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TMI Blog2024 (8) TMI 911X X X X Extracts X X X X X X X X Extracts X X X X ..... consignments in four containers by putting these goods on hold on the reasonable belief that the said goods were mis-declared for 'Diesel oil', which is restricted for import. Accordingly, representative samples were drawn from the said goods under panchanama proceedings dated 19-4-2022 and were sent for chemical testing to Central Excise and Customs Laboratory, Vododara, to ascertain whether the said goods were 'fuel oil' as declared by the appellants or 'diesel oil'. Upon testing the goods, it was found that the imported goods are not diesel, and accordingly DRI had withdrawn the embargo on the said goods and allowed the same for further clearance by the jurisdictional customs authorities. However, JNCH customs authorities had raised an objection regarding the goods treating the same as hazardous substance and thereby treating the said imports as being prohibited under the provisions of Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008. 2.2 The appellants by their letter dated 11-7-2022 had requested to release of goods covered under B/Es No. 8110603, dated 1-4-2022 and No. 8169028, dated 6-4-2022, as the goods were reported to be 'fit for refining' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onform to the IS standards would rule out the possibility that these being a hazardous waste. Thus they claimed that the imported goods fulfilled the conditions of IS standards, and these are not prohibited for import. Further they also emphasized that in none of the test reports, the imported goods have been mentioned as a 'hazardous waste'. Learned Advocate also submitted that the density limits specified in Appendix-I to the C.B.I. & C. Circular dated 4-6-2001, is not a condition for determining the classification of a hazardous waste, but is only a criterion for determining whether the fuel oil can be re-refined or not. The contention that fuel oil is to be considered as hazardous waste merely because the density exceeds 0.95% is factually erroneous, as commercially available fuel oil supplied by leading suppliers such as Indian Oil Corporation Ltd., Reliance Industries Ltd., Mangalore refinery all have density above 0.95%. On the basis of above facts, Learned Advocate submitted that confiscation of the imported goods and imposition of penalty on the appellants is clearly unsustainable in law. Hence he prayed for setting aside the impugned order. 4. Learned Authorised Represen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Act; (c) exemption or concession of duty, tax, cess or any other sum, consequent upon any notification issued therefor under this Act or under the Customs Tariff Act or under any other law for the time being in force; (d) the quantity, weight, volume, measurement or other specifics where such duty, tax, cess or any other sum is leviable on the basis of the quantity, weight, volume, measurement or other specifics of such goods; (e) the origin of such goods determined in accordance with the provisions of the Customs Tariff Act or the rules made thereunder, if the amount of duty, tax, cess or any other sum is affected by the origin of such goods; (f) any other specific factor which affects the duty, tax, cess or any other sum payable on such goods, and includes provisional assessment, self-assessment, re-assessment and any assessment in which the duty assessed is nil; Section 17. Assessment of duty. - (1) An importer entering any imported goods under section 46, or an exporter entering any export goods under section 50, shall, save as otherwise provided in section 85, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usal of the above details, it transpires that the imported goods were allowed for clearance by DRI, after being clarified that the same are not 'diesel' whose imports are prohibited. Thus the jurisdictional customs authorities were required to follow the extant legal provisions for clearance of imported goods. We are not examining about the aspect of whether the proper officer had at the time of assessment of the imported goods required the testing of the imported goods for the purpose of assessment and whether the proper officer had drawn the samples of imported goods, inasmuch as neither the appellants nor the Revenue had raised this issue as dispute and both of them have accepted the testing of representative samples of imported goods, which were initially drawn by DRI, Pune and later the same test results were used by the assessing officers and original as well as appellate authorities in deciding the issues in dispute. 6.4 In this regard we also find that the Central Board of Indirect Taxes and Customs (CBI&C) had issued circular is on the various parameters and the facilities for testing furnace oil/waste oil, which have been prescribed after consultation and deliberations w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mits being as follows :- S. No. Test Prescribed Limit (Max.) 1. Acidity (inorganic) Nil 2. Ash Content 0.1% 3. Sediment 0.25% 4. Water 1% 2. Products/furnace oil which fail the screening test should be classified as off specification furnace oil/waste oil. 3. Products/furnace oil which pass the above screening test should be subject to further testing for the remaining BIS specifications. The products should be first tested for viscosity. Products/furnace oil which has a viscosity greater than 370 centistokes at 50 degree centigrade should be classified as off specification furnace oil/waste oil. 4. Products/furnace oil of viscosity below 370 centistokes should be categorized into the following four grades of fuel oils : (1) Viscosity upto 80 centistokes (Grade IV), (2) Viscosity 80 to 125 centistokes (Grade MV 1), (3) Viscosity 125 to 180 centistokes (Grade MV 2) , and (4) Viscosity 180 to 370 centistokes (Grade HV). 