Cauvery Papers Ltd. vs Collector of Customs>1993(02)LCX0036

1993(02)LCX0036

BEFORE THE CEGAT, SPECIAL BENCH ‘C, NEW DELHI

S/Shri G.P. Agarwal, Member (J) and N.K. Bajpai, Member (T)

CAUVERY PAPERS LTD.

Versus

COLLECTOR OF CUSTOMS

Order No. 22/93-C dated 2-2-1993 in C/A. No. 3822/87-C

CASE CITED

Ram Paper Mills Ltd. v. Collector — 1990(10)LCX0008 Eq 1991 (053) ELT 0040 (Tribunal) .. [Paras 3, 10]

Advocated By: Shri Ramabadran, Advocate, for the Appellants.

Smt. Ananya Ray, SDR, for the Respondents.

[Order per : N.K. Bajpai, Member (T).]. - This is an appeal against the orders of the Collector of Customs, Bangalore confiscating 13.254 MTs of paper under Sections 111(d) and 111(m) of the Customs Act on the ground that what was imported was not Waste Paper and could not be imported under the Open General Licence, besides having been mis-declared with the intention of clearing the goods without payment of duty. An option to clear the goods on payment of a fine of Rs. 20,000/- in lieu of confiscation was given. A penalty of Rs. 10,000/- was also imposed under Section 112 ibid. The appellants’ main contention in the appeal is that they had placed orders on their suppliers for supply of Waste Paper as described in the Table appended to Notification 219/84-Cus, dated 10-8-1984. Further, the goods were shipped in accordance with Circular PS-83 issued by the Paper Stock Institute of America, which is a commodity division of the National Association for Recycling Industries. They had also produced a Certificate issued by the Defence Logistics Agency, Philadelphia in support of their contention that the paper imported were unused rolls of teletype paper and boxes or rolls of bond paper which was stored on board a ship for a long period of time and were therefore considered as scrap. The appellants have also contended that the description of the goods as Waste Paper as made out by the United States Organisation was decisive of the matter and the classification was not to be looked into from the angle of the importer. Inasmuch as the Circular had categorically mentioned that the goods were liable to be used only for repulping, the declaration should have been accepted.

2. The short point which has to be decided by us is the nature of goods as discovered on 100% examination before assessment which revealed that 13.254 MTs out of a total import of 826 MTs and valued at Rs. 64,375/- was not found to be Waste Paper.

3. Arguing on the appeal, Shri Ramabadran, the learned Counsel submitted that the appellants had placed orders for Waste Paper as could be seen from the purchase order, dated 25th July, 1986 as well as from the supplier’s invoice dated 21st August, 1986. The goods imported are to be used for pulping and the appellants had, in a letter, dated 14-11-1986 to the Assistant Collector of Customs, requested for mutilation of the goods. He also placed reliance on the decision of the Tribunal in the case of Ram Papers Mills Ltd. v. Collector of Customs [1991 (053) ELT 40], in which it was held that Waste Paper is normally used for pulp making and is often imported, compressed in bales and that its possible use for other purposes will not be a bar for its classification as Waste Paper.

4. Smt. Ananya Ray, the learned SDR submitted that the result of 100% examination had not been disputed by the appellants, as a result of which it had come to light that part of the consignment imported by the appellants was not Waste Paper. She also referred to the Explanatory Notes to Heading 47.07, the relevant portion of which was as under :-

“Waste of paper or paperboard covered by this Heading includes shavings, cuttings, clippings, torn sheets, old newspapers and journals, proof sheets and printers rejects and similar material. The Heading also covers scrap articles of paper or paperboard. Such waste and scrap is normally used for pulping and is often presented in compressed bales, but it should be noted that its possible use for other purposes (e.g. packing) does not exclude its classification in this Heading."

5. Smt. Ray submitted that the goods imported were not covered by the Explanatory Notes; nor were they covered by the heading itself which referred to ‘waste and scrap of paper or paperboard’. What was more, the evidence produced by the appellants themselves, namely, the Circular of the Paper Stock Institute of America did not support their claim. Para-40 of this Circular on which reliance was placed by the appellants reads as under :-

“(40) SORTED WHITE LEDGER

Consists of printed or unprinted sheets, shavings, guillotined books, quire waste, and cuttings of white sulphite or sulphate ledger, bond, writing paper, and all other papers which have a similar fiber and filler content. This grade must be free of treated, coated, padded or heavily printed stock.

