Custom, Excise & Service Tax Tribunal
Ms Krishna Tissue Pvt Ltd vs Kolkata-Port on 11 September, 2023
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
REGIONAL BENCH - COURT NO.2
Customs Miscellaneous Application No. 75095 of 2023
(Stay)
And
Customs Appeal No. 75224 of 2023
(Arising out of Order-in-Appeal No. KOL/CUS/PORT/KS/250/2023 dated 10.04.2023
passed by Commissioner of Customs (Appeals), Kolkata.)
M/s. Krishna Tissue Pvt. Ltd.
(BD-33, Sector-I,
Salt Lake City near Tank No.4, Kolkata-700064)
Appellant
VERSUS
Commr. of Customs (Port), Kolkata
(15/1, Strand Road, Kolkata-700001)
Respondent
APPEARANCE :
Mr. Sudhir Mehta, Advocate for the Appellant Mr. S. Debnath, Authorized Representative for the Respondent CORAM:
HON'BLE MR. P. K. CHOUDHARY, MEMBER (JUDICIAL) HON'BLE MR. RAJEEV TANDON, MEMBER (TECHNICAL) FINAL ORDER NO. MO/75589/2023 & FO/76724/2023 Date of Hearing : 11 September 2023 Date of Decision : 11 September 2023 PER BENCH The Appellant is concerned with the business of manufacturing of paper and paper board at its factory located at Burdwan. They imported 298 containers of waste paper comprising 7170.42 MT of paper waste in 36 consignments on actual user basis between January 2022 and 25th February 2022. This imported paper waste is used for making paper pulp which is further used for paper manufacturing. Waste paper is allowed to be imported by actual users under the Foreign Trade Policy.2
Customs Appeal No. 75224 of 2023
2. For facilitating import of such waste paper material, the Ministry of Environment and Forest, Government of India issued a revised Office Memorandum No. 13-1/2004 HSMD dated 11th May 2010. This OM was issued in supersession of the earlier OM of even number dated 10.02.2006 and prescribed revised guidelines and specifications for non-recyclable material contained in waste paper consignments. 2.1 For sake of ready reference and ease of comprehension the aforesaid OM is reproduced hereunder:-
OFFICE MEMORANDUM The Ministry has reviewed the prescribed limits for non-paper recyclable material in waste paper consignments being imported from other countries. In suppression of the O.M. of even number dated 10.02.2008, the revised guidelines and specifications for non-recyclable material in waste paper consignment are as follows:
i. Import and export of paper, paperboard and paper product wastes shall be regulated in accordance with the provisions laid down under the Hazardous Wastes (Management, Handing and Transboundary Movement) Rules, 2008 as amended.
ii. Import of paper wastes shall be only for recovery manufacture at the paper manufacturing unit (henceforth called as unit) and the imported material shall not be sold further.
iii. The importers would have to ensure that all recyclable materials are actually recycled by them. There should be no disposal of materials-other than by recycling. iv. The imported wastepaper consignment shall not contain any municipal solid waste or post consumer domestic waste or biomedical waste or any other type of contaminants. In case of any such contaminant being found, the consignment will have to be sent back to the 3 Customs Appeal No. 75224 of 2023 exporting country and the importer shall bear the cost thereof.
v. An inventory of imported material will be maintained by the unit including the name of company and industry from where imported.
vi. A record of waste material generated, while recycling the imported waste paper, along with the quantitiy and characteristics of the disposal of non-recyclable waste including toxic waste should be maintained by the unit. The non-recyclable waste may be disposed of as per the requirement of the State Pollution Control Board concerned to avoid any surface or ground water contamination. vii. The extent of recyclable material, which is otherwise on Open General License (OGL), shall not exceed the limits specified below. However, there shall be no putrefiable organic matter at all in the imported waste paper consignment.
