TaxTMI 
TaxTMI 
2015 (11) TMI 447
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....ed on the specific intelligence, the DRI Chennai initiated investigation and live consignments covered under Bill of Entry No.739234 and 739238 both dated 6.1.2005 were intercepted and on examination of one bale in respect of Bill of Entry No.739238, it was found that the cargo declared as "Mixed Waste Paper" contained plastic waste and scrap. Since plastic waste and scrap, a restricted item was not declared by the appellant, consignment covered by both the Bills of Entry were seized under mahazar proceedings on 12.1.2005. 4. On detailed scrutiny of documents and upon further investigation, it was noticed that appellants entered into contract with M/s.White Star Fibres, Lakshmipuram, Secunderabad to sort out imported goods i.e. waste paper into good fibre and non-fibre contraries. The officers of DRI visited the stockyard of M/s. White Star Fibres and seized stocks of segregated materials fibres, plastic scrap and Metal scrap vide mazahar dt. 12.1.2005. From the record recovered from M/s.White Star Fibre, Secunderabad, it was revealed that the appellants have imported consignment under 52 Bills of Entry which were cleared and declared as "Mixed Waste Paper" and after clearance the....
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....ion fine of Rs. 1 Crore. He also imposed penalty equal to duty on the appellant under Section 114A of the Customs Act. Hence the present appeal. 8. The case was heard on 10.2.2015 & 22.4.2015 and proceeding was recorded in the open court on 22.4.2015. ARGUMENTS ON BEHALF OF APPELLANT: 8.1 Learned Senior Counsel was elaborately heard on 10.2.2015 raising the contention that it was beyond the knowledge of the appellant to know the constituents of the waste involved in the imports and quantum thereof involved in different Bills of Entry covering different consignments in the past including the live consignments which was under investigation. There were 52 Bills of Entry forming part of this adjudication out of which 2 Bills of Entry related to live consignments. Appellant made a very clear condition in the purchase order to the supplier that "Mixed Papers Sorting Grades.01, Mixed Paper Board, Outthrows 10%." This means to the extent of 10% of other waste in the imported waste paper consignment was permissible. But such a condition does not intend that unintended waste shall be exported by exporters. 8.2 Prior to 2004, appellant had no arrangement to sort out the other waste for wh....
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.... DEEC scheme and the appellant had discharged its export obligation in respect of the goods imported thereby, which was well known to Customs, Central Excise authorities as well as DGFT. 9.5 In the past, all the 52 Bills of Entry were cleared without any examination and without any question. All along the description in the Bills of Entry were given in the manner detailed in pages 28 to 32 of the Paper Book Vol.2 which was also within the knowledge of notice issuing authority since such descriptions were in the file of Customs. Appellant's clearances were nothing strange to the authorities. Accordingly, there was no intention to make abuse of the benefit of the Notification No.21/2002-Cus. dt. 1.3.2002. (Ref. Page 5 of Vol.3 - Condition No.20 - Sl.No.152 of the Table of Notfn.). 9.6 Out of the imports made prior to the year 2004, when wastage came out from waste paper consignments, those were used as filling material in the factory of appellant and not sold. From the year 2004 onwards, when the goods imported were sent to job worker for segregation and sorting out, different components emerged therefrom. That was informed to the excise authority and that was well within their....
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....elevance to interpret the benefit of exemption notification. (Ref. Page 101 of Vol.3 of PB). Reliance was also placed on the decision of BPL Display Devices Ltd. Vs CCE Ghaziabad - 2004 (174) ELT 5 (SC) [Ref.Page 102 of Volume-3 of the PB]. The appellant made use of the goods what that was usable and what that was not usable was beyond its control to use. It had not deliberately imported undesired waste to defeat the law. Therefore, benefit of exemption notification is admissible to it. Accordingly, when there was no deliberate import of the unusable material, the benefit of notification cannot be denied following ratio laid down in the above two judgements(supra). 10.2 Since the goods were not segregable at the stage of import, classification thereof was made under CTH 47079000 For such purpose, learned senior counsel relied on the decision of Dunlop India Ltd. & Madras Rubber Factory Ltd. Vs UOI & Others - 1983 (13) ELT 1566 (SC). He specifically relied on para-30 of the judgement to submit that condition of the article at the time of import is decisive to classify the goods under appropriate head and duty is leviable on such classification. Therefore no attempt is permissible t....
