TaxTMI 
TaxTMI 
2020 (11) TMI 166
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....s whether the seized goods imported by the petitioner are old and used rubber tyres reusable as tyres or are old and used rubber tyres scrap being in pressed baled form ? 4. Case of the petitioner is that it is a company incorporated under the Companies Act, 1956 and is engaged in recycling of "waste tyres scrap" into "rubber crumbs granulation" at its factory. The process is a green category industry and is environmentally friendly for which petitioner has been granted consent by the Maharashtra Pollution Control Board, Navi Mumbai on 11th February, 2019. Petitioner has also been granted permission/no objection certificate dated 29th November, 2019 by the Ministry of Environment, Forest and Climate Change, Government of India for import of old and used rubber tyres scrap (multiple cuts/pressed baled/shredded) for manufacture of crumb rubber. 5. Petitioner has been granted import license dated 27th December, 2019 by the Directorate of Foreign Trade, Government of India for the import of old and used rubber tyres scrap (multiple cuts/pressed baled/shredded). As per the import license such imported goods have been classified under the customs tarif heading 4004000 which covers wast....
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....e Customs Act rendering those goods liable for confiscation. Accordingly, the goods were seized under section 110(1) of the Customs Act. Such putting on hold and thereafter seizure of the goods has been questioned by the petitioner on the ground that when the proper officer i.e., respondent No.4 had subjected the goods to 100% examination under docks supervision, thereafter assessed the goods and levied duty, and upon payment of duty by the petitioner had issued out of charge, respondent No.3 could not have put on hold and seized the goods. 10. Respondent No.3 on 26th August, 2020 also called upon the petitioner for submission of appropriate bond and bank guarantee as decided by the adjudicating authority for provisional release of the seized goods. 11. According to the petitioner, the imported goods are used scrap tyres in pressed bale; however, as per the seizure memos which were on the basis of inspection report of the Chartered Engineer respondent No.3 took the view that a portion of the imported goods (30%) were found in usable condition and those could be reused. 12. By letters dated 24th August, 2020 and 27th August, 2020, both prior to and post seizure, petitioner reques....
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....en filed by the petitioner seeking the following reliefs:- (a) to set aside and quash the five seizure memos dated 26th August, 2020 and the panchnama dated 9th September, 2020 to the extent it refuses to recognize the samples drawn for testing; (b) for a direction to the respondents to draw samples jointly with the petitioner from the disputed portion of the imported goods and to send such samples to the IRMRA for testing to ascertain whether those are usable in as is condition as tyres; or in the alternative, (c) to abide by the test report that may be received in respect of the samples drawn on 9th September, 2020. A further prayer has been made for a direction to the respondents not to take any coercive action against the petitioner and its officials. 17. An additional affidavit on behalf of the petitioner has been filed by Mr. Vishesh Agarwal, Chief Executive Officer of the petitioner. He has stated that pursuant to summons issued by the customs authorities, he had attended officer of the customs authorities and his statement was recorded on three occasions spanning several hours. According to him, he had submitted all the records/documents which were asked for and had....
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....ever, about 25% to 40% of the tyres were found in good and in reusable condition with intact bead wires and not completely worn out. Based on the above observations, the consignments were detained for further investigation. 19.1. Thereafter, the customs approved Chartered Engineer submitted his report opining that 25% to 40% of the tyres appeared to be reusable as such. Beads of the tyres were intact and were found to be in good condition. 19.2. Based on the report of the Chartered Engineer, the examined goods imported under five bills of entry i.e. Bill of Entry Nos.8319380 dated 29th July, 2020, 8325968 dated 30th July, 2020, 8327426 dated 30th July, 2020, 8252961 dated 23rd July, 2020 and 8293747 dated 27th July, 2020 were seized under section 110(1) of the Customs Act. 19.3. Referring to CTH 4012, it is stated that the said heading deals with retreaded or used pneumatic tyres of rubber, solid or cushion tyres, tyre treads and tyre flaps of rubber-retreaded tyres. All old and used tyres without bead cut would fall under CTH 4012. Therefore, the contention is that around 25% to 40% of the tyres in the import consignment do not merit classification under CTH 4004000 as the impo....
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....Preventive Commissionerate is investigating the petitioner as a case of misclassification of goods that are imported in concealed manner as scrap tyres. 20. Another additional affidavit was filed on behalf the petitioner on 12th October, 2020 contesting certain statements made in the course of investigation by one Mr.Sabirali Roshanali Shah, further reiterating that petitioner only imports scrap tyres which are not reusable. It is stated that use of scrap tyres as a raw material for production of rubber crumb in the factory of the petitioner is being continuously monitored by the Maharashtra Pollution Control Board. In this connection letter dated 15th September, 2020 of the Maharashtra Pollution Control Board has been annexed. 21. On 14th October, 2020 an additional affidavit on behalf of respondents was filed. It is stated that in the course of investigation, it was revealed that petitioner had issued invoices to M/s Raza Tyre Services with description of goods declared as 'used tyre crumb'. On discreet inquiry it was found that M/s Raza Tyre Services is a dealer in old, used and scrap tyres. Search operation was carried out in the premises of M/s Raza Tyre Services on 3rd Octo....
