1987(01)LCX0012

BEFORE THE CEGAT, SPECIAL BENCH, ‘D’, NEW DELHI

S/Shri G. Sankaran, Vice President (T), V.T. Raghavachari, Member (J) and K. Prakash Anand, Member (T)

SWASTIC WOOLLENS AND OTHERS

Versus

COLLECTOR OF CUSTOMS, BOMBAY

Order Nos. 68 to 77/87-D, dated 19-1-1987

Advocated By : S/Shri V. Lakshmikumaran, J.R. Gagrat, C.M. Mehta and R.C. Pandey, Advocates for the Appellants.

Smt. Dolly Saxena, for the Respondent.

[Order per : G. Sankaran, Vice President (T)]. - All these appeals involve a common issue (as admitted by both sides before us) and are, therefore, disposed of by this common order.

2. The appellants imported at Bombay Port consignments described as “woollen waste”. The detailed particulars of the consignments are furnished in the impugned orders. On examination of the consignments on percentage basis, the customs authorities found that there was prima facie evidence to show that they contained long length of slivers/tops etc. A thorough examination of the consignments was, therefore, ordered to verify the actual description of the goods on an over all basis. A technical panel was constituted for the purpose consisting of the Deputy Chief Chemist, Bombay, as Chairman and an Assistant Collector of Customs and a Senior Scientific Officer of the Office of the Textile Committee as Members. Based on the panel’s findings, show cause notices were issued to the importers to the effect that the goods appeared to be other than wool waste but long lengths of slivers/tops or deliberately broken tops which could be easily joined at the end to prepare them ready for spinning. The importers were charged with violation of import control regulations and asked to explain why action should not be taken under sections 111(d) and (m) of the Customs Act, 1962 and also why the goods should not be charged to duty under heading 53.01(1) [the correct No. is 53.01/05(1)] of the Customs Tariff Schedule (i.e. the First Schedule to the Customs Tariff Act, 1975) read with Customs Notification No. 154-Cus. dated 4-7-79 at the rate of 40% + auxiliary duty at 10% + addl. duty of customs at Rs.’ 9.375 per kg. under item No. 43 of the Central Excise Tariff Schedule read with the relevant notification. Adjudication proceedings were held by the Additional Collector of Customs, Bombay, in the course of which the importers’ counsel had also cross-examined the members of the Technical Panel. The Additional Collector passed an order dated 19-3-86 holding that the goods were not woollen waste but processed woollen products other than wool tops/raw wool and were classifiable under heading 53.Ol/ 05(1). He further held that since the goods were found to be not wool waste, the licences produced for wool waste were not acceptable and that, therefore, the imports were unauthorised. Accordingly, he confiscated the goods under the Customs Act but gave the importers option to redeem the goods on payment of the fine stipulated against each importer in his Order and on payment of proper duties. It is this order that is now under challenge before us in the present proceedings.

3. We have heard Shri J.R. Gagrat, Advocate for M/s. Ludhiana Wool Syndicate, Minerva Hosiery Mills (P) Ltd. and Nahar Spinning Mills, Shri V. Lakshmikumaran, Advocate for M/s. Swastic Woollen Mills and L.W.S. Knitwear, Ludhiana and Smt. Dolly Saxena, Sr. D.R. for the respondent Collector.

4. Since the facts and the issues in all these appeals are similar, it will suffice to mention a few salient facts in Appeal No. 1797/86-D (of M/s. Ludhiana Wool Syndicate) with reference to which Shri Gagrat made his submissions. The appellant placed an order for about 7,500 kgs. + 5% of “wool waste” on M/s. Shree Bharat International, Ludhiana (apparently agents) who, in turn, placed an order on 11-1-84 for the said goods on their principals M/s. Hart, S.A. Montevideo, Uruguay. The goods arrived in India in April, 1984 (all imports took place during the period May-June 1984). The goods were described as “wool waste” in the supplier’s invoice dated 28-2-84 and in the Certificate of Origin dated 27-2-84 issued by the National Chamber of Commerce, Montevideo. The consignment consisting of 15 bales was sought to be cleared against certain REP licences transferred to Ludhiana Wool Syndicate (hereafter referred to L.W.S., for brevity’s sake), by the respective licence holders. These licences were specifically valid for import of wool waste as one of the import replenishment materials against export product K 5 (ii) as per Appendix 17 of the relevant Import Trade Control (ITC) policies. L.W.S. also claimed duty-exemption for the goods in terms of Customs Notification No. 240-Cus. dated 2-8-76 as amended. Bales Nos. 8 and 15 of the consignment were examined by the Expert Panel (referred to earlier) and were found to contain natural coloured slivers of about 5 meters and 4 meters respectively. The department concluded, on the basis of the Panel report, that the goods could not be treated as wool waste. The goods were, therefore, held to be not entitled to duty exemption in terms of the aforesaid notification and further not eligible for clearance against the aforesaid import licences. L.W.S. were, therefore, called upon to show cause (by a notice dated 3-1-85) why the goods should not be confiscated under Sec. 111 (d).) of the Customs Act and penal action should not be taken against them under Sec. 112 of the Act. L.W.S. replied on 23-2-85 denying the allegations in the Show Cause Notice. They drew attention to the report of the expert panel in which, whereas the Dy. Chief Chemist and the Assistant Collector (Shri Bhide) had held that the goods were not wool tops for customs classification and ITC licence purposes but were cut pieces of slivers/cut pieces of wool tops which could be directly used for spinning into yarn, the Senior Scientific Officer, Textile Committee (Shri Rane had stated :-

