Custom, Excise & Service Tax Tribunal
M/S. Shivam International vs Commissioner Of Customs, Chennai on 3 June, 2011
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
C/S/88/2011 & C/EH/167/2011 and C/107/2011
C/S/95 - 97/2011 & C/EH/184 - 186/2011 and C/121 - 123/2011
(Arising out of Order-in-Appeal Nos. C/78, 79, 80 & 81/2011 dated 10.2.2011 passed by the Commissioner of Customs (Appeals), Chennai)
M/s. Shivam International
M/s. Sidhivinayak Corporation
M/s. Mahaveer Enterprises
M/s. JM International Appellants
Vs.
Commissioner of Customs, Chennai Respondent
Appearance Shri N. Viswanathan, Advocate for the Appellants Shri A.B. Niranjan Babu, SDR for the Respondent CORAM Honble Dr. Chittaranjan Satapathy, Technical Member Date of Hearing: 03.06.2011 Date of Decision: 03.06.2011 Stay Order Nos. ______________ Misc. Order Nos. ______________ Final Order Nos. _______________ Appeal No. C/107/2011 was listed today with a note from the Registry that three other appeals arising from the same impugned Order-in-Appeal have been listed on 17.6.2011. The learned Advocate appearing for the appellants in respect of C/107/2011 states that he is representing the appellants in all the four appeals and further states that early hearing applications have been filed in all the four cases. As only a very few cases were on board today morning and no cases for the afternoon, with the consent of both sides, the Registry was directed to list all the four cases for hearing together today itself in the afternoon.
2. Accordingly, all the four stay petitions, all the four miscellaneous applications for early hearing and all the four appeals listed in the supplementary list are taken up for hearing in the afternoon.
3. The learned Advocate for the appellants states that the appellants had paid 10% of the penalties imposed by the original authority before the appeals were heard by the lower appellate authority and the said amounts are still with the Department. The lower appellate authority has reduced the penalties by 50% and as such, the amounts predeposited with the Department towards penalties amount to 20% of the penalty in each case. The learned Advocate also states that the goods are still lying with the Department as only option for redemption for export on payment of redemption fine was allowed which has not yet been exercised by the appellants. Considering the fact that the goods are lying in the customs control and 20% of the penalties determined by the lower appellate authority have been paid by the appellants, the requirement of predeposit of the balance amounts of penalties in respect of all the four cases are waived.
4. All the four applications for early hearing are allowed considering the submission made by the learned Advocate that the impugned goods are lying in the customs control (nearly one year) and also considering the fact that time is available today itself to hear all the appeals.
5. Heard both sides in respect of the appeals. The learned SDR supports the impugned order for the reasons elaborately stated in the same. The appellants have imported the impugned consignments of used computer system with monitors and some laptops valued at Rs.8,81,260/-, Rs.19,51,537/-, Rs.5,72,014/- and Rs.8,38,180/- respectively in respect of the four appeals listed above. The impugned goods have been confiscated on the ground that these are hazardous waste and hence their import is prohibited. Confiscation has also been ordered on the ground of mis-declaration holding that the impugned goods have been declared as computer system whereas they are e-waste. The original authority has allowed appellants to redeem the impugned confiscated goods on payment of redemption fines determined as Rs.50,000/-, Rs.1,10,000/-, Rs.33,000/- and Rs.48,000/- respectively. Penalties have also been imposed on the four appellants and as stated earlier, the same have been reduced to 50% by the lower appellate authority. The original authority has annexed photographs to his order showing some computers stuffed in containers in a half-hazard manner without packing. However, it has been clarified during the course of hearing that these photographs do not relate to the impugned consignments. On the other hand, it has been recorded in the Orders-in-Original that the appellants have imported the impugned goods which have been shrink packed and loaded in containers.
