1988(07)LCX0091
BEFORE THE CEGAT, SPECIAL BENCH ‘A’, NEW DELHI
S/Shri K.L. Rekhi, Member (T); Harish Chander, Member (J) and P.C. Jain, Member (T)
MAHAVIR WOOLLEN MILLS
Versus
COLLECTOR OF CUSTOMS
Order No. 437/88-A, dated 29.7.1988 in C/Appeal No. 459/88-A
Cases Referred
S.S. Enterprises v. C.C. Bom. -1988 (36) ELT 135 [Para 3]
Swastik Woollens and Others v. Collector of Customs, Bom. - 1988 (34) ELT 83 [Paras 3 & 5]
Advocated By: Shri H.O. Arora, Advocate, for the Appellants.
Shri P.R. Bajaj, JDR, for the Respondent.
[Order per : P.C. Jain, Member (T)]. - Short questions involved in this appeal are whether the (i) goods imported by the appellants herein are wool waste covered under the Tariff Heading 51.03 of Customs Tariff Act, 1975 (as amended w.e.f. 28.2.1986)(ii) the value adopted by the department is correct or not.
2. Brief facts leading to the above issues are as follows :-On 18.7.1987, a bill of entry was filed on behalf of the appellant mills for the clearance of 86 bales of goods described in the said bill of entry as “mixed coloured woollen thread waste”. The assessable value of the goods was declared as Rs. 1,30,587.87 and an import licence for importation of items falling under Appendix 17 of K-5(11) of AM 1985-88 Policy was produced for clearance of the goods.
Examination of the goods on 11.8.1987 revealed that they comprised 70% of woollen yarn in the forms of cones and spools and 30% was thread waste. It was, therefore, alleged by the department that the goods had been imported in contravention of the import licence produced by the appellants for clearance of the goods and therefore these were liable to confiscation under Section 111(d) of the Customs Act, 1962. Allegation was also made that the goods were also liable to confiscation under Section 111(m) of the Customs Act for mis-declaration in the bill of entry regarding description of the goods as well as value thereof inasmuch as 70% of the goods were waste as described in the bill of entry and in the accompanying invoice. On adjudication, the learned adjudicating authority has held the goods liable to confiscation under Section 111(d) and 111(m) of the Customs Act, 1962. He has, however, given the appellant an option to redeem them on payment of a fine of Rs. 70,000/-. The value of the goods has also been fixed at Rs. 1,45,875/- on the basis of best judgment assessment at the rate of Rs. 15/- per kg. for yarn in the shape of spools/cones and at the rate of Rs. 20/- per kg. for yarn in the shape of hanks. A penalty of Rs. 2000/- has also been imposed on the appellant under Section 112(a)/(b)of the said Act.
The finding of the adjudicating authority in the impugned order is as below:-
“Scrutiny of the documents indicate that the order for the goods was placed as per indent dated 19.2.1987. The invoice mentions the goods as ‘thread waste’. However, neither the indent nor any other correspondence has been submitted by the importers in spite of the assurances given by them during the personal hearing. The actual finding on examination of the goods cannot but indicate that there has been some clandestine arrangement between the importers and the suppliers to import woollen yarn alongwith thread waste. If it were a genuine mistake, the bales would have contained woollen yarn and waste mixed up haphazardly and not packed in identifiable spools/hanks/coned and bundles. It is noted that the woollen yarn in hanks and spools is suitable at least for hand carpeting. It is therefore plausible to hold that the importers deliberately arranged to import woollen yarn alongwith wool waste. However, I take a lenient view in view of the fact that the importers are an actual users and the goods have incurred demurrage during the period of Customs formalities.”
3. Learned advocate for the appellant submits that the aforesaid finding of the adjudicating authority is without any evidence regarding the trade understanding of the wool waste referred to in Tariff Heading 51.03. Merely because the wool waste has been imported in the form of small spools/cones and hanks, these cannot be treated as serviceable yarn as held by the lower authority. It was incumbent on the department to get market enquiries made and obtained evidence as to how the term ‘wool waste’ was understood in the concerned trade and industrial circles. No such evidence has been brought forth on record by the adjudicating authority and department has imposed its own understanding without any evidence to back it up. There is no statutory definition of wool waste in the tariff itself. It was also pointed out that at the adjudication stage the learned adjudicating authority was duly apprised that the cones contained in the bales are small pieces in 10 gms. to 200 gms. and vary in shape, quality of wool and count of yarn as well. Similar is the fate of hanks packed in another few bales which vary in count quality and shape. These hanks were also found in cut pieces as shown to the learned adjudicating authority during the course of physical examination of the goods by the said authority. Learned advocate has also drawn attention to the indent placed by the importers with the local indentor M/s. Shiv Shakti Investment Pvt. Ltd. wherein the goods were described as “mixed coloured carpet thread waste with minimum 84% woollen balance nylon”.
