Custom, Excise & Service Tax Tribunal
Shri Ajit Jain vs Ahmedabad on 8 October, 2018
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In The Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench At Ahmedabad
Appeal No. C/10088,10344,10345/2018-DB
[Arising out of OIA-AHD-CUSTM-000-APP-138-141-17-18 dated 02/11/2017 passed by the
Commissioner( Appeals ) Commissioner of Central Excise, Customs and Service Tax-AHMEDABAD]
M/s. R.M.Dhariwal (huf) Appellant
Shri. Ajit Jain,
Shri. Hasit L. Patel
Vs
C.C.-Ahmedabad Respondent
Represented by:
For Appellant: Shri. Saurabh Dixit (Advocate)
For Respondent: Shri. L.Parta (A.R.)
CORAM:
HON'BLE MR. RAMESH NAIR, MEMBER (JUDICIAL)
HON'BLE MR. RAJU, MEMBER (TECHNICAL)
Date of Hearing: 03.08.2018
Date of Decision:08.10.2018
Final Order No. A / 12101-12103 /2018
Per: Ramesh Nair
These appeals are directed against order in appeal dated 02.11.2017. The
short issue involved in the present appeal is, whether the appellant manufacturer
(100% EOU) has violated Rule 5(d) and 5(g) of the Plastic Waste (Management and
Handling) Rules, 2011, in the course of exporting the goods namely RMD Gutkha (4
gms) vide following shipping bills:-
Chart reproduced below:
SB No. and Nature of Quantity Value Remark
Date goods
6478523 RMD Gutkha 10000 kgs Rs.2,29,64,063/- Sample drawn
Dt. 1.12.2011 but goods
exported
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7419312 RMD Gutkha 10000 kgs Rs.2,19,21,250/- Seized and
Dt.3.2.2012 not allowed to
be exported
The customs authority, in respect of goods namely R.M.D Gutkha presented
for export, under belief that the packing material used is in the prohibited category
prescribed under Rule 5(d) and 5(g) of the Plastic Waste (Management And
Handing) Rules, 2011, seized goods. The sample was drawn which was sent for
testing to the Customs Chemicals Laboratory at Vadodara. As per test report dated
25.01.2012 and 02.04.2012, it was reported that the packing material is composed
of Plastic, Paper and Aluminium. As against this, the supplier of packing material
M/s Dhariwal packaging has also obtained test report dated 25.08.2011 from
CIPET, a laboratory working under the Ministry of Chemical & Fertiliser which
clearly suggested that the packing material was made of non-Polluting Polymers.
The Revenue authorities also sought a report from CIPET, Chennai, wherein,
identical view was expressed as to the nature of packing material used by the
appellant. Further, the Revenue authorities had sought clarification from the Central
pollution Control Board, wherein it was also clarified vide communication dated
27.04.2012 that the packaging material used by the appellant does not violated
Rule 5(d) and 5(g) of the Plastic Waste (Management And Handing) Rules, 2011.
Thereafter, the Show Cause Notice dated 31.07.2012 involving the period
December, 2011 and February, 2012 was issued proposing confiscation of goods
covered under shipping bill No. 6478523 dated 01.12.2011 and 7419312 dated
03.02.2012. It was also proposed to be imposed penalty upon the appellant
manufacturer as well as other individuals. The adjudicating authority confirmed the
charges proposed in the Show Cause Notice whereby the goods covered under both
shipping goods was held as liable for confiscation in case of the live consignment
covered by shipping bill No. 7419312 dated 03.02.2012 and redemption fine of Rs.
55 Lakh in view of confiscation was imposed. As regard the goods already exported
vide shipping bill No. 6478523 dated 01.12.2011 a redemption fine of Rs. 57 Lakh
was imposed, a penalty of Rs. 50 Lakh was imposed upon M/s. R.M.Dhariwal under
Section 114, a penalty of Rs. 50 Lakh upon Shri Rasiklal Dhariwal Karta of M/s.