Prohibitive materials ...None permitted

Total outthrows may not exceed...2%" (Emphasis added)

6. She also submitted that the Certificate of the Defence Logistics Agency which considered the goods to be scrap because they were stored on board a ship for a long period of time did not fall within the ambit of para-40 of the Circular. She, therefore, supported the order and prayed for rejection of the appeal.

7. We have carefully considered the appeal, the submissions made at the hearing and have also perused the case records. We would first consider the question of import of the goods under the OGL. Serial No. 261 of Appendix-6, List-8, Part-I under which clearance was claimed is as under :-

(1985-1988) Import Policy

“261: Paper Waste - for units engaged in the manufacture of pulp paper and paperboard.” (Emphasis added)

8. The expression ‘paper waste’ has not been defined in the policy and would, therefore, have to be given its ordinary meaning. The expression ‘waste’ itself signifies something which is not fit for normal purposes. Moreover, since the OGL allows imports to units engaged in the manufacture of pulp paper and paperboards, it follows that what is imported has to be necessarily meant for pulping. Thus, import of waste material like cuttings, shavings, etc. which can be utilised for pulping could be imported without any import licence. This also appears to be the criteria followed by the Paper Stock Institute of America in their Circular which has been produced by the appellants themselves. We are, therefore, unable to accept that bond paper, copy paper, paper rolls, and Xerox paper which the appellants have been found to have imported can be considered to be waste paper. Para-40 of the Circular does talk of “cuttings of white sulphite or sulphate ledger, bond writing paper ....”. Thus, only cuttings of bond paper etc. can be treated as Waste Paper and not bond paper itself. The Certificate of the Defence Logistics Agency which the appellants have produced does not indicate that what has been imported are cuttings; it talks of the unused rolls of tele-type paper and boxes or rolls of bond paper and goes on to say that since these were stored on board a ship for a long period of time, they were considered scrap. We do not, therefore, think that the evidence produced by the appellants themselves supports their own case. Therefore, the conclusion of the learned Collector that the goods could not be imported under the OGL appears to us to be correct and is sustainable.

9. As to the classification of the goods under sub-heading 4707.20, it is evident that since the goods have not been found to be Waste Paper, they would not merit classification under Heading 47.07, the Explanatory Note to which also does not support such a conclusion. Only waste, shavings, cuttings, clippings, etc. and similar material are covered by this Heading. The goods would therefore fall in the residuary sub-heading 4802.60.

10. Turning now to the question of exemption under Notification 219/84, it may be seen that the Table annexed to the Notification lists as many as 12 different items and 10 of them talk of shavings, cuttings and waste of different types specifically listed therein. The only exception to cuttings, waste etc. are old newspaper, magazine, catalogues and telephone and trade directories which, even in the normal course, become waste material after they become old and are no longer in force or are not read or referred to. In these circumstances we do not consider that what the appellants have imported is covered by any of the items listed in the Table annexed to the Notification. The learned Counsel had referred to the decision of the Tribunal in the case of Ram Paper Mills Ltd. (supra). We observe that in that case, 100% examination of the goods was not done and the conclusions were drawn on the basis of inspection of the goods and approximation that 20% of the goods were serviceable material. In the present case, it is on record that 100% examination of the goods was undertaken. The appellants in that case had also waived the show cause notice and the learned Additional Collector had passed the order on the basis that approximately 20% cargo was printing and writing paper. On the contrary, the appellants in the present case have placed before us a Circular of the Paper Stock institute of America, and according to this Circular too, the goods imported by the appellants do not fall in the category of Waste Paper. We do not, therefore, think that the aforesaid decision of the Tribunal is applicable to the case of the appellants. The order denying exemption from basic duty under Notification 219/84 and, consequently from auxiliary duty under Notification 188/86-Cus, dated 1-3-1986 has correctly been passed and is upheld. The appeal fails on this count too.

11. On the question of valuation of the goods, the appellants have not indicated what, according to them, should be the value of the goods. The ld. Collector has taken the value of white ledger indicated in the invoice at the rate of US $ 370 per M.T. as the basis of valuation and we do not consider this to be arbitrary or incorrect. The appeal, therefore, fails.

12. In the result the appeal fails on all the counts and is rejected.

Equivalent 1993 (65) ELT 234 (Tribunal)