5. The above four grades could be tested for total sulphur per cent by weight (1) Grade LV viscosity up to 80 centistokes should confirm to a maximum of 3.5% sulphur by weight. (2) Grade MV1 viscosity 80 to 125 centistokes and Grade MV2 from 125 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ardous waste. 10. Samples testing positive for organic halides and PCBs should be classified as hazardous waste. The above procedure may be brought to the notice of all concerned for compliance. Board's Circular No. 106, dated 22-12-2000 stands modified to the above extent. Difficulties, if any, in following above procedure may be brought to the notice of the Board. Please acknowledge receipt. APPENDIX-1 Used Oil Specification for Re-refining Constituents/Property Acceptable Limits (Max.) Colour 8 Water 15% Density 0.85 to 0.95% Flash point COC Min. 94 Degree Centigrade Kinematic Viscosity c St at 100 degree centigrades grades 1.0 to 32 Dilutents 15% Vol. Neutralization No. 3.5 mg KOH/g Saponification value 18 mg KOH/g Total halogen 4000 ppm PCBs Absent Lead 100 ppm As 5 ppm Cd+Cr+Ni 500 ppm PAH 6%" A plain reading of the above instructions of the CBI&C, clearly indicate that a step-by-step procedure has been prescribed for determining whether the imported goods are (i) Fuel oil (ii) Off-specification product such as (a) Off-specification fuel oil (b) waste/used oil, fit for refining (c) hazardous waste, the import of which is prohibited. Thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a signatory to this agreement. 2. India has placed a number of trade related measures negotiated under the TFA in Category A. Article 5.3.1 envisages granting an opportunity for a second test in case the first test result of a sample taken upon arrival of goods declared for importation shows an adverse finding. Further Article 5.3.3 makes it obligatory to consider the result of the second test, if any, for the release and clearance of goods, and, if appropriate, may accept the results of such test. The aforementioned Articles have been placed in category A. In order to have uniformity in approach among the field formations with regard to re-testing of samples, the following procedure is prescribed : (a) Customs officers may draw the samples from import consignments for testing in case of consignments wherever needed. The results of all test reports, adverse or otherwise, shall be communicated to the importer or his authorized representative/Customs Broker immediately on its receipt. (b) In case the importer or his agent intends to request the Additional/Joint Commissioner of Customs for a re-rest, then the same shall be made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances where the customs officer is constrained to deny the re-testing facility. Board expects that such denial would be occasional and on reasonable grounds to be recorded in writing. (h) Where the re-testing procedure is done at the instance of the department instead of the importer, the above procedure shall be followed mutatis mutandis. 3. Difficulties, if any, in implementation of this circular, should be brought to the notice of the Board." 6.6 We also find that the Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008 have provided the definition of the terms 'hazardous waste', 'used oil', and 'waste oil' under Rule 3(17), 3(36) and 3(39), respectively, as follows : "Rule 3 (17) - 'hazardous waste' means any waste which by reason of characteristics such as physical, chemical, biological, reactive, toxic, flammable, explosive or corrosive, causes danger or is likely to cause danger to health or environment, whether alone or in contact with other wastes or substances, and shall include - (i) waste specified under column (3) of Schedule I; (ii) waste having equal to or more than the concentration limits specified for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CRCL had sent their individual Test Result reports vide RCL 253 to 256, 260, all dated 20-5-2022; RCL 257 to 259, 261 to 264, all dated 23-5-2022 to DRI, Pune. The individual parameters as per the requirements for Fuel Oil in terms of BIS standards IS 1593:2018 were given individually for each of these samples. These reports also provided with an indication that these samples have failed the minimum screening tests mentioned in Para 3 of C.B.I. & C. Circular No. 33/2001-Customs, dated 4-6-2001, with respect to Gross calorific value and Density. Thus these samples are off-specification/waste oil. These samples are under further process of testing by CRCL, Vadodara as per the said CBI&C circular for determining whether it is hazardous waste or fit for re-fining. 6.8 The various parameters so tested for the disputed imported consignments contained in 7 containers in respect of B/E No. 8066788 and in another 5 containers in respect of B/E No. 8066761, both dated 30-3-2022, reflected in Test result reports RCL 253 to RCL 264 have been extracted and are given below in the form of a Table, for better appreciation of the facts : Test parameters for determination of Furnace Oil/Water Oil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6, 8 & 9; and minimum limit for specification at Col. 10. The test results for Col. 11 & 12 are only required to be reported and are hence not determinative. 