Custom, Excise & Service Tax Tribunal
M/S Aishwarya Plast Exports Pvt Limited vs Commissioner Of Customs-Ahmedabad on 24 February, 2016
In The Customs, Excise & Service Tax Appellate Tribunal West Zonal Bench At Ahmedabad ~~~~~ Appeal No : C/11473/2015 (Arising out of OIA-AHD-CUSTM-000-APP-063-15-16 Dated 15/07/2015 passed by Commissioner (Appeals) of CUSTOMS-AHMEDABAD) M/s Aishwarya Plast Exports Pvt Limited : Appellant (s) Versus Commissioner of CUSTOMS-AHMEDABAD : Respondent (s)
Represented by:
For Appellant (s) : Shri Willingdon Christian, Advocate For Respondent (s): Shri Sameer Chitkara, Authorised Representative For approval and signature :
Mr. P.M.Saleem, Hon'ble Member (Technical)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
3.
Whether their Lordships wish to see the fair copy of the order? Seen 4. Whether order is to be circulated to the Departmental authorities? Yes CORAM : Mr. P.M.Saleem, Hon'ble Member (Technical) Date of Hearing / Decision : 24.02.2016 ORDER No. A/10122 / 2016 Dated 24.02.2016 Per : Mr.P.M.Saleem
M/s Aishwarya Plast Exports Pvt Limited has filed the present appeal, aggrieved by the impugned order-in-appeal dated 15.07.2015 of Commissioner (Appeals) Customs, Ahmedabad vide which he reduced the redemption fine to Rs. 50,000/- on the goods confiscated and also reduced the penalty to Rs. 1,00,000/- while upholding the impugned order of the Adjudicating Authority dated 25.02.2015 and confirming the directions of the Adjudicating Authority to re-export the goods. It is observed that this is the second round of litigation in the matter.
2. Heard both sides. The Learned Counsel for the appellants submits that they are an established manufacturing unit functioning for more than 15 years, and an 100% Export Oriented Unit (EOU) manufacturing Plastic bags and Plastic Granules and exporting the same. They import raw material viz., plastic scrap (Non Hazardous) and use the same in the process of manufacture of the final products. He submits that they regularly import such plastic scrap from their regular manufacturer suppliers abroad and there has been no problem in clearance of the same from customs, prior to or after the import of consignment in question in the present appeal. The subject consignment of plastic scrap were covered by three Bill of Entries dated 25.03.2013, 26.03.2013 and 28.03.2013, which were confiscated with an option to redeem the same on payment of fine, with penalty, alongwith the direction to re-export the goods vide the impugned orders. He submits that though the plastic scrap imported by 100% EOU are exempted from customs duty, the import of the same is governed by certain conditions under the LOP issued by Development Commissioner, Ministry of Commerce. As per the LOP pertaining to the subject goods, the following conditions are to be adhered:-
1. The material should be free from Toxic and Hazardous Contamination.
2. The material should be virgin.
3. The materials are not used whatsoever.
Samples were drawn from the subject goods and sent to Central Institute of Plastic Engineering and Technology (CIPET), Ahmedabad. The test report confirmed that the goods are free from Toxic and Hazardous Contamination and they conform to the physical forms and specifications prescribed. It also certified that the goods are virgin, but mentions that it is virgin used waste. As the test report state that the goods to be virgin but used, the lower authorities held the goods not fulfilling the LOP conditions and therefore confiscated the goods and imposed redemption fine and penalty along with a direction to re-export the goods. The appellants agitated against the same in the first round of litigation, which reached up to the Tribunal. The appellants had argued that the sample drawn was not representative and therefore they had sought drawl of fresh sample and re-testing of the same. The first appellate authority viz., Commissioner (Appeals) remanded the matter to the Adjudicating Authority for redrawing the sample. The said decision was upheld by the Tribunal in the first round of litigation. The Learned Counsel submits that the Department however instead of drawing fresh sample, re-tested the remnant sample, which was contrary to the directions of Commissioner (Appeals) and Tribunal. He points out that their argument was that the initial drawl of sample was not correct and hence testing remnant sample serves no purpose. The re-testing of the remnant sample has resulted in similar report as the first test report. In this context, he also drew the attention of the Bench to the certificates of their manufacturer- suppliers which accompanied the supply of the goods, and to the test report of CIEPT, Chennai. In the de-novo adjudication, the Adjudicating Authority again held that the goods are liable for confiscation since the same did not conform to the conditions specified in the LOP. Commissioner (Appeals) while upholding the said decision, reduced the redemption fine and penalty. The Learned Counsel submits that the subject plastic scraps are in the form of plastic films, which are manufactured by their suppliers, and these plastic films at certain intervals or length contain the bar code of their customers. The portion containing bar code in the whole consignment would be negligible, about one to two percent only. While drawing samples, instead of taking representative samples which means that the bar code portion should be in the same proportion, the sample drawn predominantly consisted of the bar code portion. This has resulted in wrong drawl of