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....ction. He specifically relied on para 24 of the above judgement to explain the ratio thereof and submitted that in absence of any of the ingredients of Section 28, present show cause notice has no jurisdiction. 12. Relying on the ratio laid down by Supreme Court in the case of Chamundi Diecast Private Ltd. Vs CCE Bangalore - 2007 (215) ELT 169 (SC), (Ref. Page 27 of Vol.4 of PB), it was the submission on behalf of the appellant that Hon'ble Supreme Court has also held that there should be suppression of facts wilfully done resulting in evasion. But that is totally absent in the present case. 13. Relying the decision of Larsen and Toubro Ltd. Vs CCE - 2007 (211) ELT 513 (SC) (Ref. Page 30 of Vol.4 of PB), it was the submission of appellant that unless the ingredients of Section 28 is present, entire adjudication is time-barred. Further reliance was placed on the Hon'ble Supreme Court's judgements as under:- (Ref. Vol.4 of PB), (i) Primella Sanitary Products Private Ltd. Vs CCE Goa 2005 (184) ELT 117 (SC) (ii) Gopal Zarda Udyog Vs CCE New Delhi 2005 (188) ELT 251 (SC) (iii) Pushpam Pharmaceuticals Company Vs CCE Bombay 1995 (78) ELT 401 (SC) (iv) Padmini Products Vs....
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....undesired materials disentitling the appellant to the benefit of Notification No.21/2002-Cus. The notification required that the appellant should only import those goods which will be used in the manufacture as has been authorized to it by the licence. The term will be used is significant in the notification under condition No.20 thereof. Appellant declared to Customs that entire goods imported shall be used in manufacture for which undertaking was given by the appellant in that respect. Therefore, the quantity of undesired goods stated above came to India not being used in manufacture, there was violation of the condition of the notification. Accordingly, not only appellant is liable to duty on the equivalent value of the goods found to be waste other than paper waste, as aforesaid but also confiscation was warranted. So also penalty was also imposable and that was rightly done by the authority below. 17.2 So far as the benefit of the notification No.203/92-Cus is concerned, the appellant being advance licence holder in respect of 23 Bills of Entry, it is liable to duty for the violation of the condition of the notification. The licence was issued under strict user condition. Tha....
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.... aforesaid questionable quantity of goods and on no other elements of import. 17.6 Countering the proposition of the appellant that there was no misdeclaration nor there was suppression and adjudication was time-barred, ld. DR submits that there was deliberate mis-declaration because quantity aforesaid found speaks for itself. Accordingly, appellant cannot plead that it has made truthful declaration of description of the imports and adjudication is beyond limitation. Merely submitting the purchase order, appellant is not immune from levy nor has defence that it has not imported the goods in violation of condition of the notification. When there was violation of condition of notification by its own declaration, it is liable to duty as well as penalty and confiscation. 17.7 Appellant was very well aware before import that it intended to import nearly 10% inadmissible goods to its benefit. Therefore, it was liable to declare suo moto that 90% of the goods were eligible to the notification benefit and 10% of the goods were dutiable. When the appellant deliberately imported waste other than paper waste it cannot claim duty exemption on any plea. The adjudication proceeding was not tim....
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....nsequence of law. REJOINDER OF APPELLANT : 20. In rejoinder, on behalf of the appellant, it was submitted that so far as Bill of Entry No.636370 dt. 31.5.2004 is concerned, the appellant well explained to the customs authorities on 30.9.2004 that because of lying of goods for a long time, and demurrage having been suffered it shall clear the goods without prejudice to its right to contest the same if any proceedings is initiated in future in this respect. Therefore, when clearance was made under protest, that absolves the appellant from the liability in respect of the imports since those were not deliberately misdeclared imports. The appellant had no intention to make any misdeclaration for the reason that any shortage in the imported quantity shall result in loss to it and because of other waste, it cannot manufacture paper out of that. Therefore, no person will cause prejudice to himself knowingly. Accordingly, entire contention of Revenue fails on this ground. a) Segregation was necessary to make proper account of the goods imported without any compromise. Therefore, the allegation of Revenue is baseless. Notification benefit is to be granted in the manner as declared by the ....
