1990(10)LCX0008
BEFORE THE CEGAT, SPECIAL BENCH ‘C’, NEW DELHI
S/Shri K. S. Venkatramani, Member (T) and S. L. Peeran, Member (J)
RAM PAPERS MILLS LTD.
Versus
COLLECTOR OF CUSTOMS
Order No. 1114/90-C, dated 17-10-1990 in Appeal No. C/2058/90-C
Cases Quoted
A. S.V. PAPER MILLS -1987(10)LCX0031 Eq 1989 (043) ELT 0140 (TRI.) [PARAS 2 & 3]
KADODRA PAPER INDUSTRIES v. C. C. -1987(07)LCX0098 Eq 1987 (031) ELT 0962 (TRI.) [PARA 3]
Advocated By: Shri Gopal Prasad, Consultant, for the Appellants.
Shri S. Chakraborti, J.D.R; for the Respondent.
[Order per : K. S. Venkatramani, Member (T)]. - The appellants herein imported a consignment of waste paper (Hard White Shavings) for which a Bill of Entry was filed on 20-3-1990 claiming classification under sub-heading 4767.90 CTA 1975 and benefit of exemption Notification 219/84. On examination of the goods, the department found that there was 20% approximately serviceable paper comprising of different shapes & sizes and of different quality and thickness compressed and bundled in bales alongwith shavings of various sizes and the sizes were found to vary from 3 ft. x 2 ft. upward. The department hence took the view that 20% cargo was mis-declared and the mis-declared quantity was held to be printing and writing paper on which a higher rate of duty was applicable than that on waste paper. As a corollary to this, the department also opined that the import of only waste paper was permissible under Open General Licence (OGL) whereas the import of printing & writing paper being a restricted item under the relevant import policy required an import licence without which the import was unauthorised. Also that the value of printing & writing paper has to be higher than that declared for waste paper. The appellants chose to have the matter adjudicated without issue of Show Cause Notice and after perusing their written explanation and hearing them in the matter on 16-4-1990, the Additional Collector of Customs, Kandla, passed the impugned order dated 18-4-1990 by which he held that 20% cargo was only printing & writing paper, ordered its confiscation under Section 111(d) Customs Act, 1962 levying a redemption fine of Rs. 40,000/- and imposed a penalty of Rs. 15,000/- on the appellants under Section 112(a) of Customs Act, 1962 and he also ordered that the assessable value declared be enhanced by 50% for the offending goods.
2. Shri Gopal Prasad, ld. Consultant, appearing for the appellants, submitted that they had been regularly importing waste paper which is the principal raw-material for the manufacture of paper in their paper mills. He pointed out that the examination report was not based on actual weighment of the paper alleged to be other than waste paper and the 20% quantity was only an approximation. Even assuming that there is some quantity of serviceable paper that by itself will not be a reason to deny it the classification as waste paper for which he cited and relied upon the Tribunal decision in the case of A. S. V. Paper Mills reported in 1989 (043) ELT 140 wherein the Tribunal had in a similar case referred to the Explanatory Notes in the CCCN as a reliable guide in the matter wherein it has been stated that waste paper is normally used for pulp-making and that it is often imported compressed in bales and that it should be noted that its possible use for other purposes does not exclude its classification as waste paper. The ld. Consultant further pointed out that the appellants had also given an undertaking that if the imported paper is not used in the manufacture of paper they will pay the differential duty. They had also offered to have that quantity of paper considered as serviceable paper mutilated before clearance. It was also argued that serviceable printing and writing paper is always imported in rolls. The confiscation of the goods and personal penalty on the appellants were, therefore, unjustified. Shri Chakraborty, ld. D. R., contended that the appellants themselves had agreed before the Additional Collector during personal hearing that 20% of the cargo was of serviceable paper after being shown a sample thereof. He also submitted that on facts the case of A. S. V. Paper Mills was distinguishable as the size of serviceable paper found therein was different, whereas in this case they were of sizes 3 ft. x 2 ft. upwards. As printing & writing paper, the import required a valid licence which the appellants did not possess and as such confiscation of the goods and imposition of penalty was in order.
3. We have carefully considered the submissions made by the ld. Consultant and the ld. D.R. The question is whether 20% of appellants’ consignment is other than waste paper and is printing & writing paper. It is seen that the examination report of the goods in the dock does not indicate whether 100% weighment was conducted. It indicates that the report is on the basis of inspection of the goods and also that the quantity of 20% is an approximation. It also shows that what is termed as serviceable paper is compressed and bundled in bales alongwith shavings of various sizes. We also find no material to show how it was concluded that what has been described as serviceable paper is printing & writing paper, because the examination report does not say so. We find that as per “paper standards and Practices - PS-88" page 6, photocopy of which is available on record, ”Hard White Shavings" is said to “consist of baled shavings or sheets of all untreated white bond ledges of writing papers. Must be free from printing and groundwood.’’ It is, therefore, evident that the quantity of 20% has been determined not on weighment but on inspection and is but an approximation and that even according to the examination report the serviceable paper was also found to be compressed and baled alongwith shavings and we have also seen that according to Paper Stock Standards and Practices Hard White Shavings consists of baled whilte shavings or sheets, inter alia, of writing paper. In the A. S. V. Paper Mills case the Tribunal had considered similar situation and following the Explanatory note to CCCN as a reliable guide in the matter had found that waste paper is normally used for pulp making and is often imported pressed in bales and that its possible use for other purposes will not be a bar for its classification as waste paper. The Tribunal further noted that printing & writing paper is usually imported in rolls. These findings of the Tribunal are also applicable to the facts of the present case as noted. In yet another case of Kadodra Paper Industries v. C. C. reported in 1987 (031) ELT 962, we find that the Tribunal was considering the same Notification 219/84 relating to import of Kraft Waste Paper, and claim for clearance of the goods under OGL. In that case on examination 90% of the bales were found to be consisting of what the department considered as serviceable bags. The importers pleaded that the goods were ordered as raw-material only for the manufacture of kraft paper and that they were prepared to have them mutilated before clearance (as in the present case). The CEGAT held that the notification did not lay down that the bags should be imported in torn or mutilated condition and that it was to prevent misuse of the duty concession that the notification evidently, prescribed execution of an end use bond as a condition for availing of the concession. In the present case also, the appellants had given an undertaking bond and had also offered to have that portion of goods held objectionable mutilated before clearance. It is also admitted in Additional Collector’s order that the appellants had placed orders for waste paper only. That they are manufacturers of paper and not traders is also not in dispute. Therefore, on a consideration of the totality of the evidence, and applying the ratio of the two decisions of the Tribunal (supra) to the facts of the present case, we hold that the Additional Collector’s order confiscating the goods and imposing personal penalty holding the goods to be printing & writing paper and assessing it to duty as such is not sustainable, and it is accordingly set aside. We may, however, observe that the clearance of the goods will be subject to the execution of the end-use bond prescribed under Notification 219/84 to the satisfaction of the Assistant Collector, who is also free to decide whether or not such clearance could be effected after getting the goods mutilated depending on the feasibility of such an operation in the docks. The appeal is disposed of in the above terms.
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Equivalent 1991 (53) ELT 40 (Tribunal)