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R.M. Dhariwal was imposed under Section 114, a penalty of Rs. 25 Lacs each was
imposed upon Shri Hasit L. Patel, Factory Manager and Shri Aji Jain Authorised
Signatory of M/s. R.M.Dhariwal. Being aggrieved by the said order in original dated
17.01.2013 appellant filed appeal before the Commissioner (Appeals) who
remanded the matter vide order in appeal No. 304 to 307/2013/Cus/Commr(A)/Ahd
dated 16.07.2013 to the adjudicating authority for de-novo decision following the
directions given in the said order. The adjudicating authority in the denovo
adjudication maintained the same order, as the confirmation made in the earlier
order was reiterated except not imposing the redemption fine in respect of the
goods already exported under shipping bill No. 6478523 dated 01.12.2011. Being
aggrieved by the said order in original the appellants filed appeals before the
Commissioner (Appeals) who, upheld the order in original vide the impugned order
dated 02.11.2017., therefore, the present appeals.
2. Shri. Saurabh Dixit, Ld. Counsel appearing on behalf of the appellant submits
that it has been established on the basis of report from CIPET and further
clarification obtain by the department from CIPET, Chennai, and also on the basis of
report from Customs Laboratory, Kandla that the packaging material consist of bio-
Degradable material of Poly Lactic Acid/ Co-Polymer of Lactic Acid, therefore, the
appellant have not violated Rule, 5(d) and 5(g) of the Plastic Waste(Management
And Handling) Rules, 2011. He also submits that the Commissioner (Appeals) in the
first round of appeal before him remanded the matter to the adjudicating authority
with a direction for re-testing of the goods by appropriate laboratory and if the
presence of plastic is proven to be nothing but bio-degradable/ plastic and material
goods in question shall not be covered by Rules, 5(d) and 5(g) of the Plastic Waste
(Management And Handling) Rules, 2011 and export shall be permissible. He
submits that the adjudicating authority in denovo adjudication passed the order in
defiance of the above direction given by the Commissioner. He further submits that
the appellant also approached the Hon'ble Supreme Court by way of writ petition
wherein, the Hon'ble Supreme Court allowed the petition on submission of affidavit
whereby the appellant was permitted the export goods even though the packaging
material contains the plastic, the adjudicating authority has misinterpreted the
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order of the Supreme Court and said that the same is having prospective effect and
not the retrospective. As regard, appeal of Shri R.M. Dhariwal, he submits that the
appellant expired on 24.10.2017 and death certificate issued by Pune Municipal
Corporation is placed in the file. In support of his submission, he placed reliance of
the following judgments:
Kalyani Sharp India Ltd Vs. CCE, Pune-lll 2008 (226) ELT 197 (Tri.
Mum)
Hyderabad Industries Ltd Vs. Collector of Customs 1992 (62) ELT 751
(Tribunal)
M/s Blue Star Ltd. Vs. CCE, Mumbai-lll 2018 (6) TMI 920 - CESTAT
Mumbai
R.M. Dhariwal 100% EOU Vs. Union of India 2016 (338) ELT 332 (SC)
Paramount Exports Vs. CC. (Export), Nhava Sheva 2015 (323) ELT
409 (Tri. Mumbai)
3. On the other hand, Shri Amit Kumar Mishra, Ld. Deputy Commissioner (AR)
appearing on behalf of the Revenue reiterates the findings of the impugned order.
4. We have carefully considered the submissions made by both the sides and
perused the records, we find that the limited issue involved in the present case is
that whether the export of goods namely, R.M.D. Guthka is in violation of Rule,
5(d) and 5(g) plastic waste (management and handling) Rules, 2011. the Customs
authorities drawn a sample sent for test to Customs laboratory, Vadodara, wherein,
the report reveals that the packaging material is composed of paper, Aluminium
and Plastic, however, the said report does not clarify whether the nature of plastic
is bio-degradable and non Poly Lactic Acid and otherwise. Therefore, the said
report was not clear. At the same time the appellant through there supplier M/s.