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....t of the 52 consignments, in respect of 29 Bills of Entry, appellants availed concessional rate of duty under Notification No.21/2002-Cus. dt. 1.3.2002 and in respect of remaining 23 Bills of Entry, the goods were cleared under DEEC Advance Licences claiming duty exemption under Notification No.203/92-Cus. dt. 19.5.2002. The appellant s main contention is that what they have imported is only 'waste paper' which may contain certain mix other than waste paper which was not known to the appellants at the time of import and also contended that they are eligible for the benefit of notifications hereinbefore stated on waste paper and there was no misdeclaration and contended that since the goods were assessed finally, there is no question of suppression of facts and therefore demand is hit by limitation. It was also contended that "Mixed Waste Paper" is rightly classifiable under 47079000 which covers unsorted waste and scrap . 23. As regards the availment of concessional rate of duty under Notification No.21/2002, on perusal of the description on the Bills of Entry, we find that appellants have declared the description of the goods imported in the following manner :- (1) Impor....
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....All goods imported for use, 5% Nil 20 in, or supply to, a unit for manufacture of paper or paperboard. ANNEXURE Condition No. Conditions 20. If,- (a) the importer furnishes an undertaking to the Deputy Commissioner of Customs or the Assistant Commissioner of Customs, as the case may be, that such imported goods will be used for the purpose specified and in the event of his failure to comply with this condition, he shall be liable to pay, in respect of such quantity of the said goods as is not proved to have been so used, an amount equal to the difference between the duty leviable on such quantity but for the exemption under this notification and that already paid at the time of importation; and (b) the importer produces to the said Deputy Commissioner or Assistant Commissioner, as the case may be, within six months or such extended period, as that Deputy Commissioner or Assistant Commissioner may allow, a certificate issued by the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, in whose jurisdiction the said goods have been used in such unit, that the said goods have been so used." 24. As seen from the above, Sl.No.15....
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....t case is from 3.9.2002 to 14.10.2004 whereas the above letter is of 2006 and the same is not applicable. Further, the said communication was issued by Ministry of Environment & Forests in the context of pollution control measures where garbage or municipal waste are brought into India in the name of waste paper. Further, we find the Customs issued standing order dt. 18.2.2006 and subsequently issued addendum to the said standing order on 31.3.2006 based on Ministry of Environment & Forests letter wherein at 6(i) of the said standing order, it is categorically stipulated that the plastic and metallic waste found in the waste paper are to be assessed to merit rate of duty. Therefore the appellants relying the Ministry of Environment & Forests communication is of no relevance for classifying the plastic & metallic waste under respective chapter heading and assessing on merit rate of duty. 27. It is on record that as per the condition of the notifications in question, the appellant themselves executed an undertaking before the Customs before clearance of goods, binding themselves that the goods shall be used for the manufacture of paper and paper board and they also undertook that in....
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....y appropriate Customs duty on the quantity of plastic waste, metallic waste and cloth waste and cleared under 23 Bills of Entry. 30. As already explained above, the contraries of 2468.057 MTs of Plastic Waste/Scrap, 360.35 MTs of Metallic Waste and 103.280 MTs of Cloth Waste (Rags) covered under 52 Bills of Entry were not declared by the appellant. The appellants relied Hon'ble Apex Court decision in the case of State of Haryana Vs Dalmia Dadri Cement Ltd. (supra). We find that the said decision relates to waiver of Sales Tax on sale of any goods to a public sector undertaking i.e. Punjab Electricity Board supplying electricity to public for use by the PSU in generation or distribution of electricity. In the above context, the Apex Court held that the word "use" figuring in Sales Tax provisions means "intended for use" by the PSU. The present case is on a different footing where the exemption notification 203/92 is specific with mandatory condition that the waste paper shall be used for manufacture of paper & paper board and the appellants executed an undertaking before Customs to that effect and the adjudicating authority rightly restricted the exemption benefit on waste pape....
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....e of substantive character and were built in with certain specific objectives of policy, on the one hand, and those which are merely procedural and technical in their nature, on the other, must be kept clearly distinguished. In Tata Iron and Steel Co. Ltd. (supra), this Court held that the principles as regard construction of an exemption notification are no longer res integra; whereas the eligibility clause in relation to an exemption notification is given strict meaning wherefor the notification has to be interpreted in terms of its language, once an assessee satisfies the eligibility clause, the exemption clause therein may be construed literally. An eligibility criteria, therefore, deserves a strict construction, although construction of a condition thereof may be given a liberal meaning if the same is directory in nature. Doctrine of substantial compliance and intended use : 24. The doctrine of substantial compliance is a judicial invention, equitable in nature, designed to avoid hardship in cases where a party does all that can reasonably expected of it, but failed or faulted in some minor or inconsequent aspects which cannot be described as the essence or the substance o....