SI No. Grade Limit (in per
cent)
1. Residential Mixed Paper 2
2. Soft Mixed Paper 1
3. Hard Mixed Paper 1
4. xx xx
5. xx xx
6. xx xx
7. xx xx
8. xx xx
9. xx xx
10. xx xx
11. xx xx
12. xx xx
4
Customs Appeal No. 75224 of 2023
13. xx xx
14. xx xx
15. xx xx
16. xx xx
17. xx xx
18. xx xx
19. xx xx
20. xx xx
21. xx xx
22. xx xx
23. xx xx
24. xx xx
25. xx xx
26. xx xx
27. xx xx
28. xx xx
29. xx xx
30. xx xx
31. xx xx
32. xx xx
33. xx xx
34. xx xx
35. xx xx
36. xx xx
37. xx xx
38. xx xx
39. xx xx
40. xx xx
41. xx xx
42. xx xx
43. xx xx
5
Customs Appeal No. 75224 of 2023
44. xx xx
45. xx xx
46. Unprinted Bleached Plate None permitted
Stock
47. Printed Bleached Plate Stock None permitted
Kinds
48. Specialty Grades (white waxed None permitted
cup cuttings, printed waxed
cup cuttings, Plastic coated
cups, polycoated bleached
kraft-unprinted, polycoated
bleached Kraft-printed,
polycoated milk carton stock,
polycoated diaper stock,
polycoated boxboard cuttings,
waxed boxboard cuttings,
printed and /or unprinted
bleached sulphate containing
foil, Waxed corrugated
cuttings, Wet strength
corrugated cuttings, Asphalt
laminated corrugated cuttings,
Beer carton scrap,
Contaminated bag scrap,
insoluble glued free sheet
paper and /or board white wet
strength scrap, Brown wet
strength scrap, Printed and /or
colored wet strength scrap,
File Stock, New Computer
printout, Ruled white, Fly leaf
shavings containing hot melt
6
Customs Appeal No. 75224 of 2023
glue, Carbon mix, Books with
covers, Unsorted tabulating
cards, colored tabulating
cards, Carbonless treated
ledger, Plastic windowed
envelops, Textile boxes,
Printed TMP, Unprinted TMP,
manila tabulating cards,
Sorted colored ledgers
2. The content of paper wastes must be verified by the Customs authorities in respect of each consignment imported into the country.
3. Adherence to stipulated conditions would be verified by the Customs Authorities, the State Pollution Control Board (SPCB) Pollution Control Committee (PCC) concerned and the Regional Offces of the Ministry of Environment and Forests.
This issues with the approval of the Competent Authority.
Sd/-
(Dr. manorajan Hota) Director
3. It is submitted by the Appellant that only in certain cases of import of a few bales of paper waste, plastic cups/cans/bottles were found which are not to be treated as contaminant but as non-paper items. The Department, however, seized the entire consignment arrived per vessel, even if a single bale was found to be having non paper recyclable material treating it as a contaminant. The Appellant filed an application for provisional release under Section 110A of the Customs Act, 1962 which was rejected by the adjudicating authority on 20-12- 2022, in view of the aforestated guidelines and a clarification received 7 Customs Appeal No. 75224 of 2023 from the HSM Division of the MOEF & ACC vide its OM dated 28.3.2022 issued under F. No. 23/53/2020HSM, as under:
" Point (iv) of the OM of 2010, under reference is an overriding prohibition and no amount of Municipal Waste, Post consumer domestic waste or Bio; medical waste or any other contaminants is allowed with the consignment of waste paper. In case such contaminants are found, then the consignment will have to be sent back to the exporting country. Such contaminats cannot be segregated and disposed of in India and the Customs authorities have to ensure compliance of the OM in Question."
4. The Appellant preferred an appeal before the Learned Commissioner (Appeals) which was heard on 01-02-2023. In the course of hearing, the appellant filed written submissions, wherein it brought to the notice of the Learned Commissioner ( Appeals) that in the midst of the proceedings, OM dated 11th May 2010 issued by MOEF has been superceded by OM dated 10th January 2023 while old OM is not saved by the new OM dated 01-02-2023. They submitted that OM dated 10th January 2023 was issued relaxing the conditions of import and the extent of non-paper items have been increased to 5% from 1% as contained in previous OM dated 11th May 2010 in respect of 49 specified grades of non paper materials, other than putrefiable organic matter and bio medical waste, municipal solid waste etc. not contained in the OM. The revised also provides for container wise examination of the goods and in case any contaminant is found in a container, that particular container is to be re-exported or suitably dealt with in terms of paragraph VII of OM dated 10-01-2023 and not the whole cargo . The OM dated 11th May 2010 did not provide for container wise examination. The OM dated 10th January 2023 is set out herein below:-
OFFICE MEMORANDUM 8 Customs Appeal No. 75224 of 2023 The Ministry has reviewed the prescribed limits for non-paper materials in waste paper consignments being imported from other countries. In superession of the OM issued vide No. 13-1/2004-HSM dated 11.05.2010, the revised guideline and specifications for non- paper materials in waste paper consignments are as follows;
i. Import and export of paper, paperboard and paper product wastes shall be regulated in accordance with the provisions laid down under the Hazardous and other Wastes (Management and transboundary Movement) Rules, 2016 as amended from time to time.