Dhariwal packaging obtained the test report from CIPET, Chennai, Which is also a
Government Institution, same is scanned below:-
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From the above test certificates it is clear that the plastic is based on starch
based Polyester Film (other than P.E.T) and it also does not contains a Vinyl
Chloride based Co-Polymer. The Revenue also obtains a test report from CIPET,
Chennai, wherein, the report dated 24.04.2004 was issued. Which is scanned
below:-
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From the above report also it is clear that the material used is Poly Lactic
Acid. In the subsequent report of Customs laboratory, Vadodara, the report given
as under:-
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From the above report also it was clarified that the packaging material is
made of plastic which is of Poly Lactic Acid. Despite of the above report, which
shows that the plastic used in packaging material is bio-degradable, the
adjudicating authority held that the appellant have violated the Rule 5(D) And 5(G)
Plastic Waste (Management And Handing) Rules, 2011. In the appeal preferred by
the appellant the Commissioner (Appeals) remanded the matter with a specific
direction which is reproduced below:-
"In my view, the adjudicating authority failed to appreciate the essence of
these provision and letter of the Board, which is aimed at preventing used of
hazardous material (non- biodegradable plastic in this case) and not the
chemically proven biodegradable materials. The expression plastic can also cover
the ploy lactic acid (polymer) as also become evident from the report of the
chemical examiner, Vadodara. However, they become evident from the report of
the chemical examiner, Vadodara. However, the reference to percentage of plastic
gives an alternate impression that the sample may comprise of non-bio
degradable plastic as well. In the circumstances, I can only hold that the test
report is confusing and there is a need for proper re-testing, by appropriate
laboratory, equipped to test such goods,, which request was not considered by the
respondent department earlier. It is necessary to ascertain if the impugned goods
contained only bio-degradable plastic/material, besides other materials like paper,
aluminium etc. If the presence of plastic is proven to be nothing but bio-
degradable plastic/materials, it shall be held that the goods in question shall not
be covered by Rule 5(d) & 5(g) of the plastic waste (Management & Handling )
(amendment ) Rules, 20011 & thus export shall be permissible."
In view of the above directions of the Commissioner (Appeals), there was
limited scope for the adjudicating authority only to ascertain by getting the product
re-tested that whether the plastic used is of bio-degradable nature and if it is
found so then there is no violation of plastic waste (management and handing)
Rule,2011. Subsequent, to remand the adjudicating authority got the sample tested
from Customs laboratory, Kandla, wherein the following test was given:-
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From the above final report it is seen that the plastic layer in the packaging
material is made of Poly Lactic Acid / Co-polymer Lactic Acid. From all the above
report of the Chemical Examiner it is clear that the plastic based on Ploy Lactic Acid
is made of starch which is clearly bio-degradable. Therefore, as per the direction of
the Commissioner (Appeals) in the first appellate order the adjudicating authority
had no option except to allow the appeal, however, he in complete defiance of the
Commissioner Appeal's direction, once again visited on the original issue and given
the finding that irrespective of any nature of plastic there is a violation of Rules,
5(d) and 5(g) of Plastic Waste (Management And Handing) Rules, 2011, which is
absolutely incorrect and illegal.
As regard the issue related to the order of the Hon'ble Supreme Court, the
Apex Court allowed export in the same package. The said order in the appellant's
case is reproduced below:-
R.M.DHARIWAL 100% EOU VS. UNION OF INDIA-2016 E.L.T 332 (S.C)
"1. This writ petition is filed with the following prayers:
(i) Issue writ of mandamus that the exemption contained under Rule-2 of Plastic
Wastes (Management & Handling) Rules, 2011 must be available to the Petitioner to
export its Pan Masala, Gutkha and tobacco in multilayered plastic sachet and also in
other packages containing plastic.
