2025 (7) TMI 1415 - AT - Customs

Classification of imported consignment of 243.83 MTS of paper in reels - classifiable as Newsprint falling under CTH 480180 or not - ascertaining the fibre content in the samples drawn by the Department from the imported lot whether less than 65% by weight or otherwise - HELD THAT - A plain reading of the Tariff entry 48.01 along with chapter note 3 to Chapter 48 it is clear that to fall under Chapter 48.01 it should be uncoated paper of a kind used for printing of newspapers of which not less than 65% by weight of the total fibre content consists of wood fibres obtained by a mechanical or chemi-mechanical process unsized or very lightly sized having a surface roughness parker print surf (1 MPa) on each side exceeding 2.5 micrometres (microns) weighing not less than 40 g/m2 and not more than 65 g/m2 except the parameter of fibre content formed to be less than 65% by weight of the total fibre content no other parameters has been disputed by the Revenue. Ascertaining the fibre content in the samples drawn by the Department from the imported lot whether less than 65% by weight or otherwise - claim of the Revenue is that all along they have been following ISI standards for analysis of the sample but not International Organization for Standardization i.e. ISO 9184/1-3 as mentioned in the HSN for Chapter 48 - HELD THAT - There are force in the contention of the learned advocate for the appellant. Both the laboratories at Cochin Customs Laboratory as well as CRCL New Delhi followed BIS standards in analysing the sample whereas the HSN notes specifically prescribes to adopt ISO 9184/1-3 standards for determination of the fibre composition for the sake of uniformity in results when subjected to testing by the exporting and the importing countries. Also it is not in dispute that the overseas supplier in its quality certificate dated 19.04.1999 clearly indicated that the fibre content is not less than 65%. During the course of cross examination of the analyst also it revealed that the tests were not done in accordance with ISO standard but as prescribed by the Chief Chemist on the basis of BIS standards. Thus if different standards are adopted for testing of the samples the results are distorted and bound to be different. The Hon ble Supreme Court in the case of Tata Chemicals Ltd. v. Commissioner of Customs (Preventive) Jamnagar 2015 (5) TMI 557 - SUPREME COURT observed that when samples have been drawn not in accordance with the express provisions of IS 436 the test reports based on the same cannot be looked into. Since the tests were not conducted in accordance with ISO 9184/1-3 prescribed for determination of fibre composition as per the HSN the objective of which was to avoid discrepancies in result on use of different methods the test result arrived at by both Cochin Customs Laboratory as well as CRCL New Delhi cannot be accepted. Thus the test report accompanied the imported goods has to be accepted. Consequently the impugned consignment of 243.83 MTS of paper in reels against Bill of Entry No.100946 dated 18.05.1999 be classifiable as Newsprint under Customs Tariff Heading 480180 with nil rate of CVD as declared. The impugned order is set aside - appeal is allowed.

Summary

ISSUES:

Whether the imported consignment of paper in reels is classifiable as "Newsprint" under Customs Tariff Heading (CTH) 480180.Whether the chemical analysis reports determining Mechanical Wood Pulp (MWP) content less than 65% are reliable and admissible for reclassification of the imported goods.Whether the testing methods employed by the Customs Laboratories complied with the International Organization for Standardization (ISO) standards as mandated by the Harmonized System Nomenclature (HSN) explanatory notes.Whether the burden of proof lies on the department to establish reclassification of imported goods and whether it was discharged.Whether levy of interest under Section 18(3) of the Customs Act, 1962 applies to imports made prior to the amendment date.

RULINGS / HOLDINGS:

The imported consignment qualifies as "Newsprint" under CTH 480180 since it meets all parameters except the disputed fibre content, which must be at least 65% mechanical wood pulp by weight as per Chapter Note 3 to Chapter 48.The test reports from Cochin Customs Laboratory and Central Revenue Control Laboratory (CRCL), New Delhi, indicating MWP content below 65%, cannot be accepted because they were not conducted in accordance with the ISO 9184/1-3 standards mandated by the HSN explanatory notes.The HSN explanatory notes explicitly require the use of ISO test methods to avoid discrepancies; both laboratories used Indian Standard IS 5285 instead of ISO 9184/1-3, rendering the test results unreliable and inadmissible for reclassification.The department failed to discharge the burden of proof for reclassification since the test reports relied upon suffer from "infirmities" and lack evidential value.Levy of interest under Section 18(3) of the Customs Act, 1962 is not applicable to imports made before the amendment effective from 13.07.2006.

RATIONALE:

The court applied the statutory framework of the Customs Tariff Act, 1975, specifically Chapter 48 and its Note 3 defining "newsprint" by fibre content and physical characteristics.The HSN explanatory notes serve as authoritative guidance mandating the use of ISO standards for uniformity and accuracy in testing physical properties of paper, including fibre composition (ISO 9184/1-3).The reliance on Indian Standard IS 5285, which covers fewer plant species than ISO 9184/1-3, results in potential inaccuracies and discrepancies in determining fibre content, undermining the reliability of the test reports.Precedent from the Supreme Court was cited emphasizing that test reports based on samples drawn or tested contrary to prescribed standards cannot be relied upon for classification and assessment purposes.The court recognized that the quality certificate issued by the overseas supplier certifying minimum 65% mechanical wood pulp content, coupled with the failure of the department to produce compliant test reports, supports classification under CTH 480180.The court distinguished the applicability of interest under Section 18(3) of the Customs Act based on the import date relative to the amendment's effective date, consistent with established case law.