sample. It also resulted in wrong test report. As bar code normally indicate that the goods are used, the test report also indicated the goods to be virgin used. He submits that the word virgin itself means that the goods are unused, and in any case, more than 98% of the consignment which are new plastic films without bar code are undisputedly not put to any use by any stretch of imagination. That is why they had requested for redrawl of sample in the first round of litigation. However, in spite of the clear directions of the Commissioner (Appeals) and Tribunal in the first round of litigation, the Department chose to test the remnant sample instead of drawing fresh sample which served no purpose. The Learned Counsel further submits that even according to Department, the impugned goods are free from toxic and Hazardous Contamination. Therefore, there is no reason why it should be re-exported. As per Section 125 of the Customs Act, 1962 read with other provisions of the Customs Act, goods which are not prohibited but liable to confiscation shall be redeemed on payment of a fine in lieu of confiscation. He submits that subject goods are not prohibited goods and the adjudicating authorities have confiscated the goods, but, allowed redemption of the same on payment of fine. He submits that redemption, by way of payment of a fine in lieu of confiscation, means that the goods are to be allowed to be cleared for home consumption, and that in their case, the goods are not even being cleared for home consumption but taken to their manufacturing unit which is 100% EOU and the goods are consumed in the manufacture of final products, which are exported. The subject goods are also free from Toxic and Hazardous Contamination and therefore not prohibited under provisions of Hazardous Waste (Management handling & Transboundary Movement) Rules, 2008. In view of the same, the Learned Counsel argues that direction to re-export the goods after payment of redemption fine is illegal and cannot be sustained. He relies upon the decision of this Bench of the Tribunal in the case of M/s San Plastics vs. Commissioner of Customs, Kandla, vide Final Order No. A/741-742/WZB/AHD/2012 dated 25.05.2012. He submits that the facts and circumstances of the said case are exactly same as in the present case and the Tribunal in that case held that the portion of the goods with the stickers and bar codes were to be separated/segregated and to be re-exported, and the remaining portion of the goods allowed for clearance on payment of reduced redemption fine and penalty.
3. On the other hand, the Learned Authorised Representative for Revenue submits that as per the test report, the goods are virgin used and as per the LOP conditions, used goods are not permitted to be imported. Therefore, there is no illegality in the orders of the lower authorities in directing the goods to be re-exported. He submits that the redemption fine was imposed under the provisions of Customs Act, whereas, re-export of the goods is for violation of the Hazardous Waste Rules, 2008.
4. On careful examination of the records and the arguments of both sides, we find that the appellants are an established manufacturer and 100% EOU unit, which consumes the imported goods in the manufacture of final products, which are exported. In such a scenario, the imported goods are not cleared to the domestic market. We find force in the submissions of the Learned Counsel that since the goods are free from Toxic and Hazardous Contamination, there is no absolute prohibition for import of the goods and hence the goods are eligible to be cleared from customs charge, on payment of redemption fine in lieu of confiscation. Therefore, we do not find any reason to order the goods to be re-exported. We find that the imported goods are not put to any use whatsoever and are virgin new material, as per the certificates of the manufacturer suppliers submitted alongwith the consignment at the time of customs clearance and which forms part of the appeal documents. It is observed that the appellants have also drawn sample on their own from the consignment and sent the same to CIPET, Chennai, who certified the goods to be plastic scrap virgin. It is observed that the appellants had disputed the initial drawl of sample and testing thereof and had succeeded in this respect in the first round of litigation. However, Revenue in its wisdom chose not to draw a fresh sample even though the Commissioner (Appeals) had directed to do so, which was upheld by this Tribunal in the first round of litigation. We also find that this Bench of the Tribunal, in the case of M/s San Plastics (supra) wherein the facts and circumstances were similar, has held that the portion of the goods containing stickers may be segregated and re-exported and the other portion allowed for clearance on payment of reduced redemption fine and penalty.
5. In view of the above analysis and in view of the peculiar facts and circumstances of the present case, we direct to segregate the portion of goods which contains the bar codes or stickers and to re-export the said portion of the goods. The balance portion of the consignment is allowed to be cleared on payment of redemption fine which is reduced to Rs. 25,000/-, and penalty which is reduced to Rs. 25,000/-. The direction of the lower authorities to re-export the entire goods is set-aside. The impugned order is upheld with the above modification.
6. Appeal is disposed of in the above terms.
(Dictated and pronounced in the open Court) (P.M.Saleem) Member (Technical) G.Y. 7