(ii) Issue writ of Certiorari or any order, writ or direction in the nature of Certiorari
quashing the impugned Rules 5(d) and 5(g) contained in Plastic Waste (Management &
Handling) Rules, 2011 as amended vide notification dated 02.07.2011; and/or
(iii) Issue a writ of Mandamus or any other appropriate writ, order or direction
declaring Rules 5(d) and 5(g) of the Plastic Wastes (Management & Handling) Rules,
2011 as being violative of Articles 14, 19(1)(g) of the Constitution and also ultra vires
the provisions of the Environment (Protection) Act, 1986; and
(iv) Grant such and further orders as may be deemed just and necessary in the facts
and circumstance of the present case and in the interest of justice.
2. When the matter was listed before this Court on 13.10.2015, the following order was
passed : " Learned Senior Counsel appearing for the Petitioner states that the facts that
obtain in the present Petition are in pari material with and materially identical to those
which existed in the Writ Petition No. 466 of 2011 titled "Baba Global Ltd. vs. Union of
India"•. The Petitioner before us is also a 100% export oriented unit exporting Pan
Masala, Gutkha and Tobacco across the globe. In Baba Global Ltd. by Order dated
03.09.2013 this Court had taken note of sundry undertakings given by the Petitioner
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therein, the principal one of which was that no part of the production would be sold or
released in the local market in India. The Petitioner before us has filed a similar
Undertaking and has assured the Court that it will abide by all the terms of the
Undertaking. Baba Global Ltd. was finally disposed of by Order dated 03.09.2013 inter
alia by noting the statement of the learned Additional Solicitor General that Baba
Global Ltd. would be exempted from operation of the Plastic Wastes (Management and
Handling) Rules 2011 (in short 'the 2011 Rules'). The learned Senior Counsel for the
Petitioner rests his case on that Order seeking parity of treatment between both the
sets of Writ Petitioners.
Learned Senior Counsel appearing for the Respondents submits that learned
Additional solicitor General was not authorized to make the 'Exemption Statement'
recorded in the Order dated 03.09.2013 since the stand is that the Ministry itself is not
competent or empowered to grant any exemption. It is further submitted that for
these reasons that a Review has been filed.
In the course of hearing yesterday as well as today it has been vehemently
contended by the learned Senior Counsel for the Petitioner that the existence of the
Review is not reflected on the record. This contention seems to be vindicated by the
fact that even in the affidavit filed on behalf of the Union of India particulars of the
Review have been withheld.
-
Our attention has also been drawn to the Orders passed in the Writ Petition No. 856 of 2013 entitled M/s. Harsh International vs. Union of India on 06.12.2013 which reads as follows:
"Shri Radhakrishnan, learned senior counsel appearing for the respondents again requests for an adjournment to enable his clients to file reply affidavit.
The time prayed for is granted.
List the case on 20.01.2014.
In the meanwhile, Petitioner No. 1 shall be exempted from the operation of the Plastic Wastes (Management and Handling) Rules,2011″• It is evident therefore that a Writ Petition under Article 32 of the Constitution filed by Baba Global Ltd. has been finally disposed of by permitting the 100% export of Pan Masala, Gutkha and Tobacco in multilayered plastic sachet; and in Harsh International interim orders have been passed exempting the Writ Petitioner from the operation of the said 2011 Rules.
We think it is imperative to impart parity to all the Writ Petitioners before us. In these circumstances, we pass orders similar to those passed in Harsh International namely that during the pendency of the present proceedings, the Petitioner shall stand exempted from the operation of the 2011 Rules on the understanding that it shall strictly abide by all the terms contained in the Undertaking furnished by it in terms of its Affidavit dated 28th July, 2015.
As prayed for, Counter Affidavit be filed within six weeks from today. Rejoinder within four weeks' hence.
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List thereafter."
•
3. The parties have completed their pleadings.
4. The learned senior counsel appearing for the Union of India (Ministry of Environment & Forest)submits that the undertaking would not be sufficient to meet the requirements under law. However, it is pointed out that on this ground though a review was filed, it was dismissed on 14.01.2016.
5. In that view of the matter, we confirm the order dated 13.10.2015 and allow the writ petition in terms of the order in Baba Global Ltd."