6. The entire case of the Department is based on the report of a Chartered Engineer who was called in to examine the consignments by the DRI officials. It is a fact that the Chartered Engineer concerned is not one of the notified authorities under the Environment (Protection) Act, 1986 or under the Rules made thereunder or under the Circulars issued in the context of the same. It is also a fact that no report has been obtained by the customs authorities in regard to the consignments either from the State Pollution Control Board or from any Central Govt. agency or a competent laboratory or testing agency. The Chartered Engineers report has been summarized in the Orders-in-Original. For example, in respect of Appeal No. C/107/2011, the original authority has summarized the report as follows:-
The Chartered Engineer furnished a detailed inspection report dated 14.6.2010 wherein it was concluded that based on the random inspection, the consignment consists about 85% reusable directly for short while and the rest 15% non-functional; that to bring the reusable items for long time use by way of refurbishing them on par with ETN (equivalent to-new) and make the non-functional items for reuse, will result in heavy amount of e-waste generation and that to handle the e-waste, purpose-built recycling plant under controlled condition and dumping area with facility of hazard toxic waste treatment and disposal are essential needs to prevent risk to human health and environment.
7. From the above, it is clear that according to the Chartered Engineer, 85% of the computers imported are directly usable and only 15% of the same are non-functional going by the random sample examination undertaken by him (it is not in dispute that he did not examine all the packages). He has also opined that if the reusable computers have to be refurbished and if the non-functional computers have to be made re-usable it will result in heavy amount of e-waste generation. As such, the report only expresses an apprehension if the imported goods are taken for refurbishing. The present importers are traders and they, according to the learned Advocate are not going to do any refurbishing, but simply sell the imported goods for which there is a market available. He states that poor people cannot afford new brands of computers and they make do with cheaper and obsolete computers imported from abroad and sold in the domestic market at a cheaper price. Such used computers are also used in computer training centres.
8. Apart from the fact that the Chartered Engineer is not competent to certify what is or is not hazardous waste, he has not even so certified the consignments to be hazardous waste. Hazardous waste is a term defined under the Rules made under the Environment (Protection) Act, 1986 but the term e-waste is not so defined. According to the learned Advocate, a draft notification has since been circulated to bring into the ambit of hazardous waste what is proposed to be covered under the term e-waste. But admittedly, the draft E-waste (Management and Handling) Rules, 2010 notified on 14.5.2010 inviting objections and suggestions had no legal force at the time of import. According to the learned Advocate, these Rules after finalization will come into force sometime in 2012.
9. Only what can be categorized as hazardous waste and so certified by a competent authority is required to be dealt in terms of the Environment (Protection) Act, 1986 read with the Rules made thereunder and import of such hazardous waste is required to be prevented. The authorities below have laboured hard to use the Chartered Engineers certificate and the apprehension expressed thereunder to treat the consignments as hazardous waste under the relevant Rules but such an exercise done by them cannot be approved as no competent authority has examined and held the consignment to be falling in the category of hazardous waste.
10. The impugned computer systems imported are lying in the customs area for nearly a year and has not caused any hazard or danger to anyone so far. The same also cannot be considered as waste electrical and electronic assembly etc. described in Basel B1110 category under Part B of Schedule III to the Hazardous Waste (Management, Handling and Transfer Movement) Rules, 2008 as in the form imported, the impugned goods are only used computer systems. Further, it is nobodys case that these goods imported from Australia, US and Korea are being sent to India deliberately for dumping the same as hazardous waste when the appellant-importers have paid nearly Rs. 41 lakhs through banking channels for the same and they are also prepared to pay the applicable duty and other charges as leviable. The payments made through banking channels have not been called into question nor the DRI investigation shows any intention on the part of the exporters or importers in this case to transfer hazardous waste for the purpose of disposal in a third world country. More likely, the appellants being traders have imported the used computer systems for the purpose of trading at a profit since these were available at cheaper rates abroad having become obsolete there but still have use in a developing country market. The learned Advocate also brought on record details of similar imports earlier made by the appellants as well as others and such imports have been regularly allowed without treating such used computer systems as hazardous waste.
11. The learned Advocate fairly concedes that secondhand personal computers / laptops cannot be freely imported under para 2.17 of the Foreign Trade Policy and hence the appellants are willing to pay reasonable amounts of fine and penalty for such imports as has been done in the past.
12. In view of the foregoing, I am of the view that the impugned goods cannot be considered as hazardous waste. Accordingly, the impugned orders are set aside and all the four appeals are remanded to the original authority for the limited purpose of re-adjudicating the cases for violation of para 2.17 of the Foreign Trade Policy and for allowing clearance on payment of applicable duty and reasonable amounts of fine and penalty to be determined by him.
13. All the four appeals are allowed in the above terms.
(Dictated and pronounced in open court) (Dr. Chittaranjan Satapathy) Technical Member Rex ??
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