TMI Blog2013 (11) TMI 342X X X X Extracts X X X X X X X X Extracts X X X X ..... s in bills of entry dated 28-5-1998 and 29-5-1998, as mentioned hereinabove. If that be so, the marketability of the said product imported, may not be required, but has been proved to be marketable by the trade or commerce of the industry in which the appellant is operating. I also find that there are Government licensed recyclers who are permitted to procure this kind of oil and recycle the same, have given the certificate that said sludge/sediment oil is procured by them and recycled. In my view, though the marketability question does not arise for the goods imported, the Revenue has discharged the said burden. Sludge/sediment oil in the present case is required to be dealt with as marketable and classifiable under Chapter 27, due to the composition of their being found in the chemical examiner’s certificate as mixture of hydrocarbons and held to be marketable - Decided against the assessee. Valuation to the said sludge which has arrived at by the revenue seems to be disputed by the appellant before the lower authorities and the value adopted by the Revenue has not been justified. In my view, since the valuation of the said sludge/sediment is disputed, the correct duty liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... behalf of the appellants submits that the Department has failed to prove the marketability of the sludge/sediments. He contends that the Commissioner has relied upon two bills of entries filed by two other importers wherein they have paid duty classifying the sludge/sediments under CTH 2710; reliance has also been placed on the Asst. Commissioner s report saying that the recognized recyclers of used/waste oil revealed that the goods in question are usable as industrial fuel after recycling. He has also relied upon the opinion of the Chemical Examiner, according to which, the Flash point is 65 deg. C., density at 15 deg. C. is 0.93191 gm/ml and Smoke point is less than 10 mm; the Chemical Examiner also said that the sample contained approximately 4% water. He submits that they had let out the sludge into the sea which cannot be admitted in view of the pollution control laws. However, the ld. Advocate submits that no evidence has been put forth by the Revenue to show that the product is marketable. He further submits that CVD is not leviable on the product since similar products are not manufactured in the country. This is in view of the fact that this is the left over in the crude ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me is made fit for the same by the recyclers. This shows that there is a market and recyclers would be willing to take the same. (c) The fact that other two importers have filed the bills of entry and paid duty and cleared the same also supports the view of the Revenue. (d) The appellants have not been able to show why evidence produced by Revenue is not acceptable. (e) The appellants also have not been able to show why the arguments put forth by the Revenue are not acceptable. (f) The contradictory statements of the appellants regarding the sludge/sediments also supports the contention of the Revenue. (g) The Chemical Examiner s report also shows that the product fulfils the requirements for classification under chapter 2710 and this has also been not disputed. 5. In view of the above, we hold that the classification and dutiability as held in the order are correct and we uphold the same. The value has not been disputed and accordingly the same is upheld. 6. As regards CVD, we do agree with the ld. Advocate that this item cannot be considered as a manufactured item. This is in view of the fact that the ld. Advocate s argument is based on the theory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were declared in the Gas Free Certificate for Hot Work dated 5-12-1996 as also in the declaration in Oil Lab Marine Surveyors Co. Ltd. s certificate dated 27-11-1996. Even as per the Surveyors report dated 21-1-1997, sludge/sediment is not considered as cargo and as per IOPP rules cannot be pumped out in the open or protected sea water and as such are retained on board. 9. The Revenue s case is that such sludge and sediments are marketable and classifiable under Heading 2710.00 of the Schedule annexed to the Customs Tariff Act, 1975. For better appreciation, I reproduce the said heading as under :- 2710.00 : Petroleum Oils and oils obtained from bituminous minerals, other than crude; preparations not elsewhere specified or included, containing by weight 70% or more of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations. 10. Revenue has relied upon the chemical test report dated 3-2-1997 of the sample of the sludge/sediments which reads as under :- The sample is in the form of black coloured thick free flowing liquid. It is composed of mainly mineral hydrocarbon together with small amount of sediment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E.L.T. 268 (S.C.)]. The nature of the sludge and sediments in the present case needs to be analysed for weighing the marketability, as a fact. The Gas Free Certificates by Oil Lab Marine Surveyors Co. Ltd. and Govt., of India, Min. of Explosives have stated that the contents of the subject tank has to be considered as SLOP/sludge/sediments having no commercial value. Further the process through which such sludge comes into existence also establishes that the same cannot be considered as commodity known in the commerce and worthwhile to be traded in. It is not in each and every case where some sale has taken place that has to be held as the marketable product. Any waste/rubbish produced can have some use and thus some sale value but this fact itself is not sufficient to establish the marketability, which needs to be established by showing regular sale purchase or the capability of the same being bought to the market for sale purchase purposes or for trading purposes. 13. Further reliance on the bill of entries is also not appropriate in the absence of the details as regards the quality of the sludge imported under the cover of those bills of entries. The origin of the sludge im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty on the appellant-company is required to be reduced to Rs. 50,000/- and on Shri S.P. Mehta, Managing Director to Rs. 20,000/- as held by Member (T) or the same is required to be set aside in its totality as held by Member (J). 17. [Per : M.V. Ravindran, Member (J)]. - This Difference of Opinion is placed before me as per the directions of the Hon ble President to sort out the following differences :- (i) Whether the sludge/sediments, in the present case are required to be held as marketable and hence classifiable under Chapter 27 and consequently dutiable, as held by Member (Technical) or they have to be held as non-marketable and consequently, non-dutiable as held by Member (Judicial)? (ii) As to whether the value of sludge and sediments, was not disputed as held by Member (Tech.) or the same stands disputed by the appellant, as held by Member (Judicial), (even though no finding on the value stands given in view of the order holding sludge/sediments as not marketable.) (iii) As to whether the penalty on the appellant-company is required to be reduced to Rs. 50,000/- and on Shri S.P. Mehta, Managing Director to Rs. 20,000/- as held by Member (Tech.) or the same i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by M/s. G.N. Ship Breakers and M/s. Kothi Ship Breaking Industries were 12.8 MT and 10.8 MT respectively. It is his submission that the chemical test report also indicates that sludge/sediment is composed mainly of mineral hydrocarbon and small amount of segment water which is approximately 4%. He would submit that the goods which were imported, there is no question of any marketability. It is his submission that the reliance placed by the learned counsel is in respect of the products which are manufactured in India and the waste arises during the course of manufacture. It is his submission that both the Members have clearly held that CVD is not applicable on the sludge/sediment, which is imported by the appellant. 21. I have considered the submissions made at length by both sides and perused the record. 22. In my considered view, the entire difference of opinion can be sorted by answering only one question, i.e. whether the product which was found in the ship s hold/tank No. 8 is marketable or not. 23. It is undisputed that the appellant herein is a ship breaker and had imported ship for breaking and filed bill of entry import of vessel and contents therein for ship breakin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iner s certificate as mixture of hydrocarbons and held to be marketable. (ii) As regards the value, the valuation to the said sludge which has arrived at by the revenue seems to be disputed by the appellant before the lower authorities and the value adopted by the Revenue has not been justified. In my view, since the valuation of the said sludge/sediment is disputed, the correct duty liability needs to be worked out (though this is not a question of dispute between the Members but, as I held that there is a dispute which has been raised by the appellant as regards valuation, hence this clarification by me) in accordance with law. (iii) As I have already that sludge/sediment is marketable, order passed by the Member (Technical) as to reduction of penalty on the company as well as on the Managing Director, seems to be correct and to that extent I agree with the learned Member (Technical). 27. In view of the above, I hold that the order passed by the Member (Technical) as regards the marketability and demand of customs duty along with penalties imposed, is correct but the valuation for charging customs duty being disputed by the appellant before the lower authorities, the correc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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