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2024 (8) TMI 1351 - AT - CustomsClassification of the imported goods - HDPE Regrind - classifiable under Customs Tariff Item (CTH) 3901 2000 or not - permissible for importation into the country in terms of Foreign Trade Policy - whether the impugned order in upholding the confirmation of confiscation of imported goods imposition of redemption fine for re-export and imposing of penalty on the appellants by the original authority is legally sustainable or not? HELD THAT - The imported goods have been tested by three laboratories viz. (i) CRCL JNCH laboratory which is also known as DYCC JNCH laboratory is an in-house customs testing facility; (ii) Government laboratory of CIPET Aurangabad and (iii) Envirocare Labs Pvt. Limited which is a NABL accredited laboratory. As regards CRCL JNCH laboratory we find that the Commissioner of Customs NS-V JNCH had issued Public Notice No.56/2021 dated 16.06.2021 informing the importers exporters and the EXIM trade that the said laboratory cannot analyse/test certain 20 specified goods due to non-availability of facility in that laboratory - on perusal of the test report given by CRCL JNCH laboratory it transpires that it is given mainly on the basis of visual examination and the nature of constituent material could not be ascertained by them. Hence such test reports of CRCL JNCH laboratory cannot be relied upon as it does not have any legal basis. It is seen that the BIS standard in IS 14534 1998 inter alia prescribe only post-consumer waste in-house scrap for the purpose of monitoring the quality and for facilitating identification of the basic raw material. In such context there is a mention of visible contamination with respect to post-consumer plastics which have been elaborated in Annexure-A to such Standard as goods covering trash/carry bags Carry bags non-food containers office supplies municipal supplies building products pipe and fittings of PP PE nylon etc. Thus it is clear that in terms of BIS standard the imported product do not quality as plastic waste/scrap. The impugned order upholding confiscation of goods on the basis of violation of DGFT s Public Notice requiring an import license in respect of the imported goods is not proper and justified. The impugned order dated 07.12.2022passed by the Commissioner of Customs (Appeals) JNCH Mumbai-IIis not legally sustainable and the therefore the same is set aside - appeal allowed in favour of the appellants.
Issues Involved:
1. Classification of imported goods. 2. Compliance with Foreign Trade Policy. 3. Legality of confiscation and penalties imposed on the appellants. 4. Validity of test reports and their interpretation. Detailed Analysis: Classification of Imported Goods The primary issue in this case revolves around the classification of imported goods, specifically 'HDPE Regrind.' The appellants classified the goods under Customs Tariff Item (CTI) 3901 2000, while the department reclassified them under CTI 3915 1000. The appellants argued that Chapter Note 7 to Chapter 39 excludes waste, parings, and scrap of a single thermoplastic material transformed into primary forms from heading 3915. The Tribunal found that the imported goods were indeed HDPE Regrind, composed of a single thermoplastic material, and thus should be classified under CTI 3901 2000. Compliance with Foreign Trade Policy The Tribunal examined whether the imported goods fell under the category of plastic waste/scrap, which would require a license from the Directorate General of Foreign Trade (DGFT) as per Public Notice No. 392(PN)92-97 dated 01.01.1997. The test reports from CIPET and Envirocare Labs, both accredited laboratories, confirmed that the goods were HDPE Regrind and not waste/scrap. Consequently, the Tribunal concluded that the DGFT restrictions did not apply to the imported goods. Legality of Confiscation and Penalties The Tribunal scrutinized the confiscation of goods under Sections 111(d) and 111(m) of the Customs Act, 1962, and the imposition of penalties under Sections 112(a) and 114AA. The Tribunal found that the appellants had sought prior examination of the goods on a 'First Check basis,' which was permitted by the customs authorities. Therefore, the Tribunal held that the confirmation of mis-declaration and subsequent confiscation and penalties were not justified. Validity of Test Reports and Their Interpretation Three laboratories tested the imported goods: CRCL JNCH, CIPET Aurangabad, and Envirocare Labs. The Tribunal found that the CRCL JNCH laboratory did not have the facility to test reprocessed/recycled plastics, making its report unreliable. The reports from CIPET and Envirocare Labs, however, confirmed that the goods were HDPE Regrind and met the parameters set by the Hazardous Waste Rules, 2016. The Tribunal emphasized that the visual impurities and oil contamination did not classify the goods as waste/scrap. Conclusion The Tribunal set aside the impugned order dated 07.12.2022, passed by the Commissioner of Customs (Appeals), JNCH, Mumbai-II, and allowed the appeals in favor of the appellants. The Tribunal found that the correct classification of the imported goods was under CTI 3901 2000, and the DGFT restrictions did not apply. The confiscation of goods and imposition of penalties were deemed unjustified.
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