“On examining the samples visually drawn from each consignment, it is to be stated that in some of the consignments woollen material is in the form of slivers of different lengths, rovings and woollen fibres sucked up by pneumatic system fitted on the spinning frame while in other consignments, woollen material is in the form of slivers only on varying length.

It is not possible to give opinion on visual observations of this material. Further, there are no specifications laid down for the same by ISI or International Standard Organisations. To decide the items according to end uses is also very difficult because to decide end use itself is a ticklish matter and mere so because of multiple end uses for any given material."

5. L.W.S. further referred to the note of the Assistant Collector in which also it was stated that there was no standard definition of wool waste as also to the Customs Laboratory Test Report, referred to in the Show Cause Notice, to the effect that the chemist was unable to stale whether the goods were wool waste or not. from the test carried out in the laboratory. The Dy. Chief Chemist and the Assistant Collector had, in the circumstances, no power to lay down their own guidelines for determining whether the goods were wool waste or not. The matter would have to be determined on the basis of trade understanding. The goods, in the present instance, had been indented for and supplied as wool waste. The explanatory notes to the Customs Co-operative Council Nomenclature (C.C.C.N.) stated at page 738 that wool waste could be of different types arising at different stages on processing of wool and , in spinning of wool, that lap and slivers ends could comprise wool waste, that there could be carded or combed wool waste, and that wool waste may be ‘used for spinning. Further, nowhere had it been laid down that wool waste comprising pieces of sliver should not exceed 3 meters in length and that ‘it should be packed in gunny bags and not in machine pressed bales. L.S.W. also relied upon a letter dated 5.6.81 from S.G.S. India Pvt. Ltd. to Deluxe Spinning Agency, Bombay that lap and sliver (broken pieces) could comprise wool waste. Wool tops would have lengths ranging from 250, to 1166 meters whereas the present material was about 4 meters only. Reliance was also placed on two letters dated 16.1.85 and 23.1.85 to L.W.S. from the Principal Scientific Officer, Punjab Test House, Ludhiana, regarding the definition of wool tops and soft waste to the following effect :-

“Slivers of different small lengths, cut slivers, broken pieces of slivers of variable and non-continuous small lengths upto 20 meters or even more cannot be subjected to drawing and spinning process directly as in the case of wool tops. These are a kind of soft wool-waste and nothing else.

Wool tops which can be subjected to drawing and spinning processes directly have a standard weight and specific continuous length, the definition of wool Tops is a running length of at least 300 to 450 meters approximately and weight of sliver varies from 10 to 20 grams per meter of length, which are wound into a ball weighing 5 kgs. to 8 kgs. approximately or even more.."

All these disproved the department’s allegation that pieces of sliver of 4-5 meters length were directly spinnable and were not wool waste.

Finally, L.W.S. asked for cross-examination of the Deputy Chief Chemist, the Assistant Collector and any other person on whose opinion reliance was being placed by the department. In the hearing which took place before the Additional Collector of Customs, Bombay, the Members of the Expert Panel were cross-examined by the counsel for the notices. In the written submissions dated 10-12-85 on the conclusion of the hearing, the counsel referred to the importers’ offer to get the goods mutilated prior to use which had been declined by the Customs authorities.

