TMI Blog2015 (11) TMI 447X X X X Extracts X X X X X X X X Extracts X X X X ..... is of no relevance for classifying the plastic & metallic waste under respective chapter heading and assessing on merit rate of duty. As per the condition of the notifications in question, the appellant themselves executed an undertaking before the Customs before clearance of goods, binding themselves that the goods shall be used for the manufacture of paper and paper board and they also undertook that in the event of non-compliance they shall pay customs duty on such quantity. Therefore, it is established beyond doubt that the above quantity of plastic waste/scrap, Metallic scrap and cloth waste imported in the guise of waste paper are not eligible for exemption under Sl.No.152 of the Notfn. 21/2002. Therefore, appellants are liable to pay appropriate customs duty on the above items. Condition (ii) (b) of Notfn. 203/92 is similar to condition 20 of Notfn 21/2002. On perusal of the Advance Licence No.0910028933/2/03/00 at page 99 of the paper book, we find that the advance licence was issued to import items as per the list attached to the licence. Sl.No.2 of the list attached covers ITCHS code 47079000 with description of imported item as waste paper . As already discussed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as Sl.No.31 to 52 in the SCN they failed to declare the non-contraries i.e plastic waste and scrap. Therefore, appellants have not only flouted their own terms and conditions of contract and imported the goods by not declaring it as plastic waste and scrap and they are fully aware that the consignments contained plastic scrap and other scrap but they have deliberately declared the goods as waste paper and not paid appropriate duty on the non-fibre contraries and availed the concessional rate of duty under the above notifications. Appellants failed to intimate the Customs authorities on their activity of sorting of the imported goods into fibre and non-fibrous contents through M/s.White Star Fibres Ltd. and the quantity of plastic scraps and other scraps recovered and sold in the domestic market. But for the detection by the investigation agency, this would not have come to the light. Appellant s contention that they have intimated the Central Excise authorities about the quantity of plastic waste and scrap for issuing end-use certificate is not relevant. As per the condition of the notification appellants failed to inform the customs authorities where the appellants availed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at appellants entered into contract with M/s.White Star Fibres, Lakshmipuram, Secunderabad to sort out imported goods i.e. waste paper into good fibre and non-fibre contraries. The officers of DRI visited the stockyard of M/s. White Star Fibres and seized stocks of segregated materials fibres, plastic scrap and Metal scrap vide mazahar dt. 12.1.2005. From the record recovered from M/s.White Star Fibre, Secunderabad, it was revealed that the appellants have imported consignment under 52 Bills of Entry which were cleared and declared as Mixed Waste Paper and after clearance the goods were sent to M/s.White Star Fibres for sorting. 5. Investigating authority also noticed that during 2004, the appellants imported identical goods of waste paper, mixed papers of sorted grade 5.01 under Bill of Entry No.636370 dt. 31.5.2004 and on detailed examination it was noticed that declared cargo contained non-fibre contraries along with declared cargo which was approx. 15% of the imported goods. Duty was assessed on the non-fibre content and the appellant paid the appropriate duty. It was further noticed that for the subsequent clearances, the appellants have not declared to the Customs the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the past including the live consignments which was under investigation. There were 52 Bills of Entry forming part of this adjudication out of which 2 Bills of Entry related to live consignments. Appellant made a very clear condition in the purchase order to the supplier that Mixed Papers Sorting Grades.01, Mixed Paper Board, Outthrows 10%. This means to the extent of 10% of other waste in the imported waste paper consignment was permissible. But such a condition does not intend that unintended waste shall be exported by exporters. 8.2 Prior to 2004, appellant had no arrangement to sort out the other waste for which it used such waste as filling material on its ground. After 2004, it sorted out the other waste from paper waste through job worker. All the imports were made bonafide and no intention was there to cause prejudice to Revenue. Only upon sorting out, appellant was able to know the composition, content and quantum of other waste contained in the imports and that was not more than 10% of the paper waste imported. However, in the live consignments, weight of other waste was 8% as was noticed in the adjudication. 