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Issues: (i) whether coloured rubber granules imported from used tyres were classifiable under tariff item 4002 19 90 or as reclaimed rubber under heading 4003, or as waste, parings and scrap of rubber under heading 4004; (ii) whether the goods were restricted goods requiring DGFT authorisation and liable to absolute confiscation and penalty.
Issue (i): whether coloured rubber granules imported from used tyres were classifiable under tariff item 4002 19 90 or as reclaimed rubber under heading 4003, or as waste, parings and scrap of rubber under heading 4004.
Analysis: Classification had to be determined by the terms of the headings read with the relevant Chapter Notes. Headings 4001 and 4002 apply to natural and synthetic rubber in primary forms, but Chapter Note 5(A) excludes rubber compounded with pigments, accelerators and similar additives. The imported goods were found to be the result of a manufacturing and de-vulcanising process applied to used tyres, yielding rubber granules in primary form. Chapter Note 6 to Chapter 40, which defines waste, parings and scrap, was held not to cover such processed granules, and the explanatory material for heading 4003 supported treatment as reclaimed rubber.
Conclusion: The goods were correctly classifiable under heading 4003 as reclaimed rubber, and not under tariff item 4002 19 90 or heading 4004.
Issue (ii): whether the goods were restricted goods requiring DGFT authorisation and liable to absolute confiscation and penalty.
Analysis: Since the goods were held to fall under heading 4003, the import policy for that heading was free. The restriction under the hazardous waste rules and Schedule III, Part B, Basel No. B3080 was held applicable to waste, parings and scrap of rubber, not to processed rubber granules of the kind imported. The foundation for confiscation, redemption fine and penalty therefore did not survive.
Conclusion: The goods were not restricted goods and absolute confiscation, redemption fine and penalty were not sustainable.
Final Conclusion: The impugned order was set aside and the appeal was allowed, with the imported goods held to be freely importable reclaimed rubber rather than restricted rubber waste.
Ratio Decidendi: Processed rubber granules obtained from used tyres, having undergone de-vulcanising and manufacturing processes, are classifiable as reclaimed rubber under heading 4003 when they are not merely waste, parings or scrap of rubber within the meaning of Chapter Note 6 to Chapter 40.
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