6. The Additional Collector of Customs, Bombay, by his impugned Order dated 19-3-86, rejected the defence put forth by L.W.S. and held that the goods were not wool waste but were “processed woollen products other than wool tops/raw wool” and were classifiable under heading 53.01/ 05(1) of the Customs Tariff Schedule. Accordingly, he ordered that the goods attracted duties appropriate to such classification. He also held that since the goods were not woollen waste, the ITC licences produced were not valid to cover their import. The goods were, therefore, confiscated by him but allowed to be redeemed on payment of a fine of Rs. 90,000/-.

7. The Orders passed in the cases of other importers also were identically worded (in fact, the adjudication order is a common one), the difference being only in the quantum of the redemption fines and the amounts of duty which, though not quantified in the Order, would, naturally, be different, being dependent on the quantity and value of the goods in each consignment. It is these orders of the Additional Collector that are now under challenge before us in these proceedings.

8. The discussion and findings by the Additional Collector in his impugned orders may be summarised thus:

(i) The goods vary in length from 4 meters and above (In the majority report of the expert panel, the lengths are stated to range from 3 to 15 meters). The goods were found by the Committee to be cut pieces of slivers which were parallelly laid, homogenous and of even thickness and that they were nothing but cut pieces of wool tops, which could not be considered to have arisen during the process of manufacture of yarn from wool tops in order to quality as soft waste viz. small cut ends of wool tops/slivers. They were not in short lengths in entangled form which is generally the condition of wool waste, and even not irregular in shape in order to be accepted as wool waste. The C.C.C.N. explanatory notes under heading 53.05 provide that the heading covers slubbings, carded slivers, tops and rovings (which the Additional Collector refers to as processed woollen products) as also cut or broken tops and cut or broken carded slivers which have been deliberately cut or broken into short uniform lengths. On the other hand, heading 53.03 covers waste from combing, carding and .other processes preparatory to spinning, namely, noils, composed of short fibres removed during combing, laps and sliver ends, small waste pieces of the combed lap etc. Though the length of slivers or rovings or tops to be considered as waste has not been indicated in the aforesaid CCCN notes, the Additional Collector concludes that sliver ends refer to short pieces.

(ii) Heading 53.03 would cover also slivers/tops whether deliberately cut or broken or whether in short uniform or non-uniform lengths.

(iii) Board’s Tariff Advice of 4.2.60 with reference to item No.49(4) of the Indian Customs Tariff Schedule (in force prior to the 1975 Schedule) provides that woollen waste may consist of free fibres and clippings, cuttings etc. They should not consist of long lengths of yarn or of rovings or slivers.

(iv) In the light of the above, it is clear that rovings, slivers/tops of short lengths or ends alone could be considered as wool waste. The wool content of the present disputed consignments is more than 98% or completely wool and it is not mixed with any other waste. The lengths of samples are not less than 3 meters but range between 3 to 20 meters or even more. It is, therefore, not appropriate to treat these goods as wool waste.

(v) Though the letters of experts produced by the importers are said to have been issued based on the experts’ experience, no literature or evidence regarding accepted trade practice with regard to any technical literature has been produced. The experts had no occasion to see the goods in dispute.

(vi) The importers’ request for permission to mutilate the goods (cut them into pieces) belies their claim that the goods are waste.

(vii) If the goods are not wool raw or wool tops, it would not follow that they are wool waste under heading 53.01/05(2). The goods are classifiable under heading 53.01/05(1) since they are not wool waste but process woollen products other than wool tops/raw wool. Consequently, the import licences for wool waste are also not acceptable.

9. During the hearing before us, Shri Gagrat, learned counsel for some of the appellants inter alia put forth the following contentions :-

(i) On 15-6-84, when the consignment of L.W.S.(the submissions were with reference to this consignment but were meant to apply to the others as well) was examined for the first time, the customs staff reported that the goods could be considered as wool waste. Likewise, the customs laboratory also reported on 20-6-84 that the goods could be considered as wool waste. Again, on 25-7-84, the examination of the goods under the Assistant Collector’s supervision resulted in the report that the goods are bona fide woollen waste. It was only thereafter that. the goods were examined by the expert panel as per the Deputy Collector’s order.

(ii) The expert panel’s report was not unanimous. The report did not say that the subject goods were the result of deliberate cutting of slivers. It said the fibres were of varying, different lengths. .But, the majority report considered the goods were not waste apparently on the basis of the length of the fibres being above 3 meters (about 4 meters/5 meters).

(iii) The term “woollen waste” would cover slivers provided they were not deliberately cut and were not of uniform length.