Since the above judgement in the appellants case is based on judgements in the case of Baba Global Limited (Supra) the judgement in Baba Global is also reproduced below:-
In this petition filed under Articles 32 of the Constitution, the petitioners have made the following substantive prayers:
i. Issue writ of declaration that the exemption contained under rule 2 of plastic wastes (Managements & Handling) Rules, 2011 must be available to the petitioner to export its Pan masala, Gutkha and tobacco in multilayered plastic sachet and also in other packages containing plastic.
ii. Issue writ of certiorari or any other, writ of direction in the nature of certiorari quashing the impugned Rules 5(d) and 5(g) contained in plastic Wastes (Managements & handling) Rules, 2011 as amended vide notification dated 07.07.2011 produced at (Annexure P* and P10;
iii. Issue a writ of declaration or any other appropriate writ, order of direction declaring Rule 5(d) and (g) of the plastic Wastes (Management & Handling) Rules, 2011 as being violative of Articles 14, 19 (1) (g) of the Constitution and also ultra vires the provisions of the Environment Protection Act, 1986."
During the pendency of the writ petition, Affidavits dated 7.8.2013 and 30.08.2013 have been filed on behalf of the petitioners.
In paragraphs 2 to 7 of affidavit dated 30.08.2013, the deponent Shri Ravinder Kumar has made the following statements:
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DB "2. I say that the petitioner company is a 100% Export Oriented Unit established in SEZ Area. The petitioner company is not in the business of selling Pan Masala, Gutkha and tobacco products manufactured in its Unit in the domestic area.
3. I say that in case of exemption from plastic waste (Management & Handling) Rules, 2011 (as amended) (hereinafter referred to as the Plastic Rules) being granted for the export of pan Masala, Gutkha and tobacco products in Plastic packaging, the petitioner company undertakes not to sell Pan Masala, Gutkha and tobacco products in plastic packaging inside India in violation of the Plastic Rules.
4. I say that the petitioner company shall not establish its unit outside the SEZ/EPZ for manufacture of pan Masala, Gutkha or any other tobacco product in plastic packages for domestic sale.
5. I say that in case of grant of exemption from the plastic Rules to the petitioner company for export of Pan Masala, Gutkha and tobacco product in plastic packaging against an order of export, the said exemption shall not apply to the waste and rejects.
6. I say that the company shall not bring back the exported Pan Masala, Gutkha and tobacco products in plastic packaging to India for distribution or sale.
7. I undertake to comply with all the conditions mentioned hereinabove."
Shri P.P. Malhotra, Learned Additional Solicitor General, on instructions, made a statement that in view of the undertaking given by the petitiners' representative, its unit will be exempted from the operation of the Plastic Wastes (Management and Handling) Rules, 2011.
In view of the above, the writ petition is disposed of as in fructuous.
From the above judgments it is observed that the Ho'ble Supreme Court has taken up clear view that if the goods are manufactured in 100% EOU and the said goods is exported and not cleared in the domestic market, the operation of Plastic Waste (Management and Handing) Rules, 2011 is exempted. The Hon'ble Supreme Court in this judgment laid down a principle that in case of export of goods the Plastic Waste (Management and Handing) Rules, 2011, is not applicable. Therefore, 15 | P a g e C/10088,10344,10345/2018- DB as per the judgments of Supreme Court even if the packaging material contains non Bio-degradable plastic but the goods is exported, the Plastic Waste (Management and Handing) Rules, 2011 shall not apply. We are of the view that as per the facts of the present case as discussed above and as per the Hon'ble Supreme Court judgments cited herein above, there is no case of violation of Plastic Waste (Management and Handling) Rules, 2011 against the appellant. As per our above discussions, we are of the considered view that the export goods of the appellant are not liable for confiscation. Accordingly, the impugned order is set aside. The appeals are allowed.
(Pronounced in the open court on 08.10.2018)
(Raju) (Ramesh Nair)
Member (Technical) Member (Judicial)
Prachi