9. Placing a detailed paper book, summary of the case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were nothing strange to the authorities. Accordingly, there was no intention to make abuse of the benefit of the Notification No.21/2002-Cus. dt. 1.3.2002. (Ref. Page 5 of Vol.3 - Condition No.20 - Sl.No.152 of the Table of Notfn.). 9.6 Out of the imports made prior to the year 2004, when wastage came out from waste paper consignments, those were used as filling material in the factory of appellant and not sold. From the year 2004 onwards, when the goods imported were sent to job worker for segregation and sorting out, different components emerged therefrom. That was informed to the excise authority and that was well within their knowledge since end-use certificates were issued by that authority to the appellant. The appellant maintained full record of the quantity of segregated waste and sales thereof. 9.7 While record reveals different composition of the other waste in 52 consignments imported during the period 3.9.2002 to 14.10.2004, there was hardly about 1% of such constituent in the consignments. The extent of plastic waste was about 12%, metallic waste were about 2% and cloth waste was about 0.5%. But even this aspect was informed to the Central Excise authorities whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e unusable material, the benefit of notification cannot be denied following ratio laid down in the above two judgements(supra). 10.2 Since the goods were not segregable at the stage of import, classification thereof was made under CTH 47079000 For such purpose, learned senior counsel relied on the decision of Dunlop India Ltd. Madras Rubber Factory Ltd. Vs UOI Others - 1983 (13) ELT 1566 (SC). He specifically relied on para-30 of the judgement to submit that condition of the article at the time of import is decisive to classify the goods under appropriate head and duty is leviable on such classification. Therefore no attempt is permissible to differ with the classification declared by the appellant. 10.3 It is global phenomena that waste paper bales usually contain extraneous material/contaminants to some extent as is recognised by two publications as under :- (a) European List of Standard Grades of Recovered Paper and Paper Boards (Ref. Pages 41, 42, Volume 2 of PB) (b) Publication of Technical Association of Pulp and Paper Industry, Atlanta (Ref. Pages 43/Volume 2 of PB) 10.4 Ld. Senior counsel submitted that the imports relate to the year 2002-04 and past clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e resulting in evasion. But that is totally absent in the present case. 13. Relying the decision of Larsen and Toubro Ltd. Vs CCE - 2007 (211) ELT 513 (SC) (Ref. Page 30 of Vol.4 of PB), it was the submission of appellant that unless the ingredients of Section 28 is present, entire adjudication is time-barred. Further reliance was placed on the Hon'ble Supreme Court's judgements as under:- (Ref. Vol.4 of PB), (i) Primella Sanitary Products Private Ltd. Vs CCE Goa 2005 (184) ELT 117 (SC) (ii) Gopal Zarda Udyog Vs CCE New Delhi 2005 (188) ELT 251 (SC) (iii) Pushpam Pharmaceuticals Company Vs CCE Bombay 1995 (78) ELT 401 (SC) (iv) Padmini Products Vs CCE 1989 (43) ELT 195 (SC) 14. The appellant submits that when there was no suppression of facts, there is no question of any adjudication in respect of past consignments. Therefore, there is no question of any confiscation nor penalty imposable. Similarly, the live consignment carrying 8% permissible limit of goods other than paper waste should not be adversely viewed. Apex court in the case of State of Haryana Vs Dalmia Dadri Cement Ltd. - 2004 (178) ELT 13 (SC) categorically held that goods used appearing in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tity of undesired goods stated above came to India not being used in manufacture, there was violation of the condition of the notification. Accordingly, not only appellant is liable to duty on the equivalent value of the goods found to be waste other than paper waste, as aforesaid but also confiscation was warranted. So also penalty was also imposable and that was rightly done by the authority below. 