(iv) The show cause notice proceeded on the basis that the goods were not woollen waste but attracted duty in terms of notification No. 154 dated 4-7-79. The notification, in turn, pertained to wool, raw and wool tops falling under heading 53.01/05(2) of the Customs Tariff Schedule. The impugned order, however, went on an entirely different basis, namely, that the goods were neither wool, raw nor wool tops nor woollen waste but process woollen products falling under heading 53.01/05(1) attracting duty at the statutory rate.

(v) The evidence produced by the appellants in support of the contention that slivers upto, and even more than, 15 meters in length could be considered as waste was, without justification, ignored. The Deputy Chief Chemist, in his cross-examination, had deposed that the panel noted down only the length of the sample drawn from the consignment and no other features of the sample. He had further made it clear that he had to follow the Central Board of Revenue’s Tariff Advice on the subject of what constituted woollen waste though the said advice did not define what should be considered as “long length”. However, the Deputy Chief Chemist had clarified that there was no note of examination by the panel to the effect that the goods were found to be cut pieces or deliberately cut pieces or that they were homogenous; further that, cut pieces could be as a result of arising and not only as a result of deliberate cutting, that genuine arisings could be parallel and homogenous; also that he could not say whether the slivers could be used directly for spinning.

(vi) The impugned order virtually gave a go-by to the panel report on which was based the show cause notice. The Additional Collector adopted an entirely different approach based on the C.C.C.N. headings, and explanatory notes, calling the goods “process woollen products”. The Additional Collector had no evidence before him to show that the goods comprised fibres of uniform length, the result of deliberate cuttings.

(vii) Assuming, without admitting, that the goods were process waste, they would fall under heading 53.03 of the C.C.C.N. and would still qualify for being classed as “woollen waste”.

10. Based on the above contentions, the learned counsel made the following submissions:

(i) The findings in the impugned order being beyond the scope of the allegations in the show cause notice were violative of the principles of natural justice and bad in law. Reliance was placed in this connection on the Bombay High Court’s judgments in Xaca (India) Private Ltd. vs Union of India 1980 ELT 227 (BOM) and Wimco Ltd. vs. Union of India & Anr. 1980 ELT 235 (BOM).

(ii) The Additional Collector fell into error in interpreting the entries in the Customs Tariff Schedule of 1975 not on the basis of the words used therein but on the basis of the CCCN headings and explanatory notes. If any expression was not defined in the Customs Tariff Schedule (as in the present case), the rules of interpretation and trade understanding should inform the findings, not the CCCN headings and explanatory notes. Several authorities were cited in support of this submission.

(iii) The evidence produced by the appellant was arbitrarily and without giving any reason rejected.

(iv) Reliance on the Board’s Tariff Advice vitiated the impugned order (authorities cited).

(v) The examination of 10% of the consignment could not, in a commodity like woollen waste, be adopted as the basis for adjudication with regard to the entire consignment.

11. Shri Lakshmikumaran, learned counsel for some of the appellants, adopted the arguments advanced by Shri Gagrat but made the following additional contentions/ submissions:-

(i) Notification No. 240-Cus dated 2-8-76 exempted woollen waste falling under chapter 53 of the Customs Tariff Schedule. It did not matter under which heading of the chapter the waste fell. The Custom House could not, therefore, deny exemption on the ground that the subject goods fell under one particular heading and not the other. Notifications ought to be construed liberally (authorities cited). The CCCN explanatory notes should not be followed in interpreting the entries in the Customs Tariff Schedule 1975 (authority cited).

(ii) Even CCCN did not define woollen waste. It classified different types of wastes under different headings.

(iii) The subject goods are woollen waste. As per the definitions in the ASTM (American Society for Testing of Materials), the present goods would be classifiable as “soft waste”. Waste could arise out of excess lengths in wool tops which could not be economically used and which were, therefore, disposed of as wool waste. To say that fibres exceeding 3 meters in length were not eligible to be classed as waste would amount to adding words to the notification which itself did not define waste.

(iv) An established practice followed by the Custom House could not be upset suddenly. In any event, the benefit of the favourable interpretation should go to the assessees.

(v) Deliberate machine cutting of fibres would result in fibres of uniform length. The present goods were, however, of non-uniform lengths. Therefore, they were not deliberately cut pieces.

12. Replying to the arguments of the counsels, Smt. Dolly Saxena, learned Sr. D.R. made the following submissions:-

(i) Heading 53.01/05 of the Customs Tariff Schedule, 1975, comprised the five different headings 53.01 to 53.05 of the CCCN. .Hence the CCCN notes which reflected international understanding of the terms used in trade and commerce were relevant and authoritative in interpreting the entries in the said tariff schedule.