ii. Import of paper wastes shall be only for recovery/manufacture at the paper-manufacturing unit and the imported material shall not be sold further.
iii. The importers would have to ensure that all recyclable materials are actually recycled by them. Further, there should be no disposal of materials other than by recycling or co-processing in cement kilns or through waste to energy plants. iv. The extent of non-paper materials, which is otherwise on open General Licence (OGL), shall not exceed the limits specified below. However, there shall be no putrefiable organic matter at all in the imported waste paper consignment.
SI No. Grade Limit (in per
cent)
1. Residential Mixed Paper 5
2. Soft Mixed Paper
3. Hard Mixed Paper
4. xx xx
5. xx xx
6. xx xx
7. xx xx
8. xx xx
9. xx xx
9
Customs Appeal No. 75224 of 2023
10. xx xx
11. xx xx
12. xx xx
13. xx xx
14. xx xx
15. xx xx
16. xx xx
17. xx xx
18. xx xx
19. xx xx
20. xx xx
21. xx xx
22. xx xx
23. xx xx
24. xx xx
25. xx xx
26. xx xx
27. xx xx
28. xx xx
29. xx xx
30. xx xx
31. xx xx
32. xx xx
33. xx xx
34. xx xx
35. xx xx
36. xx xx
37. xx xx
38. xx xx
39. xx xx
40. xx xx
10
Customs Appeal No. 75224 of 2023
41. xx xx
42. xx xx
43. xx xx
44. xx xx
45. xx xx
46. xx xx
47. xx xx
48. Specialty Grades (white waxed None permitted
cup cuttings, printed waxed
cup cuttings, Plastic coated
cups, polycoated bleached
kraft-unprinted, polycoated
bleached Kraft-printed,
polycoated milk carton stock,
polycoated diaper stock,
polycoated boxboard cuttings,
waxed boxboard cuttings,
printed and /or unprinted
bleached sulphate containing
foil, Waxed corrugated
cuttings, Wet strength
corrugated cuttings, Asphalt
laminated corrugated cuttings,
Beer carton scrap,
Contaminated bag scrap,
insoluble glued free sheet
paper and /or board white wet
strength scrap, Brown wet
strength scrap, Printed and /or
colored wet strength scrap,
File Stock, New Computer
printout, Ruled white, Fly leaf
11
Customs Appeal No. 75224 of 2023
shavings containing hot melt
glue, Carbon mix, Books with
covers, Unsorted tabulating
cards, colored tabulating
cards, Carbonless treated
ledger, Plastic windowed
envelops, Textile boxes,
Printed TMP, Unprinted TMP,
manila tabulating cards,
Sorted colored ledgers
49. All kind of plastic, wood, Sand,
Metal Textile and Glass
50. Bio Medical Waste, Municipal Not permitted
Solid Waste, Post Consumer
domestic waste and any other
waste or contaminants not
enlisted in this OM.
v. The imports should be accompanied by a certificate of
origin naming the foreign facility from where the material originated, whether it is a result of single strea or dual stream waste collection, and a credible pre-shipment inspection report based on a bale-break report.
vi. The importer should obtain a quarterly certificate from the SPCB, that the non-paper waste included in the previous imports made in quarter preceding the immediately preceding quarter, has been scientifically disposed of an especially, the plastic has been sent to waste to energy plants or cement kilns. This certificate should be a mandatory document to be submitted to the customs authority at the time of clearance of the import consignment.12
Customs Appeal No. 75224 of 2023 vii. If any contaminants more than as specified above are found in any imported container, the same shall be sent back to the exporting country and the importer shall bear the cost thereof. However, the importer will have an option to pay penalty of 25% of the value of the container instead of re-exporting the material. The whole material of such container will be handed over to cement kilns for co-processing or in waste to energy plants for energy generation under the supervision of respective SPCB/PCCs. The importer shall either have own waste to energy plant or a standing arrangement with a waste to energy plant or a cement plant for this purpose.