17.2 So far as the benefit of the notification No.203/92-Cus is concerned, the appellant being advance licence holder in respect of 23 Bills of Entry, it is liable to duty for the violation of the condition of the notification. The licence was issued under strict user condition. That was not liable to be abused. When appellant was not an actual user of the entire import but aforesaid quantities were sold without being used in the manufacture of the specified goods, it was not entitled to the benefit of the notification. The condition will be used having been violated, that warranted levy of duty as well as penalty and confiscation. 17.3 There was no declaration to the Customs about the composition of the import and the quantity thereof in the consignment covered by each Bill of E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order, appellant is not immune from levy nor has defence that it has not imported the goods in violation of condition of the notification. When there was violation of condition of notification by its own declaration, it is liable to duty as well as penalty and confiscation. 17.7 Appellant was very well aware before import that it intended to import nearly 10% inadmissible goods to its benefit. Therefore, it was liable to declare suo moto that 90% of the goods were eligible to the notification benefit and 10% of the goods were dutiable. When the appellant deliberately imported waste other than paper waste it cannot claim duty exemption on any plea. The adjudication proceeding was not time barred. Main character of the goods at the time of shipment decides classification thereof. When appellant had conscious knowledge about various goods imported through 2 live Bills of Entry and the import manifest declared goods as wastepaper while Bills of Entry declared the goods as mixed waste paper , there was deliberate suppression of fact. This demonstrates that appellant abused the process of law to make undue gain for which it is liable to duty and other consequence of law. 17.8 It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was made under protest, that absolves the appellant from the liability in respect of the imports since those were not deliberately misdeclared imports. The appellant had no intention to make any misdeclaration for the reason that any shortage in the imported quantity shall result in loss to it and because of other waste, it cannot manufacture paper out of that. Therefore, no person will cause prejudice to himself knowingly. Accordingly, entire contention of Revenue fails on this ground. a) Segregation was necessary to make proper account of the goods imported without any compromise. Therefore, the allegation of Revenue is baseless. Notification benefit is to be granted in the manner as declared by the judgement of the apex court. Even though the term will be used is appearing in the condition it is qualified by the words intended to make use. Therefore, when appellant was prevented to make use of other waste for reasons beyond its control it cannot be denied benefit of notification. b) There is no dispute that Chapter 47 applies to the imports. Even appellant did not dispute the classification of the goods if otherwise classifiable in other entries in case Tribunal finds that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... main contention is that what they have imported is only 'waste paper' which may contain certain mix other than waste paper which was not known to the appellants at the time of import and also contended that they are eligible for the benefit of notifications hereinbefore stated on waste paper and there was no misdeclaration and contended that since the goods were assessed finally, there is no question of suppression of facts and therefore demand is hit by limitation. It was also contended that Mixed Waste Paper is rightly classifiable under 47079000 which covers unsorted waste and scrap . 23. As regards the availment of concessional rate of duty under Notification No.21/2002, on perusal of the description on the Bills of Entry, we find that appellants have declared the description of the goods imported in the following manner :- (1) Imported Waste Paper/Pulp Waste Paper (2) Waste Paper Mixed Waste Paper (3) Waste Paper Imported Mixed Cutting (4) Waste Paper Co-mingled Super mixed (5) Waste Paper Co-mingled Kerbside Super mixed (6) Waste Paper Sorting Grade 5.01 (7) Waste Paper Sorted Grade It is seen from the above that appellants used different ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnishes an undertaking to the Deputy Commissioner of Customs or the Assistant Commissioner of Customs, as the case may be, that such imported goods will be used for the purpose specified and in the event of his failure to comply with this condition, he shall be liable to pay, in respect of such quantity of the said goods as is not proved to have been so used, an amount equal to the difference between the duty leviable on such quantity but for the exemption under