(ii) The appellants had not attempted to establish as to what type of waste was the subject goods. The onus was on them in claiming duty exemption. It was not sufficient to pick holes in the department’s case.

(iii) There was no evidence to show that the goods were woollen-waste arising at the wool top stage. The evidence produced by the appellants were of persons who had not seen the goods in dispute whereas the expert panel members had submitted their report after examination of the goods. The Additional Collector had adequately dealt with the submissions regarding trade opinion and the Custom House practice in dealing with such goods.

(iv) There was no violation of the principles of natural justice. Referring to the appellant’s submissions that the basis of the impugned order was different from that of the show cause notice, it was denied that there was any such divergence. There was no legal bar to arriving at a correct finding on the basis of the available evidence.

(v) The imported goods were simply fibre lengths which could be joined together and used for spinning.

(vi) For the rest, the impugned orders were defended for the reasons set out therein.

13. The counsels for the appellants did not exercise their right of rejoinder except that Shri Gagrat drew the attention of the Bench to the several customs laboratory test reports which reported the goods thus :

“Sample is cutpieces of wool tops. This was with reference to the Senior Departmental Representative’s submission that there was no evidence to show that the goods were waste arising at the wool top stage.”

14. We have carefully considered the submissions of both sides and perused the records.

15. The first thing we would like to observe is that there does not appear to be any authoritative definition of what constitutes “woollen waste”. At any rate, none has been placed before us. The glossary of Textile Terms (natural fibres) published by the Indian Standards Institution - I.S. 232:1967-defines wool tops but not woollen waste. The Central Board’s Tariff Advice of 14-7-60 states:-

“Woollen waste —- should consist entirely of woollen fibres or can also contain a small %age of other fibres such as cotton or nylon...... It may consist of free fibres and clippings, cuttings etc. They should not consist of long lengths of yarn or of rovings or slivers. The wool content (expressed as a percentage of total fibre content) should not be less than 80% in the case of woollen waste. The other 20% may consist of any other fibres natural or synthetic.”

It may be noted that the above definition contemplates free fibres and clippings, cuttings etc. It also envisages that there should not be long lengths of yarn, rovings or slivers. As to what constitutes long lengths, it is silent. While it is a settled position in law that Board’s Tariff Advices, instructions, circulars etc. cannot circumscribe the discretion of the adjudicating authority (see Supreme Court’s judgement in the case of ORIENT. PAPER MILLS LTD. Vs. UNION OF INDIA, 1978-ELT J. 345) and the Additional Collector has referred to, and relied upon, inter alia the aforesaid Tariff Advice of the Board and his Order must, therefore, be faulted on that score, we have nevertheless referred to the definition contained in the said Tariff Advice only to show how imprecise the term “wool waste” is: it could not be defined or explained with a degree of precision even by the Board, a high statutory authority under the Customs Act. It is against this background that we have to examine and assess the evidence on record:

(i)As already noted, the indent for the goods, the suppliers’ invoice and the certificate of origin issued by the National Chamber of Commerce, Montevideo, all describe the goods as wool waste.

(ii)The test report submitted by the Chemical Examiner of the Customs Laboratory on 20-6-84 (reference Bill of Entry No. 214/167 and L.W.S.) reads thus :-

“The sample consists of pieces of slivers and rovings. It is composed of wool 86.8% and the rest non-wool. It can be considered as wool-waste”.

(iii)The report of examination (on 25-7-84) of the goods in the docks (the case of L.W.S. Bill of Entry No. 214/167) under the supervision of the Assistant Collector (Docks) records that :-

“..... these are bona fide woollen waste not containing long lengths of rovings but are slivers in lengths between 5’ to 10’........”

It may thus be seen that at the earliest stage of the proceedings, the Docks Customs staff including the Assistant Collector (Docks) and the Chemical Examiner of the Customs Laboratory considered that the goods were woollen waste.

(iv) It was on or around 4-9-84 that as per the Deputy Collector’s orders, the goods were ordered to be examined afresh to verify whether goods consists of cut pieces of wool waste or whether these could be taken to be wool waste taking an overall view. It may also be ascertained if these are cut slivers of uniform lengths to be considered as wool tops and long slivers in ball form. The expert penal examined the consignment on 29-10-84. The report of the panel was not unanimous as we have seen. Whereas the Deputy Chief Chemist and the Assistant Collector concluded that the goods were not wool waste, Shri Rane, Senior Scientific Officer of the Central Testing Laboratory, Textile Committee, Bombay, appended a dissenting note. As already noted, the Panel did not have any authoritative definition to go by. The Deputy Chief Chemist placed reliance on the Board’s Tariff Advice which, as we have noted, was far from being precise.

