1994(02)LCX0094

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

S/Shri K.S. Venkataramani, Member (T) and G.A. Brahma Deva, Member (J)

K.R. ENTERPRISES

Versus

COLLECTOR OF CUSTOMS, MADURAI

Order No. C/119/94-D, dated 24-2-1994 in C/A. No. 3561/88-D

Cases Quoted

S.S. Enterprises v. Collector — 1988(02)LCX0032 Eq 1988 (036) ELT 0135 (Tribunal)                                                     [Paras 2, 4]

Mahavir Woollen Mills v. Collector — 1988(07)LCX0091 Eq 1989 (039) ELT 0563 (Tribunal)                                      [Paras 2, 4]

Advocated By : Shri Hari Om Arora, Advocate, for the Appellant.

 Shri M.K. Jain, SDR, for the Respondents.

[Order per : K.S. Venkataramani, Member (T)]. - This appeal arises out of an adjudication order passed by the Additional Collector of Customs, Madurai, dated 20-9-1988. Facts, briefly, are that the appellants, herein, imported the consignment for which the bill of entry declaring the goods to be wool waste was filed at the Tuticorin Port on 4-7-1988. The goods were cleared on being classified under sub-heading 5103.10, Customs Tariff Act, 1975 as wool wate. The department’s case is that on subsequent detailed examination of the representative samples drawn from the consignment, the goods were found to be wool yarn in spool form. The department also noted the Bombay Customs House Public Notice No. 60 dated 8-6-1988 saying that the bases of wool yarn should not be more than 30 Cms. (12 inches) long for qualifying for assessement as shoddy wool. The imported consignment by the appellants was not found to be in accordance with this specification. A show cause notice dated 23-8-1988 was issued charging appellants with misdeclaring wool yarn in spool form as wool waste in contravention of Section 46 of the Customs Act, 1962. It was, further, alleged that as the goods are not classifiable as wool waste under sub-heading 5103.10 CTA, it is to be classified as wool yarn. The Additional Collector considered the reply to the show cause notice in which it was stated that the consignment consists predominantly of broken, tangled or knotted yarns and that the presence of a few spools will not make any difference for classification of the goods as wool yarn waste. The Additional Collector again drew samples from the consignments during the adjudication proceedings and on examination of the samples found that the bundles of wool yarn are not standardized or uniform in size and observed that it cannot be categorically stated that this is a regular consignment of original woollen yarn. However, he came to the conclusion that it is capable of being put to alternate uses and as such is not covered by para 26 of I.T.C. Policy 1985-88 and hence not covered by a valid import licence. He ordered confiscation of the consignment under Section 111(d) of the Customs Act, 1962 and gave option to clear the goods on payment of a fine of Rs. one lakh in lieu of confiscation and imposed penalty of Rs. 5,000/- on the appellants, herein.

2. Shri Hari Om Arora, ld. Counsel for the appellants, contended that merely because the goods were found to be in spools, it will not be a ground for classifying the goods as wool yarn. On this aspect, the matter is covered according to the ld. Counsel by the decision of the Tribunal in the case of S.S. Enterprises v. Collector of Customs - 1988 (036) ELT 135 and in the case of Mahavir Woollen Mills v. Collector of Customs - 1989 (039) ELT 563. The ld. Counsel also drew attention to the findings of the Additional Collector that it was found that the goods were not in uniform length and unsuitable for weaving. This would go in favour of the appellants.

3. Shri M.K. Jain, ld. S.D.R. reiterated and supported the reasoning in the Additional Collector’s order.

4. We have considered the submissions made by both the sides. It is found that the department has not substantiated their case for classifying the imported goods as wool yarn. The samples drawn have not been got tested by chemical examiner or any other departmental experts. Apart from this, on a visual examination of the samples, the adjudicating authority himself has given a finding “however, the consignment is not uniform in length and cannot be solely used for purpose of weaving..... It cannot be categorically stated that this is a regular consignment of original woollen yarn”. It is found that in the case of Mahavir Woollen Mills (supra), the Tribunal had considered the similar situation wherein the Tribunal had followed its earlier decision in the case of S.S. Enterprises (supra). The Tribunal observed that the department’s finding that the goods are woollen waste, has to be substantiated by evidence regarding trade understanding of the goods. Para 5 of the Tribunal’s decision is reproduced below :

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5. In the present case also, merely because the goods are found in spools, will not support the case of the department for classification of the goods as wool yarn especially in the light of the Additional Collector’s own findings that the goods are not capable of being used for weaving and in the absence of any expert opinion regarding the goods. Therefore, we see a lot of substance in appeal which is, accordingly, allowed.

Equivalent 1994 (071) ELT 0799 (Tribunal)