this notification and that already paid at the time of importation; and (b) the importer produces to the said Deputy Commissioner or Assistant Commissioner, as the case may be, within six months or such extended period, as that Deputy Commissioner or Assistant Commissioner may allow, a certificate issued by the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, in whose jurisdiction the said goods have been used in such unit, that the said goods have been so used. 24. As seen from the above, Sl.No.152 of the notification exempts all goods falling under Chapter 47.07 for use in the manufacture of paper and paper board which is chargeable to Concessional Cust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stry of Environment Forests in the context of pollution control measures where garbage or municipal waste are brought into India in the name of waste paper. Further, we find the Customs issued standing order dt. 18.2.2006 and subsequently issued addendum to the said standing order on 31.3.2006 based on Ministry of Environment Forests letter wherein at 6(i) of the said standing order, it is categorically stipulated that the plastic and metallic waste found in the waste paper are to be assessed to merit rate of duty. Therefore the appellants relying the Ministry of Environment Forests communication is of no relevance for classifying the plastic metallic waste under respective chapter heading and assessing on merit rate of duty. 27. It is on record that as per the condition of the notifications in question, the appellant themselves executed an undertaking before the Customs before clearance of goods, binding themselves that the goods shall be used for the manufacture of paper and paper board and they also undertook that in the event of non-compliance they shall pay customs duty on such quantity. Therefore, it is established beyond doubt that the above quantity of plastic wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already explained above, the contraries of 2468.057 MTs of Plastic Waste/Scrap, 360.35 MTs of Metallic Waste and 103.280 MTs of Cloth Waste (Rags) covered under 52 Bills of Entry were not declared by the appellant. The appellants relied Hon'ble Apex Court decision in the case of State of Haryana Vs Dalmia Dadri Cement Ltd. (supra). We find that the said decision relates to waiver of Sales Tax on sale of any goods to a public sector undertaking i.e. Punjab Electricity Board supplying electricity to public for use by the PSU in generation or distribution of electricity. In the above context, the Apex Court held that the word use figuring in Sales Tax provisions means intended for use by the PSU. The present case is on a different footing where the exemption notification 203/92 is specific with mandatory condition that the waste paper shall be used for manufacture of paper paper board and the appellants executed an undertaking before Customs to that effect and the adjudicating authority rightly restricted the exemption benefit on waste paper and assessed the plastic metallic waste on merit rate of duty. Therefore, ratio of the above Hon'ble Supreme Court decision reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y procedural and technical in their nature, on the other, must be kept clearly distinguished. In Tata Iron and Steel Co. Ltd. (supra), this Court held that the principles as regard construction of an exemption notification are no longer res integra; whereas the eligibility clause in relation to an exemption notification is given strict meaning wherefor the notification has to be interpreted in terms of its language, once an assessee satisfies the eligibility clause, the exemption clause therein may be construed literally. An eligibility criteria, therefore, deserves a strict construction, although construction of a condition thereof may be given a liberal meaning if the same is directory in nature. Doctrine of substantial compliance and intended use : 24. The doctrine of substantial compliance is a judicial invention, equitable in nature, designed to avoid hardship in cases where a party does all that can reasonably expected of it, but failed or faulted in some minor or inconsequent aspects which cannot be described as the essence or the substance of the requirements. Like the concept of reasonableness , the acceptance or otherwise of a plea of substantial compliance depe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e thing to be done but are given with a view to the orderly conduct of business, they may be fulfilled by substantial, if not strict compliance. In other words, a mere attempted compliance may not be sufficient, but actual compliance of those factors which are considered as essential. The