The majority report records that the goods were found to be “cut pieces of slivers which are parallely laid, homogenous and the thickness is even. Merely by visual inspection, it was found by us that these were nothing but cut pieces of wool tops which could not have been said to have arisen during the process of manufacturing yarn from the wool tops in order to qualify (as) soft waste viz. small cut ends of wool tops. In these consignments, the length of the slivers has also been found by us to be ranging from 3 meters to 15 meters. The goods in these cases cannot be considered to be wool waste for the purpose of exemption under notification No. 240-Cus., dated 2-8-76 as these are not short lengths in entangled form which is generally the condition of wool waste. These are such that these can be directly used for spinning. These are also not irregular in shape and in fact are ....such that these can be directly used for making yarn. From packing also it can be inferred that these are wool waste as normally wool waste is packed in gunny bags. However, in such cases, have seen even wool waste being packed in machine pressed bales.”

It is clear from the majority report that the Deputy Chief Chemist and the Assistant Collector were, in the absence of any standard definition, drawing up “sufficient and reasonable” guidelines for distinguishing between wool waste and wool fibres which cannot be treated as wool waste and which are in the form of slivers or cut pieces of wool tops. [But it appears to us that the guidelines drawn up were not reasonable for the reason that in the absence of statutory definition, the panel should have taken into account the trade understanding of what would constitute wool waste.

In this context, it has to be noted that from the extracts of the notings in the Custom House file - filed by L.S.W. in their Paper Book at pp.110-116-it is seen that there was a practice in the Custom House of treating slivers in length which were not uniform as waste and that the Dy. Collector had, in circumstances that seem to be similar, adopted the goods as waste in accordance with the above practice despite some reservations on his part. It was thereafter that the expert panel was set up].

The Deputy Chief Chemist has deposed in his cross-examination that the panel noted down only the length of the samples and no other features. He has also deposed that there were no notes of the penal to show that the goods were cut pieces or deliberately cut pieces nor that the goods were homogenous. He has also deposed that the cut pieces can be as a result of arising and not only of deliberate cutting, that genuine arisings can be parallel, homogenous and of even thickness. Though the majority report states that the subject goods could be directly used for making yarn, in his cross-examination, the Deputy Chief Chemist has deposed that, not being a man from the trade, he could not say whether slivers could be used directly for spinning.

From the above discussion of the panel report and the depositions in the course of cross-examination of the panel members, it is clear that the view of the majority that the subject goods are not woollen waste is not founded on precise and accepted criteria. The validity of the majority report has been considerably diluted by the depositions in cross-examination.

(v) The evidence tendered by the appellants cannot be dismissed without justification. It needs to be examined for its evidentiary value:

(a) The letter, dated 5-6-81 from S.G.S. India Private Ltd. (a member of the Group “Societe Generale de Surveillance) states that commercial wool tops which can be subjected to drawing and spinning process directly have a standard weight and specific continuous length. It further states that broken pieces of slivers of variable lengths cannot be subjected to drawing and spinning processes directly as in the case of wool tops.

(b) The definition of “soft waste” as given in “Applied Textiles 5th Edition - Raw materials To Finished Fabrics - by George E. Linton and Joseph J. Pizzuto reads as follows:-

“These comes (sic) from the carding, combing, filling and drawing departments of the mill, sliver, slubbing, top and roving furnish the waste Which may be white or coloured. Staple length, handle and appearance will be the same as those of the original source. These wastes have much call in woollens (sic) and are used to some degree in worsted because of the good to excellent quality of the fibre. Thus are reworsted from the initial operations in the mill and are run through the regulation blending, oiling, mixing and subsequent treatments.”

Soft waste has been defined in I.S. ‘232-1967 thus :-

“Waste which is soft in nature and which has a little or no twist produced during the spinning process; obtained mostly in machines, such as scutchers and cards; also includes clearer laps, sweepings fly, etc. ”

It is also seen that the ASTM definition (ASTM D-123) defines soft waste as “waste from slubbing, roving and wool tops and lap waste as ”waste of long fibres found in drawing the spinning processes by the breaking of the ends between the front roller and the bobbins. This may be reprocessed."

It appears to us that the subject goods conform to the above definition. It should be noted that these definitions do not stipulate what the length of the fibres should be not that soft waste should be uneven in thickness, non-homogenous and should be in an entangled mass of fibres. Since it envisages waste to arise inter alia from slivers, slubbings and tops and rovings, it stands to reason that such waste would be of fairly even thickness, homogenous nature and not necessarily an entangled mass.

