ITC Bhadrachalam Paper Boards Ltd. vs Commissioner of Customs, Chennai>2001(10)LCX0043

2001(10)LCX0043

IN THE CEGAT, SOUTH ZONAL BENCH, CHENNAI

S/Shri S.L. Peeran, Member (J) and Jeet Ram Kait, Member (T)

ITC BHADRACHALAM PAPER BOARDS LTD.

Versus

COMMR. OF CUS., CHENNAI

Final Order No. 1763/2001, dated 12-10-2001 in Appeal No. C/34/97

Cases Quoted

Akbaruddin Bakruddin — Relied on....................................................................................... [Para 3]

Amin Abdul Gani v. Collector — 1988(06)LCX0007 Eq 1988 (038) ELT 0046 (Tribunal) — Relied on...................... [Para 8]

Hello Mineral Water Pvt. Ltd. v. Collector — 1997(04)LCX0158 Eq 1998 (098) ELT 0530 (Tribunal) — Relied on. [Para 5]

Southern General Trading Company v. Collector — 1994(11)LCX0086 Eq 1995 (077) ELT 0592 (Tribunal) — Relied on [Para 6]

Advocated By : Shri J. Sankararaman, Advocate, for the Appellant.

Shri Sree Kumar Menon, SDR, for the Respondent.

[Order per : S.L. Peeran, Member (J)]. - This appeal arises from order-in-original No. 293/96 AP dated 12-9-96 by which the Commissioner has held that the import “V93 Hiko Trays” by the appellant was in contravention of Foreign Trade (Development and Regulation) Act, 1992 and the said goods requires licence as per para 156 of EXIM policy 1992 - 97 read with ITC (HS) Classification of Import and Export Items on the ground that the item is plastic trays and are in ready-to-use condition, having multiple use and can satisfy human needs; these plastic trays are classifiable under sub-heading 3926.90 of CTA. The appellant had imported and declared them for classification under chapter 84.36 as “other agricultural, horticultural, forestry, poultry-keeping or bee-keeping machinery including germination plant fitted with mechanical or thermal equipment; poultry incubators and brooders”. They contend that the item did not require licence and it can be imported under OGL. The goods were valued at Rs. 11,42,011/- and as a consequence of the allegation the Commissioner confirmed the same by holding that the item require a licence as it was a consumer goods not permitted to import without licence, therefore, the order for confiscation of the goods. However, as it was being utilised by the appellant themselves he has taken a lenient view by imposing redemption fine of Rs. 2,80,000/- and penalty of Rs. 60,000/- under Section 112 (a) of Customs Act, 1962.

2. We have heard ld. Advocate Shri S.S. Sankararaman for the appellant and Shri Sree Kumar Menon, SDR for the respondent.

3. Ld. Counsel contended that these plastic trays are for the appellant’s use for the purpose of germinating seeds and to raise the saplings from their nursery and the same are re-distributed to farmers for re-plantation. The plants after they grow into trees are utilised for manufacture of pulp. There is no intention to evade duty or get the goods surreptitiously and hence they are not consumer goods. They cannot be confiscated and released on fine besides imposing penalty. He relied on the Apex Court judgment rendered in the case of Akbaruddin Bakruddin wherein the Apex Court has set aside the penalty on the ground that the appellants had imported goods with an intention to evade duty. He contends that the item is required to be classified under Chapter 84 and not as part of classification of Chapter 39.

4. Ld. SDR submitted that the item is a consumer goods requiring licence and therefore it was confiscable and the Commissioner has taken a lenient view in imposing less fine and penalty and therefore there is no need to re-classify under Chapter 84 and grant any relief in the matter.

5. On a careful consideration of the submission we notice on perusal of the impugned order, the Commissioner has examined the article as “plastic not elsewhere classified” falling under heading 3926.90 of ITC (HS) Classification of Export & Import Item that the condition of the earlier declaration that the item to be restricted under the EXIM policy and it requires to be imported only on licence. The item is being used directly just like a bucket with a handle having pores for sprinkling water on plant and that the item is a consumer item. We notice that the Tribunal in the case of Hello Mineral Water Pvt. Ltd. v. CC, New Delhi as reported in 1997(04)LCX0158 Eq 1998 (098) ELT 0530 (T) upheld similar allegation when the importer imported mineral water cooler/ container which was reid plastic (polycarbonate) square empty bottles for mineral water of capacity of six gallons to be in the nature of consumer durable and covered under consumer goods require specific licence for import under terms of para 22 of Chapter V of the EXIM Policy 1992 - 97. The Tribunal also upheld the imposition of penalty of Rs. 1 lakh. The finding recorded from para 3 to 6 is reproduced herein :

