2025 (12) TMI 1155 - AT - Customs

Imported rubber process oil labelled hazardous waste-unaccredited lab test rejected; confiscation, fine and penalty set aside; re-export ordered.

The dominant issue was whether imported rubber process oil could be treated as hazardous waste justifying absolute confiscation. The Tribunal held that ... Absolute confiscation of goods - levy of penalty - import of Rubber Process Oil - hazardous waste or not - sample meets the requirement of petroleum based process oil for rubber industry as per IS:15078:2001 or not - whether the goods in the present case should be allowed re-export as proposed in the SCN? - HELD THAT:- The alleged goods were sent to CRCL, Delhi by the DRI officials and on the basis of the report of CRCL the impugned show cause notice was issued to the appellant as per the report of the CRCL the impugned goods were found to be hazardous in nature. It is also found that the Additional Commissioner vide his letter dated 01.04.2013 has written to the CRCL that they are not having research facility on the subject matter of testing of samples of RPO; in view of the letters of the Commissioner (Appeals), it was incumbent upon the customs department that the impugned goods should have been got tested from the recognized laboratory because the report of CRCL cannot be relied upon for determining the hazardous nature of the RPO as CRCL does not hold recognized accreditation for hazardous waste characterization. Further it is found that the once the department in the show cause notice has given a specific proposal for re-export of the goods under Rule 17 of the Hazardous Waste Rules, 2008 but finally confiscated the goods without giving the option to the importer of the same. Further, as per the provisions of Customs Act, the re-export should be allowed within the period of 90 days but in the present case this time limit has not been adhered to by the department - it is further found that the once the customs has given an option in the show cause notice for re-export of the goods and when the appellant is willing to export the goods than there was no justification for absolute confiscation and therefore, the order of the absolute confiscation passed by the impugned order is set aside and the respondent is directed to allow re-export of the goods after obtaining and undertaking from the appellant that the same goods will not be re-imported. The imposition of redemption fine and penalty is also set aside - Appeal allowed. 1. ISSUES PRESENTED AND CONSIDERED (i) Whether absolute confiscation and disposal of the imported goods as hazardous waste was justified when (a) the show cause notice expressly proposed re-export under Rule 17 of the Hazardous Waste Rules, 2008, and (b) the importer was willing to re-export. (ii) Whether the finding that the goods were hazardous could be sustained when the department relied on a CRCL report despite material on record indicating CRCL lacked the requisite research facility/accreditation for hazardous waste characterization, and the goods were not tested from a recognized laboratory for such determination. (iii) Whether, upon setting aside absolute confiscation and directing re-export, the redemption fine and penalty imposed were liable to be set aside. 2. ISSUE-WISE DETAILED ANALYSIS Issue (i): Justification for absolute confiscation versus permitting re-export as proposed Legal framework: The Court considered the departmental proposal in the show cause notice for re-export under Rule 17 of the Hazardous Waste Rules, 2008, and noted the reference to a 90-day period for permitting re-export. Interpretation and reasoning: The Court found that the department had issued the show cause notice proposing confiscation coupled with re-export of the goods, yet the adjudication resulted in absolute confiscation without giving the importer the option to re-export. The Court also noted that the department did not adhere to the contemplated 90-day timeline for re-export. Given that the importer expressed willingness to re-export, the Court held there was no justification to proceed with absolute confiscation contrary to the course proposed in the show cause notice. Conclusions: The order of absolute confiscation was set aside. The Court directed that the goods be allowed to be re-exported, subject to obtaining an undertaking that the same goods would not be re-imported. Issue (ii): Sustainability of the hazardous determination based on CRCL testing Legal framework: The Court evaluated the evidentiary basis for treating the goods as hazardous, focusing on the testing relied upon by the department. Interpretation and reasoning: The Court noted that the show cause notice and subsequent action were premised on the CRCL report. However, it found on record a departmental communication stating CRCL was not having research facility for testing samples of the product. On this basis, the Court held it was incumbent on the department to have the goods tested from a recognized laboratory equipped for hazardous waste analysis/characterization. The Court concluded that the CRCL report could not be relied upon for determining the hazardous nature of the goods because CRCL did not hold recognized accreditation for hazardous waste characterization. Conclusions: The Court rejected reliance on the CRCL report as a sufficient basis for sustaining the hazardous characterization in the manner done, which supported setting aside absolute confiscation and allowing re-export. Issue (iii): Consequence for redemption fine and penalty Interpretation and reasoning: Since the foundational relief was granted by setting aside absolute confiscation and directing re-export, the Court treated the associated redemption fine and penalty as unsustainable in the circumstances. Conclusions: The redemption fine and penalty were set aside, and the appeal was allowed on the terms of permitting re-export with a non-reimport undertaking.