(c) The letters, dated 16-1-85 and 23-1-85 to L.W.S. from the Principal Scientific Officer, Punjab Test House, Ludhiana, testify to the position that wool tops must be of running length of at least 300-450 meters, that “sliver of different small lengths, cut slivers, broken pieces of slivers of variable and non-continuous small lengths upto 20 meters or even more cannot be subjected to drawing and spinning process directly as in the case of wool tops. These are a kind of soft wool waste and nothing else.”

(d) The certificate, dated 15-4-85 issued by Wool Research Association, Bombay (attached to the Commerce Ministry, Government of India) defines soft waste as a product of woollen and worsted carding, combing and drawing. It goes on to say that card waste, combing waste, roving waste and laps (soft waste from worsted drawing and spinning) also came under the category of soft wool waste. It adds that “The cut slivers, in different lengths and non-continuous slivers cannot be directly subjected to drawing and spinning process as in the case of wool top. In our opinion the above types of slivers may be called as a soft wool waste."

(e) Shri Kuldip Raj, a Textile Technologist of Ludhiana, in his certificate, dated 3-5-85 states that he has been in the trade and is conversant with wool tops and wool waste and opines that “sliver pieces of even more than 15 meters in length arise as waste in the process of wool top manufacture and also during the first preparatory for worsted spinning. These are treated as soft waste. It is not possible to spin worsted yarn out of such wool waste.

(f) To similar effect is the certificate, dated 11-5-1985 issued by Shri S.K. Kathju, a Chartered Textile Technologist from Ahmedabad. He says inter alia: “short lengths of slivers, upto 15 meters or so, are discarded as waste in wool top making and in the spinning process. These wastes are used for woollen spinning. Such pieces of sliver cannot be used directly in spinning on the worsted system.”

(g) We do not consider it necessary to refer to other certificates from textile technologists filed by the appellants because they run more or less on similar lines.

(h) The evidence discussed above, produced by the appellants, has been, in our opinion, summarily rejected by the Additional Collector on the ground that though the certificates were said to have been issued by the experts based on their experience, “ no literature or accepted trade practice with reference to any technical literature” had been produced and further that they had no occasion to see the goods in question with reference to its composition, viz. wool content, length, homogeneity, uniformity etc. But we do not see that the Additional Collector has cited any authoritative standard literature on the subject of woollen waste either, in support of his finding that the subject goods are not wool waste. We do not see why, in the absence of any evidence to the contrary, the evidence tendered by these experts should be rejected as unworthy of credence, especially looking to the admitted absence of any definition of the expression “woollen waste” for tariff purposes and the far from satisfactory or conclusive nature of the expert panel report relied on by the department.

16. The fact that the length of the samples range from 3 to 20 meters does not clinch the issue. The evidence, on the other hand, points to the position that in trade and technology, such lengths are accepted as soft waste.

17. Looking to the sources from which soft waste could arise, as seen from the definitions in the A.S.T.M. and the book “Applied Textiles”, it appears that the fact that the fibres are parallel or homogenous or of not very short lengths would not disqualify them from being considered as “soft waste”.

18. As already pointed out, reliance by the Additional Collector on Board’s Tariff Advice was not proper. In any event, the said tariff advice also does not lay down any length prescription.

19. Much reliance has been placed by the Additional Collector on the C.C.C.N. and its explanatory notes. The Indian Customs Tariff Schedule 975, does not follow the C.C.C.N. pattern in toto. In the present case, five headings of chapter 53 of the C.C.C.N. (53.01 to 53.05) have been compressed into a single heading (with two sub-headings) in the Indian Tariff Schedule. Therefore, no rational or definite conclusions can be drawn as to the meaning and scope of the entries or … entries in heading 53.01/05 of the Indian Schedule by looking at the explanatory notes in the C.C.C.N. with reference to the five separate headings. This is apart from the fact that the explanatory notes in the C.C.C.N. have no binding force and have, at best, only persuasive value. Even so, it may be worthwhile looking at the C.C.C.N. notes. The crucial portion appears to be the note under heading 53.05 to the following effect :-

“This heading covers the slubbings, carded slivers, tops, and rovings referred to above and also cut or broken tops and cut or broken carded slivers, which have been deliberately cut, or broken into short uniform lengths.”