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....o that doctrine. On the other hand, if the requirements are procedural or directory in that they are not of the essence of the thing to be done but are given with a view to the orderly conduct of business, they may be fulfilled by substantial, if not strict compliance. In other words, a mere attempted compliance may not be sufficient, but actual compliance of those factors which are considered as essential." The ratio of the above decision is squarely applicable to the facts of this case as it established beyond doubt that appellants had imported and misdeclared 2468.057 MTs of Plastic Waste/Scrap, 360.35 MTs of Metallic Waste and 103.280 MTs of Cloth Waste (Rags) and the said goods were cleared as waste paper and to that extent the appellants failed to comply the mandatory condition of the notification. Therefore, by respectfully following the above Apex Court's decision, we are of the considered view that concessional rate of duty availed by the appellants under Notification No.21/2002 as well as full exemption availed under 203/92 Cus. is not eligible on the quantity of plastic scrap, metallic scrap and cloth scrap (rags) and these goods are chargeable to appropriate Custom....
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....er fibrous cellulosic material; recovered (waste and scrap) paper or paper board". If the Section X and Chapter 47 description and sub heading 4707 read harmoniously it is evident that what is covered under the main heading 4707 and chapter subheading under 47079000 is only "waste and scrap of paper or paper board". The word used unsorted waste and scrap under chapter heading 47079000 only relates to unsorted waste paper of headings 4707 10, 4707 20, 4707 30 and which are mixed and unsorted and it does not cover unsorted waste paper mixed with other materials such as plastics and metallic waste and rags. The appellant's reliance on the ratio of the Hon ble Supreme Court in the case of Dunlop India Ltd. and Madras Rubber Factory Ltd. (supra) is misplaced in view of above fact findings in the present case and clearly distinguishable. The above case relates to classification of V.P. Latex and as to whether it is to be classified as raw rubber, whereas the present case relates to plastic scrap, metallic scrap imported and same is not declared by the appellants but cleared as waste paper. Therefore, there is no merit in the appellant s claim. Accordingly, we hold that the plastic wa....
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....eproduced as under : 1. MATERIAL SPECIFICATON TO BE STRICLY FOLLWOED AND NON FIBER CONTRARIES NOT ACCEPTABLE. MATERIAL SHOULD NOT HAVE UNSLUSHABLE FIBER, PLASTICS, WAX COATED PAPER AND POLY IMPORTED WASTE PAPER/PULP LAMINATED WASTE AND OTHER CONTRARIES. WE RESERVE OUR RIGHTS TO CLAIM FROM DAMAGES CAUSED TO OUR PROCESS MACHINE APART FROM THE LOSS ON ACCOUNT OF PRODUCTION AND MATERIAL LOSS BOTH, RAW MATERIAL FINISHED GOODS. 35. From the above clause, it is abundantly clear that it is strictly stated in the above clause that non-fibre contraries are not acceptable and materials should not have unslushable fibre, plastics, wax coated paper and poly imported waste paper/pulp, whereas we find that in spite of the above specific conditions, the appellants have violated their own terms and conditions of the contract and deliberately not declared non-fibre contraries, plastic scrap and other scraps in their Bill of Entry. Further, on perusal of Bill of Entry No.636370 dt. 31.5.2004, the appellants imported "Mixed Paper" and on examination it contained waste paper and plastic waste/scrap and the same was classified under Chapter Heading 47079000 and Chapter 39159029 respectively and appell....
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....ment of customs duty on the plastic scrap, metallic scrap & cloth waste (rags). The mens rea is proved beyond doubt and ingredients of Section 28 is satisfied for invoking extended period. Therefore, appellants relying on the Hon ble Supreme Court decision in the case of Uniworth Textiles Ltd. Vs CCE Raipur (supra), Chamundi Diecast Private Ltd. Vs CCE Bangalore (supra), Larsen & Toubro Ltd. Vs CCE (supra) Primela Sanitary Products Pvt. Ltd. Vs CCE (supra), Gopal Zarda Udyog Vs CCE (supra), Pushpam Pharmaceuticals Co. Vs CCE and Padmini Products Vs CCE (supra) against the suppression of facts is clearly distinguishable to the facts of this case as already discussed above and all the ingredients for wilful suppression of facts is established beyond doubt. The ratio of the above Supreme Court decisions are not applicable to the present case. Therefore, invoking the extended period under Section 28 is fully justified and well within the law. Correspondingly penal provisions invoked under Section 114A is also fully justified. The appellants' relying Hon'ble Madras High Court decision in their own case reported as ITC Ltd. Vs Norasia Container Lines Ltd. - 2009 (247) ELT 60 (Mad....