1987 (7) TMI 253 - AT - Customs

Paper - Waste paper or waste paper board may include bags not essentially in torn or mutilated condition

Summary

Issues:
1. Whether the imported goods were eligible for duty-free assessment under Customs Tariff Act, 1975.
2. Whether the goods could be cleared under Open General Licence (OGL).
3. Whether the confiscation of goods and imposition of penalties by the Collector under the Customs Act, 1962 were justified.

Analysis:

1. The case involved the import of Kraft Waste Paper by a company, which was claimed to be duty-free under Heading No. 47.01 of the Customs Tariff Act, 1975. However, upon examination, it was found that a significant portion of the imported bales consisted of new paper bags with foreign markings, indicating they were not solely waste paper. The customs authorities argued that since empty paper bags were dutiable under a different heading, the goods were liable for confiscation and penalty under Sections 111(d) and (m) of the Customs Act, 1962. The Collector imposed a fine and penalty, which was challenged in the appeal.

2. The appellants contended that the imported bags could still be considered waste paper or waste paper board, thus eligible for duty-free assessment under a specific Customs Notification. The appellants highlighted that the bags were not intended for use in packing cement but were likely discarded as scrap material, as evidenced by international trade practices. They argued that the bags fell within the scope of the exemption provided in the Customs Notification, which covered various items including bags, without specifying a requirement for them to be torn or mutilated. The appellants' offer to mutilate the goods further supported their claim.

3. Upon considering both parties' submissions, the Tribunal agreed with the appellants. The Tribunal found merit in the argument that the bags, despite having foreign markings, could still be classified as waste paper or waste paper board under the Customs Notification. The Tribunal emphasized that the notification did not mandate the bags to be torn or mutilated for eligibility for duty concession. Therefore, the Tribunal set aside the Collector's order of confiscation and penalties, directing the goods to be assessed under the relevant Customs Notification, subject to the execution of a bond. The Tribunal also ordered the refund of the penalty paid by the importers and allowed the importers' offer to mutilate the goods before clearance.

In conclusion, the Tribunal ruled in favor of the importers, holding that the imported goods were eligible for duty-free assessment under the Customs Notification and could be cleared under Open General Licence. The Tribunal overturned the Collector's decision of confiscation and penalties, directing the goods to be assessed accordingly and refunding the penalty paid.