No evidence has been placed before us, nor has any evidence as on record been pointed out to us, by the department to show that the goods in the present cases consist of tops and carded slivers which have been deliberately cut or broken into short uniform lengths. The Additional Collector concluded that such deliberately cut uniform lengths or products which are not the result of deliberate cutting would fall under heading 53.03 of the C.C.C.N. Assuming for the sake of argument that it may be so, would that make any real difference? We think, not. Our reason is that, in the first place, it is nobody’s case that the present goods do not fall under heading 53.01/05 of the Customs Tariff Schedule, 1975. Hence, it is immaterial whether the goods fall under heading 53.03 or 53.05 of the C.C.C.N. (although we are of the opinion that 53.05 is the more appropriate heading). In the second place, notification 240-Cus., dated 2-8-76 does not specify the heading of sub-heading where woollen waste should fall. It merely says that woollen waste should fall within chapter 53 or chapter 63. The Additional Collector calls the subject goods not as wool waste but as processed wool products other than wool tops/raw wool and, on that basis, classifies them under sub-heading (1) of heading 53.01/05 of the Tariff Schedule, 1975. We have already discussed the evidence available on record and have opined that the subject goods are appropriately classifiable as soft woollen waste. In this view of the matter, the discussion as to the proper heading for these goods under the C.C.C.N. is, in our view, only of academic interest and need not detain us further.

20. As the Counsel for L.W.S. has stated, the show cause notice proceeds on the basis that the subject goods are not covered by notification No. 240 -Cus., dated 2-8-1976, being not woollen waste. It then proceeds to say that the goods are, therefore liable to duty at the rate of 40% (basic duty) 10% (auxiliary duty) and Rs. 9.375 per kg. (additional duty or C.V.D.) under heading 53.01/05 read with notification No. 154-Cus., dated 4-7-1979. This latter notification, in terms, pertains to “wool raw and wool tops falling under sub-heading No.(2) of heading 53.01/05.” The adjudication order, however, after holding that the goods are not wool waste, proceeds to hold them as “process wool products” classifiable under sub-heading (i) of heading 53.01/05 (“not elsewhere specified”). The order does not specify the rate of duty to be charged on the goods. It merely records “proper duties as in force at relevant time”. If the intention (not expressed) was to charge duty at the rate applicable to sub-heading (i), it would accord with the specific finding on classification of the goods. If, however, the intention was to charge duty at the rate indicated in the show cause notice, the clear implication is that the goods fall under sub-heading (2) because notification 240-Cus., dated 2-8-1976, as we have seen, in terms, pertains to wool, raw and wool tops. [which, according to the Additional Collector, the goods are not]. We wish the order was less ambiguous and more precise. This however, would not mean any difference to our findings and conclusions.

21. The result is that the evidence on record points, in our view, to the conclusion that the subject goods are “woollen waste”. The department has not shown that they are not “woollen waste.”

22. The goods are, therefore, eligible for duty exemption in terms of notification 240 Cus., dated 2-8-1976. Since the goods are held to be woollen waste, the rejection of the licences on the basis that the goods are not woollen waste has also to be held as incorrect.

23. In the view we have taken and in the light of the above discussion, we do not think it necessary to refer to and discuss the authorities cited before us by the learned counsels for the appellants.

24. The result is that the impugned orders are set aside, the goods are declared to be eligible for duty exemption in terms of Customs Notification No. 240, dated 2-8-1976 and allowed to be cleared against the licences for import of wool waste. If fines and duties have been paid, they shall be refunded to the respective appellants.

25. Shri Gagrat had submitted before us that a considerable amount of demurrage had accrued on the consignments. He, of course, conceded that the tribunal had no jurisdiction to direct issue of detention certificates since issue or non-issue of such certificates is not governed by the provisions of the Customs. Act. Having regard to the long history of the cases, we would only observe that it appears to us that these are fit cases for consideration of issue of detention certificates by the customs authorities so as to enable the appellants to get such relief as the Port Trust may grant in the matter of demurrage charges.

26. As observed earlier, there is no statutory definition of the term “woollen waste”. Nor had any other definition of the said expression as such been placed before us. It is in this background that we have considered the case of the appellants and the technical authorities and expert opinions on record and arrived at our conclusions. In this context, we have also taken note of the fact that even during adjudication, the appellants had made a request that the imported goods may be suitably mutilated before being released. It, therefore, appears to us that in the circumstances of those cases, especially in the absence of any definition of the’ term “woollen waste”, the offer for mutilation may be acted upon by the Revenue, if deemed fit, before the goods are released.

27. A copy of this Order shall be placed in each of the appeal files.

Equivalent 1988 (34) ELT 83 (Tribunal)