2019 (12) TMI 796 - AT - Customs

Tribunal rules in favor of appellant on imported goods classification dispute

The Tribunal found in favor of the appellant in a case concerning the classification of imported goods as waste/scrap and the legality of a re-export ... Classification of imported goods - cut solar cells - during some cells are damanged - doubt about import of scrap and waste - benefit of N/N. 24/2005-Cus dt. 01/03/2005, 12/2012-CE dt. 17/03/2012 and 21/2012-Cus dt. 17/03/2012 - Absolute confiscation - penalty - HELD THAT:- The order of re-export of the goods on payment of redemption fine within 30 days and if not complied with, the goods will be disposed of as per the statutory provisions, is in excess of jurisdiction conferred by the Statute, because the provisions of the Customs Act do not provide for re-export of the imported goods on payment of redemption fine and therefore the adjudication order was beyond the statutory provisions of the Customs rules. This proposition was considered by the Division Bench of the Tribunal in the case of HBL POWER SYSTEMS LTD. VERSUS CC, VISAKHAPATNAM [2018 (7) TMI 793 - CESTAT HYDERABAD] wherein the Tribunal in identical circumstances has analysed the scope of Section 125 of the Customs Act where it was held that The scope of Section 125 of the Act is limited by the words in which it is framed and it is not open to the adjudicating authority or the Tribunal (who are creatures of the statute) to stretch, modify or restrict the scope of this Section; they are bound by it. Classification of goods - HELD THAT:- It is submitted that, there is no misdeclaration on his part because the right classification for the impugned goods is CTH 85414011 - both the authorities have mis-read and mis-construed the reports submitted by the IISc., CPCB and KSPCB. In fact out of the 3 reports, the crucial and relevant is the report submitted by the KSPCB because their officers visited the spot and after physical verification, they have observed in their report dt. 31/10/2017 that the cut pieces of solar cells of silicon wafers may be used for various solar applications like assembling of solar lantern, solar light etc. As per the settled law, the burden of classification is on the Department and in the present case, the Department has not made any effort to prove the same by any documents except the proceeding to classify the impugned goods as waste and scrap solely considering breakage of some of the imported goods and without considering the nature of usage of the said goods - even in the report of CPCB, the Board has clarified that the scrap of solar cells (broken/small pieces of silicon wafers) does not appear in any of the Schedule of the Hazardous and other Wastes (Management & Transboundary Movement) Rules, 2016. The imported solar cells are precise in nature and therefore there is always likelihood of some damage during the process of transit and the present case, only 70 kgs. has been damaged out of 13599.5 kgs. and even the damaged goods can also be used for various solar applications as per the technical write up produced by the appellant on record. The Customs authorities to release the consignments of the appellant within a period of two weeks - Appeal allowed - decided in favor of appellant. Issues Involved:1. Classification of imported goods as waste/scrap.2. Jurisdiction and legality of the re-export order.3. Applicability of Section 111(d) & (m) of the Customs Act, 1962.4. Requirement of prior permission under Hazardous and other Wastes (Management & Transboundary Movement) Rules, 2016.5. Procedural lapses and burden of proof on the Department.Issue-wise Detailed Analysis:1. Classification of Imported Goods as Waste/Scrap:The appellant imported small solar cells and declared them under CTH 85414011. However, the Customs authorities classified them as waste/scrap under CTH 38256900, based on the observation that the goods were broken pieces of solar cells. The Tribunal found that only 70 kgs out of 13,599.5 kgs were broken, which does not justify classifying the entire consignment as waste/scrap. The Tribunal noted that the appellant provided sufficient documentation, including purchase orders, bills of entry, and commercial invoices, indicating the goods were small solar cells. The report from the Karnataka State Pollution Control Board (KSPCB) confirmed that the cut pieces could be used for various solar applications, supporting the appellant's classification.2. Jurisdiction and Legality of the Re-export Order:The Tribunal held that the order for re-export of the goods on payment of redemption fine was beyond the statutory provisions of the Customs Act, 1962. Section 125 of the Customs Act does not confer the authority to impose conditions such as re-export upon redemption. The Tribunal cited the case of HBL Power Systems Ltd. Vs. CC, Visakhapatnam, where it was established that the adjudicating authority has no power to compel re-export as a condition for redemption. Thus, the re-export order was set aside.3. Applicability of Section 111(d) & (m) of the Customs Act, 1962:The appellant argued that there was no mis-declaration or wrongful classification with the intent to evade customs duty. The Tribunal found that the appellant's declaration was based on the purchase order and supplier’s invoices. The reports from IISc, CPCB, and KSPCB did not indicate that the goods were hazardous waste. Therefore, the provisions of Section 111(d) & (m) were not applicable, and the confiscation and penalty were unjustified.4. Requirement of Prior Permission under Hazardous and other Wastes (Management & Transboundary Movement) Rules, 2016:The appellant contended that the imported small solar cells were not listed in any Schedule of the Hazardous and other Wastes (Management & Transboundary Movement) Rules, 2016, and thus did not require prior permission. The CPCB report supported this claim, stating that the imported goods did not appear in any Schedule of the Rules. The Tribunal agreed, noting that the KSPCB categorized the solar industry under the White category, which does not require environmental clearances.5. Procedural Lapses and Burden of Proof on the Department:The appellant argued that the burden of proof for classification lies with the Department, which failed to provide corroborative evidence. The Tribunal found that the Department had not made any effort to prove the classification with documentary evidence and relied solely on the breakage of some goods. The Tribunal emphasized that the Department must prove misclassification with substantial evidence, which was lacking in this case.Conclusion:The Tribunal concluded that the impugned order was not sustainable in law. It set aside the re-export order and directed the Customs authorities to release the consignments within two weeks. The appeal was allowed, and the Tribunal emphasized the importance of proper classification and adherence to statutory provisions.