2. The contents of paper wastes must be verified by the Customs authorities in respect of each consignment imported into the country.
3. Adherence to stipulated conditions would be verified by the Customs Authorities, the State Pollution Control Board (SPCB)/Pollution Control Committee (PCC) concerned and the regional offices of MoEFCC.
4. This issues with the approval of the Competent Authority.
Sd/-
(Ved Prakash Mishra) Director It is also to be taken note of the fact that the said revision in the guidelines have been necessitated by virtue of the Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008, being replaced by Hazardous and other Wastes (Management, Handling and Transboundary Movement) Rules, 2016.
5. We have heard the learned Advocate, Shri Sudhir Mehta for the Appellant and the learned Authorized Representative Shri. Faiz Ahmed for the Department and perused the appeal records.
13Customs Appeal No. 75224 of 2023
6. It is the submission of the Appellant that since the new OM has been issued in the midst of the proceedings, application for provisional release and adjudication of show cause notice need to be adjudicated under new OM dated 10-01-2023. They further contend that since the OM dated 11th May 2010 has lapsed and OM dated 10-01-2023 being a beneficiary OM, would need to be applied for the subject proceedings and adjudication of the show cause notice which has been issued on 21-09-2022. Under the revised OM, all containers need to be examined and in case of contaminant found in any container, that container alone would need to be re-exported and not the whole consignment.
7. The Appellant relied upon the judgment of the Constitution Bench of Hon'ble Supreme Court in the case of Kolhapur Cane Sugar Works Limited vs. Union of India reported in 2000 (119) ELT 257 SC for the proposition that Section 6 of General Clauses Act would not apply to a lapsed Rule deleted without a saving clause. and Section 159(A) of the Customs Act 1962 would also not apply as OM dated 11th May 2010 of MoEF was not issued under Customs Act 1962. They thus contend that the said pending proceedings would automatically lapse because of no saving Clause contained therein. The Appellant also cited the judgment of the constitution bench of Hon'ble Supreme Court in the case of Commissioner of Income Tax vs. Vatika Township Private Limited reported in 2015 (1) SCC to canvass the point that beneficial notification need to be given retrospective effect. The Appellant relied upon Para 30 and 31 of the judgment where in the court has held as under:
30. We would also like to point out, for the sake of completeness, that where a benefit is conferred by a legislation, the rule against a retrospective construction is different. If a legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally, and where to confer such benefit appears to have been the legislators' object, then the 14 Customs Appeal No. 75224 of 2023 presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. This exactly is the justification to treat procedural provisions as retrospective. In Govt. of India v. Indian Tobacco Assn. the doctrine of fairness was held to be relevant factor to construe a statute conferring a benefit, in the context of it to be given a retrospective operation. The same doctrine of fairness, to hold that a statute was retrospective in nature, was applied in Vijay v. State of Maharashtra. It was held that where a law is enacted for the benefit of community as a whole, even in the absence of a provision the statute may be held to be retrospective in nature. However, we are (Sic not) confronted with any such situation here.
31. In such cases, retrospectivity is attached to benefit the persons in contradistinction to the provision imposing some burden or liability where the presumption attaches towards prospectivity. In the instant case, the proviso added to Section 113 of the Act is not beneficial to the assesse. On the contrary, it is a provision which is onerous to the assesse. Therefore, in a case like this, we have to proceed with the normal rule of presumption against retrospective operation. Thus, the rule against retrospective operation is a fundamental rule of law that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act, or arises by necessary and distinct implication.
8. The Appellant further relied upon the judgment of Hon'ble Gujarat High Court in the case of Satguru Polyfab Pvt. Limited vs. Union of India reported in 2022 (380) ELT 55 GUJ where the court has held as under:-
"17.In view of the aforesaid amendment brought in the Rules, 2016 the SEZ units and EOU units notified by the Central Government are permitted to use the raw materials against Basal No. B3010 in Schedule VI in the Rules, 2016. Though the petitioners have imported the materials prohibited by the Rules, 2019 the same were not put to use by the petitioners pursuant to the directions issued by this Court. The petitioners therefore, may approach the respondent authorities with an application to permit the petitioners to use the raw materials lying in the custody of the petitioners in view of the Rules, 2021 vide notification dated 27-1-2021. On receipt of such application, the 15 Customs Appeal No. 75224 of 2023 respondent authorities are directed to permit the petitioners to use the raw materials which were imported by the petitioners and which were the subject matter of the petitions and such materials being kept separate unutilised by the petitioners as per the directions of this Court. The undertaking given by the petitioners before this Court is also discharged in view of the fact that now the petitioners can use such raw materials in SEZ units after the notification dated 27-1-2021."
