities of certain petro-chemical products by various importers, including M/s. Om Udyog and M/s. S K Petrochem. The investigation revealed that these entities, controlled by Shri Jeevan Jain, imported petro-chemical products through mis-declaration and undervaluation. The goods were subsequently sold through traders, including M/s. Goyal Petrochem. During searches conducted on 28.01.2013, significant quantities of petro-chemical products were found at the premises of M/s. Goyal Petrochem, leading to further investigation and testing.2. Classification of Goods as Hazardous Waste:Samples of the detained goods were sent to CRCL, New Delhi, for testing. The CRCL reports indicated that the samples did not meet the specifications for Calcium Grease and Heavy Alckeys as per IS standards. Specifically, the Calcium Grease sample had a kinematic viscosity and flash point significantly below the required standards, and the Heavy Alckeys sample had a high concentration of PAHs, classifying them as hazardous waste under the Hazardous Waste Management Handling and Transboundary Movement Rules, 2008. The CRCL test reports confirmed that the goods were hazardous wastes as specified in Part A of Schedule-III/II of the Hazardous Waste Rules, 2008, requiring prior informed consent and a license from the Directorate General of Foreign Trade (DGFT).3. Confiscation of Goods and Imposition of Penalties:Based on the CRCL reports and the investigation findings, a show cause notice was issued to the appellants. The adjudicating authority confiscated the detained goods and imposed penalties on Shri Ashok Goyal of M/s. Goyal Petrochem and Shri Jeevan Jain, Proprietor of M/s. Om Udyog, under Section 112 of the Customs Act, 1962. The Commissioner (A) upheld the Order-in-Original, leading to the present appeal.The appellants argued that the CRCL reports did not pertain to the samples drawn from their premises and that the allegations were based on assumptions without corroborative evidence. However, the respondent maintained that the goods were rightly confiscated as they were hazardous.The Tribunal found that the Commissioner (A) had thoroughly discussed the evidence and test reports, concluding that the goods were hazardous waste. The findings indicated that the goods were imported in violation of the Customs Act, 1962, as the conditions prescribed in the Hazardous Waste Rules, 2008, were not complied with. Consequently, the goods were liable for confiscation under Sections 111(d) & 111(m) of the Customs Act, 1962, and the penalties imposed on the appellants were justified.Conclusion:The Tribunal upheld the findings of the Commissioner (A) that the imported goods were hazardous waste and thus prohibited. The confiscation of the goods and the penalties imposed on the appellants were upheld, and the appeals were rejected. The judgment emphasized the importance of complying with the Hazardous Waste Management Rules and the Customs Act to prevent the illegal importation and handling of hazardous materials.