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....f site visit report submitted by the Central Pollution Control Board and after thread-bare discussion by the expert committee. For rubber tyres to be treated as scrap it can be either having multiple cuts or pressed baled or shredded i.e. in either of the three forms. In the present case, it is pressed baled. He has explained the process of baling stating that about 100 tyres are pressed into a bale at a time and then high pressure of about 200 tonnes are applied by a hydraulic baling machine rendering the tyres as waste and scrap; totally unfit for reuse. He has also referred to the import export license (authorization) dated 28th November, 2019 issued to the petitioner by the Directorate General of Foreign Trade, Government of India for importing old and used tyres scrap (multiple cuts/pressed baled/shredded) for 10,000 MT. 23.2. Referring to the seizure memos he submits that respondents acting on the report of the customs approved Chartered Accountant have proceeded on the 'reasonable belief' that the imported old and used scrap tyres in pressed baled form contains usable tyres and therefore, there is misdeclaration of the imported goods. He strenuously argues that it is not op....
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.... he submits that there is no justification at all for seizure of the imported goods which should therefore be released forthwith. 24. On the other hand, Mr.Anil C. Singh learned Additional Solicitor General has referred to the prayer portion of the writ petition and submits that the reliefs claimed besides being vague do not make out an actionable cause of action for institution of a legal proceeding. He submits that viewed in the above context the writ petition is premature. Referring to the seizure memos he submits that there is a reasonable belief formed on the basis of specific information and from the report of the Chartered Engineer that in the guise of old and used scrap tyres in pressed baled form petitioner is actually importing usable tyres. There is clear misdeclaration of the goods which may warrant confiscation. Therefore, the customs authorities rightly invoked the provisions under section 110(1) of the Customs Act for seizure of the goods. 24.1. Mr. Singh submits that the report of the Chartered Engineer clearly indicates that approximately 25% to 40% of the imported tyres were found to be in good and in reusable condition. Reiterating the contentions of the respon....
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....d used scrap tyres in pressed baled form covered by seven bills of entry which were initially examined, assessed, duty paid and issued out of charge by respondent No.4. However, on the basis of information received that in the guise of old and used scrap tyres pressed baled petitioner was importing reusable tyres, respondent No.3 put on hold the consignments. Thereafter, on the basis of report submitted by the Chartered Engineer the imported goods covered by five out of the seven bills of entry were seized vide separate seizure memorandum dated 26th August, 2020. 28. Evidently there is a dispute between the petitioner and the respondents regarding classification of the goods imported. While according to the petitioner the goods imported are old and used scrap tyres in pressed baled form which being a restricted item is covered by the import license, it is the stand of the respondents that 25% to 40% of the imported goods were found to be tyres in good shape and in reusable condition. Differing from the petitioner, it is contended that old and used tyres without any bead cut would fall under CTH 4012 which deals with retreaded or used pneumatic tyres of rubber, solid or cushion tyr....
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....However, the panchnama clarified that customs department has nothing to do with the testing and the above exercise has been facilitated on the request of the petitioner. 32. Before dilating on this aspect, we also find that by letter dated 26th August, 2020, Deputy Commissioner of Customs (Prevention), Marine and Preventive, Mumbai had written to the petitioner offering provisional release of the seized goods on submission of appropriate bond and bank guarantee which has been reiterated by the respondents in the affidavit in reply. Petitioner has averred in the writ petition that it is hesitant to accept the said offer of provisional release because once the seized goods are out of customs control without there being a test report, the question as to whether the imported goods seized are reusable as tyres or are scrap would not be possible to be decided. 33. At this stage, we may advert to the provisions contained in section 110 of the Customs Act. It deals with seizure of goods, documents and things. Sub section (1) says that if the proper officer has reason to believe that any goods are liable to confiscation under the Customs Act, he may seize such goods. As per sub section (2....
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....a finding of fact. Therefore, we are of the view that this aspect should be best left to the adjudicating authority to decide, if it requires adjudication. Pre-empting an adjudication on this issue by the writ court by taking a view one way or the other may not be justified. Moreover, having regard to the provisions of section 110, it may also not be proper for the writ court to fix a timeline for winding up of the investigation and for commencement and completion of adjudication at a stage when notice under section 124(a) of the Customs Act has not yet been issued. 39. Having said so, it needs no reiteration that the writ court is primarily concerned with the decision making process and not with the correctness of the decision per se. The decision making process and by extension the investigation process has to be fair and reasonable, adhering to the due process consistent with the principles of natural justice. 40. While respondents may place reliance on the report of the Chartered Engineer, petitioner would have the right to question the said report. Further more, request of the petitioner to draw samples from the seized containers and thereafter to send the samples for testin....