“3. The appellants claim that the bottles imported are not consumer goods because they were not meant for use by consumers but only meant for fitting on to mineral water dispensers and they submit that these bottles cannot be refilled i.e. though mineral water can be drawn out of the dispenser with the help of a PVC funnel into the dispenser and then drawn out for human consumption, water or any other liquid cannot be filled into such bottles straightaway. He submits that since these goods were not meant for consumers and they cannot satisfy human goods directly, they cannot be considered as consumer goods for the purpose of Import Policy and hence their import did not require a licence. Therefore, imposition of penalty, holding that the licence was required for the import is not warranted. He also submits there was no mala fide on the part of the assessees so as to give rise to penal liability.

4. Opposing the contentions of learned Counsel, learned DR draws my attention to the grounds of appeal and to the Collector’s order, in which the case of the Department has been set out and in which it is stated that the goods are in the nature of consumer durables which are included in the definition of consumer goods and, therefore, the lower appellate authority has rightly held that the import of this type of goods required a specific Import Licence and in the absence of such licence, the Collector (Appeals) has rightly imposed a penalty.

5. The description of the goods is contained in a pamphlet titled Mineral Water Cooler. The entire system of the mineral water cooler is explained. The purpose of the system is for the delivery of ultra-pure mineral water and the mineral water is supplied on schedule and comes in shatterproof and tamperproof bottles made from the most hygienic material which are fixed on to the system through a patented seal system in order to ensure that there are no spills and splashes while loading and unloading. The containers have been supplied by the appellants themselves to be used as carriers to carry the said mineral water to homes and offices and brought back to the factory for refilling and that the containers would be reused and washed with mineral water to make them bacteria free and these containers would be sealed by a cap made of food grade LD (plastic) manufactured indigenously. The appellants had further stated that a pump made of food grade PVC with funnel would be supplied which would be used to take out mineral water from the containers which could be fixed on to the containers after tearing off the seal fixed thereon. Learned DR is correct in his contention that the goods fall squarely within the description of consumer durables. The definition of consumer goods includes consumer durables and, therefore, the case of the Department that the import of these goods requires a licence is accepted. Learned Counsel at this stage submits that these goods cannot be considered as consumer durables because they cannot be used again. However, there is no basis or material to substantiate this contention.

6. In the light of the above discussion, I hold that a licence is required for their import, uphold the impugned order of the Collector (Appeals) imposing fine and penalty and dismiss the appeal.”

6. The above judgement clearly applies to the facts of the case. It is also seen from the judgement rendered by the Tribunal in the case of Southern General Trading Company v. CCE - 1995 (077) ELT 592 examined the definition of the consumer goods in EXIM policy which states:

“All consumer goods, howsoever, described of industrial, agricultural, mineral or animal origin, whether in SKD/CKD condition or ready to assemble sets or in finished form.”

7. The definition of consumer goods in the policy was also noted as follows:

“Consumer goods means any consumption goods which can directly satisfy human needs without further processing and include consumer durables and accessories, components, parts and spares of such consumer durables.”

8. After noting both the definitions the Tribunal has held that lubricant oil imported by the importer was a consumer item requiring licence. Therefore upheld the order of the confiscation and penalty of Rs. 25,000/- was imposed. Likewise in the case of Amin Abdul Gani v. CC as reported in 1988(06)LCX0007 Eq 1988 (038) ELT 0046 (T) upheld the allegation of import of consumer item requiring licence and also imposition of penalty of fine.

9. The prayer for classifying under Chapter 8436 does not arise as the item is rightly classified as the article of plastic goods item “hiko trays” which are plastic in nature. They cannot be treated as item to be classified under Chapter 8436 as machinery for agricultural, horticultural, forestry, poultry-keeping and bee-keeping machinery.

10. In that view of the matter taking into consideration of the judgement cited there is no merit in this appeal and the Commissioner has already given relief by nominal fine and penalty. In the above cited judgment the penalty has been confirmed. In this case the penalty is only Rs. 60,000/-. The judgement cited by the ld. Counsel is distinguishable as there was a charge of mis-declaration and intention to evade duty. The Apex Court noted that there is no intention to evade duty and in that circumstance the penalty was set aside. In the present case the above noted judgement have upheld the imposition of penalty under the said Section of Customs Act and other legislations for importing the item which requires specific licence and for such violation penalty has been held to be leviable. In that view, there is no merit in this appeal and hence the same is rejected.

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Equivalent 2002 (139) ELT 0442 (Tri. - Chennai)