Learned advocate for the appellant has further taken support from a direct decision of the Tribunal in the case of S.S. Enterprises v. C.C Bombay [1988 (36) ELT 135]. The learned advocate also takes support from another decision of the Tribunal in the case of Swastik Woollens and Others v. Collector of Customs, Bombay [1988 (034) ELT , 83] wherein it has been held in para 26 of the said report as follows :-
“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."
The learned advocate has further submitted that just as in the case of Swastic Woollens, the appellants had also made an offer to the adjudicating authority to get the goods mutilated to the satisfaction of the Customs authorities before release but this offer had not been accepted. In view of the foregoing pleas, the learned advocate urges that the impugned order deserves to be set aside in toto and the appeal should be allowed.
4. Shri P.R. Bajaj, the learned JDR appearing for the department reiterates the findings of the adjudicating authority in the impugned order. He highlights that since 70% of the goods are not thread waste as declared but are in the form of spools/cones and hanks, they are not wool waste because as per the Explanatory Notes under Tariff Heading 51.03 HSN yarn waste such as broken knotted or tangled yarns collected as waste during spinning, doubling, reeling, weaving, knotting etc. operations are, inter alia, included in the said Tariff Heading. The impugned goods, according to the learned JDR, are neither broken nor knotted or tangled yarn and therefore, they would not come within the scope of the expression “wool waste”. Hence, it has been rightly held, according to the learned JDR, that the imported goods are not covered by the licence and are also misdeclared in the bill of entry. The impugned order, therefore, according to him, is correct in law and on facts.
Replying, learned advocate for the appellant has relied on the observations of the Tribunal in the case of S.S. Enterprises mentioned supra and has stated that broken knotted or tangled yarn is not the only form of yarns waste. The CCCN and the HSN quoted above merely give them as examples. What is of relevance is that the yarn waste is collected from various operations referred to above in the spinning and post-spinning departments. In the instant case the goods imported are waste of yarn arising in the course of weaving of carpets as is apparent from the copy of the indent on record.
5. We have carefully considered the pleas advanced on both sides. We find that the support taken by the learned advocate for the appellant from Tribunal’s decision in the case of S.S. Enterprises is well founded and is of direct relevance to the case in hand. The only evidence on which the department seeks to base its case is that the goods have been imported in the form of spools and cones and hanks. There is no evidence whatsoever on record regarding the trade understanding of the goods or the trade understanding of the expression ‘wool waste’. In the case of S.S. Enterprises the goods imported were in the form of hanks. In para 23 thereof the Tribunal has held as follows :-
“We do not agree that hank yarn cannot go waste or merely because such wasted yarn happens to be in hank form, therefore, it would merit classification as good yarn or normal serviceable yarn.”
Similarly, the reliance placed by the learned advocate for the appellants on para 26 from “Swastik Woollens and others” decision mentioned supra is also well founded. The Tribunal in the said judgment has discussed the definition of woollen waste as laid down in CCCN in detail. In this case also we observe that there is no difference in the scope of the expression ‘yarn waste’ as given in CCCN and HSN under the relevant Explanatory Notes under Tariff Headings 53.03 and 51.03 respectively. The Explanatory Notes, we observe, merely give by way of examples of yarn waste as broken, knotted or tangled yarns. It is also on record that the spools and cones are small pieces in 10 gms. to 200 gms. and vary in shade, quality of wool and count of yarn as well. It is also further on record that the appellant has offered to get the goods mutilated according to the satisfaction of the Customs authorities to make them conform to ‘wool waste’ as per the latter’s understanding.
Since the department has not categorically proved that the goods are not wool waste, as discussed above, the charge of misdeclaration of description of goods and their value is also not tenable. Hence while setting aside the impugned order with consequential relief to the appellant, we order that the goods shall be released to the appellant.
6. Appeal disposed of accordingly.
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Equivalent 1989 (39) ELT 563 (Tribunal)