ratio of the above decision is squarely applicable to the facts of this case as it established beyond doubt that appellants had imported and misdeclared 2468.057 MTs of Plastic Waste/Scrap, 360.35 MTs of Metallic Waste and 103.280 MTs of Cloth Waste (Rags) and the said goods were cleared as waste paper and to that extent the appellants failed to comply the mandatory condition of the notification. Therefore, by respectfully following the above Apex Court's decision, we are of the considered view that concessional rate of duty availed by the appellants under Notification No.21/2002 as well as full exemption availed under 203/92 Cus. is not eligible on the quantity of plastic scrap, metallic scrap and cloth scrap (rags) and these goods are chargeable to appropriate Customs Duty and the duty demand of ₹ 1,06,10,668/- is confirmed. Adjudication to that extent is upheld. 31. On the cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Chapter 47 description and sub heading 4707 read harmoniously it is evident that what is covered under the main heading 4707 and chapter subheading under 47079000 is only waste and scrap of paper or paper board . The word used unsorted waste and scrap under chapter heading 47079000 only relates to unsorted waste paper of headings 4707 10, 4707 20, 4707 30 and which are mixed and unsorted and it does not cover unsorted waste paper mixed with other materials such as plastics and metallic waste and rags. The appellant's reliance on the ratio of the Hon ble Supreme Court in the case of Dunlop India Ltd. and Madras Rubber Factory Ltd. (supra) is misplaced in view of above fact findings in the present case and clearly distinguishable. The above case relates to classification of V.P. Latex and as to whether it is to be classified as raw rubber, whereas the present case relates to plastic scrap, metallic scrap imported and same is not declared by the appellants but cleared as waste paper. Therefore, there is no merit in the appellant s claim. Accordingly, we hold that the plastic waste and scrap, metallic waste, cloth waste (rags) are rightly classifiable under appropriate sub he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ARIES NOT ACCEPTABLE. MATERIAL SHOULD NOT HAVE UNSLUSHABLE FIBER, PLASTICS, WAX COATED PAPER AND POLY IMPORTED WASTE PAPER/PULP LAMINATED WASTE AND OTHER CONTRARIES. WE RESERVE OUR RIGHTS TO CLAIM FROM DAMAGES CAUSED TO OUR PROCESS MACHINE APART FROM THE LOSS ON ACCOUNT OF PRODUCTION AND MATERIAL LOSS BOTH, RAW MATERIAL FINISHED GOODS. 35. From the above clause, it is abundantly clear that it is strictly stated in the above clause that non-fibre contraries are not acceptable and materials should not have unslushable fibre, plastics, wax coated paper and poly imported waste paper/pulp, whereas we find that in spite of the above specific conditions, the appellants have violated their own terms and conditions of the contract and deliberately not declared non-fibre contraries, plastic scrap and other scraps in their Bill of Entry. Further, on perusal of Bill of Entry No.636370 dt. 31.5.2004, the appellants imported Mixed Paper and on examination it contained waste paper and plastic waste/scrap and the same was classified under Chapter Heading 47079000 and Chapter 39159029 respectively and appellants themselves had paid appropriate duty on plastic scrap whereas in all the subsequen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mens rea is proved beyond doubt and ingredients of Section 28 is satisfied for invoking extended period. Therefore, appellants relying on the Hon ble Supreme Court decision in the case of Uniworth Textiles Ltd. Vs CCE Raipur (supra), Chamundi Diecast Private Ltd. Vs CCE Bangalore (supra), Larsen Toubro Ltd. Vs CCE (supra) Primela Sanitary Products Pvt. Ltd. Vs CCE (supra), Gopal Zarda Udyog Vs CCE (supra), Pushpam Pharmaceuticals Co. Vs CCE and Padmini Products Vs CCE (supra) against the suppression of facts is clearly distinguishable to the facts of this case as already discussed above and all the ingredients for wilful suppression of facts is established beyond doubt. The ratio of the above Supreme Court decisions are not applicable to the present case. Therefore, invoking the extended period under Section 28 is fully justified and well within the law. Correspondingly penal provisions invoked under Section 114A is also fully justified. The appellants' relying Hon'ble Madras High Court decision in their own case reported as ITC Ltd. Vs Norasia Container Lines Ltd. - 2009 (247) ELT 60 (Mad.) is only in favour of the Revenue where the Hon'ble High Court clearly direct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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