6.9 By careful study of the above test results provided by CRCL. Vadodara, it is evident that these 12 samples have in fact passes in the minimum screening test for initial four parameters such (1) Acidity (2) Ash Content (3) Sediment (4) Water, inasmuch as these are conforming to the prescribed maximum limit. In the sample test results for all 12 disputed consignments Acidity is NIL; Ash content is less than 0.10; Sediment is less than 0.25% and Water content is NIL. However, it is reported in the Test report that further testing is being done. The further test reports also indicate that the parameters are within the limits prescribed; and there is no presence of heavy metals such as Polychlorinated Biphenyls (PCB), Poly Aromatic Hydro carbon (PAH); Lead, Chromium, Cadmium, Nickel; Arsenic as the results state that these have not been detected. Thus, we are of the considered opinion that the facts in terms of test results of these 12 samples taken from the imported goods in 12 containers cannot be treated as 'hazardous good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said bills of entry has been found hazardous after testing. Accordingly, the goods declared as fuel oil having declared quantity of 288.58 MTs under Bills of Entry Nos. 8066788, dated 30-3-2022 and 8066761, dated 30-3-2022 are liable for confiscation u/s 111(d) of the Customs Act, 1962. 10. Accordingly, I hold the 288.58 MTS fuel oil having declared assessable value of Rs. 1,09,96,315/- imported vide 8066788, dated 30-3-2022 and 8066761, dated 30-3-2022 liable for confiscation under Section 111(d) of the Customs Act, 1962. For the same reasons, I hold that the importer is liable for penalty under Section 112(a) of Customs Act, 1962." 7.2 The said order of the original authority was also confirmed by the Learned Commissioner of Customs (Appeals) by dismissing the appeal filed by the appellants. He had addressed both the issues of test results of the samples and the classification of the imported goods on the said basis as well as the issue of allowing re-testing facility in his order. 7.3 Further, the Learned Commissioner of Customs (Appeals) had also dealt with the twin issues of importability of the goods and the issue of re-testing facility sought by the appellants, in his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning to Bills of Entry No. 8066788, dated 30-3-2022 and 8066761, dated 30-3-2022 mentions that they do not meet the requirements in respect of acceptable limit of density at 15/15°C as prescribed for used oil specification for re-refining as mentioned in the Appendix-1 of the Board Circular No. 33/2001-Cus., dated 4-6-2001, however, fuel oil exceeding the limit of density at 15/15°C to the extent of 20/20 is also permissible for domestic consumption as can be seen from the certificate of quality of the similar goods issued by M/s. Reliance Industries Ltd. In this regard it is worth noting that the Board has issued Circular No. 33/2001-Cus., dated 4-6-2001 on the subject of "Parameters and facilities for testing furnace oil/waste oil". It is well settled law that the officers of the department are bound by the circulars/instructions issued by the Board unless shown to be contrary to any law laid down by Supreme Court or High Court. 6.9 Learned Advocate of the appellant has submitted a copy of the Order-in-Original No. MCH/ADC/AK/94/2019-20, dated 13-1-2020 passed by the Additional Commissioner of Customs, Custom House, AP & SEZ, Mundra in support of their claim. On going t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il for re-refining with acceptable limits as 0.85 to 0.95% in the C.B.I. & C. Circular dated 4-6-2001. However, under the relevant Rules governing the specifications of used oil suitable for recycling or fuel derived from waste oil defined under Rule 3(36) and Rule 3(39) of the Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008, the specification provided under Schedule V of the said Rules, do not contain any such statutory requirement of 'Density' as one of the determining parameter. Even the original notification in S.O. 2265(E), dated 24-9-2008 which brought in force the original Rules in 2008 did not contain such a requirement under the specification mentioned for used oil for recycling or waste oil under Schedule V. Thus, we are of the considered opinion that the 'density' of the imported goods is not a determining factor/parameter for classifying the goods for considering an item as 'used oil' or 'off-specification furnace oil/waste oil'. Thus, from the above analysis of the legal provisions of the Rules of 2008, facts and specific test results of the 12 samples, we find that the imported goods are not 'hazardous waste' and the impugned order is fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d both the authorities below during adjudication of the case, without even recording the date of communication of the first test results by the department to the appellants importer; then the date of receipt of the request letter from the appellants by the Customs authorities, should have taken a reasoned view on allowing the facility of second test or retesting as per procedure. However, in complete disregard to the above provisions, the authorities below have simply dismissed the request for re-testing sought by the appellants. Thus, by not following the principles of natural justice and in complete disregard to the CBI&C instructions, the impugned order has been passed by the Learned Commissioner of Customs (Appeals). 9. In view of the above discussions and analysis, it is made clear that none of the evidences relied upon by the department, to allege the mis-classification as 'fuel oil' and for resorting to classification of the goods as 'hazardous waste', stand the scrutiny of law. We are of the considered opinion that the department had failed to substantiate the grounds for confiscation of the imported goods and for imposition of redemption fine and penalty. Hence, w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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