CESTAT sets aside order on hazardous waste re-export, directs re-testing and consultation

The CESTAT set aside the order for re-export of goods as hazardous waste and the imposition of redemption fine and penalty. The matter was remanded to the original authority for re-testing of the goods by CRCL or a notified laboratory and consultation with the State Pollution Control Board (SPCB) to determine the hazardous nature. The original authority was directed to follow natural justice principles and resolve the issue within three months.

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Issues Involved:
1. Whether the imported goods are hazardous waste under the Hazardous Waste (Management, Handling and Transboundary Movement) Rules, 2008.
2. Validity of the test reports and the process followed for determining the hazardous nature of the goods.
3. Legality of the order for re-export of the goods and imposition of redemption fine and penalty.

Detailed Analysis:

1. Whether the imported goods are hazardous waste under the Hazardous Waste (Management, Handling and Transboundary Movement) Rules, 2008:

The appellant imported 44306.90 kg of Lubricant Oil - Open Gear, which was declared under tariff item 2710 1980 of the Customs Tariff Act, 1985. The goods were tested by CRCL, New Delhi, and the reports indicated that the PAH (Polycyclic Aromatic Hydrocarbons) content in the samples exceeded the prescribed limit, categorizing the goods as hazardous waste. The adjudicating authority and Commissioner (Appeals) upheld the confiscation and ordered re-export of the goods under Rule 17 of the Hazardous Waste Rules, 2008, with a redemption fine and penalty imposed under Sections 111(d), 111(m), and 112 of the Customs Act, 1962.

2. Validity of the test reports and the process followed for determining the hazardous nature of the goods:

The appellant contested the test reports, arguing that CRCL did not have the facility to test for hazardous waste until December 2015, and the tests were conducted by a private laboratory, M/s Avon Food Labs Pvt Ltd. The Chemical Examiner, during cross-examination, confirmed that CRCL lacked the testing facility at the time and that the tests were outsourced. The adjudicating authority relied on the test reports and clarifications from CRCL, but the appellant argued that the actual test reports from the private laboratory were not disclosed, raising doubts about the validity of the findings.

The adjudicating authority and Commissioner (Appeals) dismissed the appellant's arguments, stating that the private laboratory was accredited and recognized for testing hazardous waste under the relevant rules and circulars. However, the CESTAT noted that the test reports did not disclose the name of the laboratory, and the actual test report was not provided. The CESTAT highlighted the need for re-testing by CRCL or an appropriately notified laboratory to determine the true nature of the goods.

3. Legality of the order for re-export of the goods and imposition of redemption fine and penalty:

The adjudicating authority ordered the re-export of the goods after payment of a redemption fine of Rs. 50,000 and imposed a penalty of Rs. 10,000. The CESTAT found this approach contrary to the decisions in similar cases, where it was held that Section 125 of the Customs Act does not confer the power to impose conditions for re-export on payment of redemption fine. The CESTAT cited several decisions, including Pace India [2020 (372) ELT 442 (T)], HBL Power Systems Ltd. [2018 (362) E.L.T. 856 (Tri. - Hyd.)], and others, which established that the adjudicating authority cannot compel re-export on payment of redemption fine.

The CESTAT emphasized that the responsibility to prevent the import of hazardous waste lies with the revenue authorities and the State Pollution Control Boards (SPCBs). The CESTAT directed the original authority to get the samples re-tested by CRCL or an appropriately notified laboratory and consult with the SPCB to determine the hazardous nature of the goods. Based on the re-test results, the appellant should be allowed to clear the goods in DTA or re-export them as per Rule 17(2) of the Hazardous Waste Rules, 2008. If the importer does not opt for these options, the goods should be disposed of as per the Hazardous Waste Rules, 2008.

Conclusion:

The CESTAT set aside the impugned order and remanded the matter back to the original authority for re-testing of the goods and consultation with the SPCB. The original authority was directed to follow the principles of natural justice and dispose of the matter within three months. The appeal was disposed of in these terms.

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