9. The Appellant also relied upon the judgement of the Division Bench of Hon'ble Calcutta High Court in the case of PR. Commissioner of Central Excise vs. Himadri Speciality Chemical Ltd. reported in 2022 GSTL 264 Cal where the Court held:-
"11. As could be seen from the above clarification, the decision in Cadila Health Care was also taken note of by the department and the position stood clarified that sales promotion would include services by way of sale of goods on commission basis. As pointed out by the Hon'ble Supreme Court in Commissioner of Income Tax v. Vatika Township Private Limited [(2015) 1 SCC 1] that if a legislation confers the benefit on some persons but without inflicting the corresponding detriment on some other person or on the public generally, and where to confer such benefit appears to have been the object of the legislature, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. In Commissioner of Income Tax v. Archean Granite Private Limited [(2020) 117 taxmann.com 977 (Madras)] amendment made to Section 40(a)(ia) of the Finance Act, 2010 inserting proviso therein was held to be retrospective with effect from the assessment year 2005-06 and the Court followed the decision in the case of Commissioner of Income Tax v. Calcutta Export Company [(2018) 93 taxmann.com 51]. Therefore, we find that the approach to the issue in the manner done by the Learned Tribunal cannot be faulted."
10. The Appellant also relied upon the judgment rendered in the case of Dinesh Bhabootmal Salecha vs. Commissioner of Customs (Import), Mumbai reported in 2022 (381) ELT 762 wherein the Tribunal directed provisional release of the goods quoting judgment of the Hon'ble Delhi 16 Customs Appeal No. 75224 of 2023 High Court in the case of Spirotech Heat Exchangers Private Limited vs Union of India reported in 2016 (341) ELT 110 (Delhi) and summarized the proposition of law. The same is set out herein below:-
"20. Before doing so, it would be apposite for us to take note of the decision of the Tribunal in Pushpak Lakhani v. Commissioner of Customs (Preventive), New Delhi [Final Order No. 50001/2022 disposing of Appeal No. 50253 of 2021 against Order-in-Original No. VIII (CusPrev)/Adj/Commr/JWC/27/2013/9900, dated 11th September, 2020 of Principal Commissioner of Customs (Preventive), New Delhi] which has elaborately dealt with the legal provisions of seizure, confiscation, adjudication and redemption as well as the several judicial decisions that, put together, establish the framework within which adjudicating authorities may exercise discretion after seizure. All these aspects were summarized thus:
42. The following position emerges from the aforesaid decisions of Hon'ble Delhi High Court in Its My Name:
(i) The Tribunal is not required to adjudicate either finally or tentatively at the time of provisional release as to whether the alleged infractions committed or the consequent liability, if any, of the seized goods to confiscation under the Customs Act;
(ii) The order of provisional release is an interlocutory exercise and does not finally adjudicate on any liability;
(iii) The exercise of power under section 110A of the Customs Act to release imported goods on a provisional basis is essentially and fundamentally discretionary in nature;17
Customs Appeal No. 75224 of 2023
(iv) Section 110A of the Customs Act contemplates release of any goods. Thus, both prohibited goods and non-prohibited goods can be released;
(v) If the goods are not per se prohibited, question of going into prohibited goods as per Om Prakash Bhatia case does not arise at the stage of provisional release;
(vi) A Circular which absolutely proscribed provisional release of prohibited goods or where any provisions are contravened, is void;
(vii) The Tribunal is competent to order provisional release and fix terms and there is no need for remand;
(viii) While passing an order for provisional release, there is no adjudication of competing rights and liabilities;
(ix) High Courts would interfere with an order passed by the Tribunal for provisional release of the goods only on grounds of perversity;
(x) Allowing provisional release of the seized goods does not interfere with the adjudication of the show cause notice or with the jurisdiction of the adjudicating authority to hold that the goods were liable to confiscation and the mere fact that the goods may possibly be held liable to confiscation at a later stage cannot be a ground to refuse provisional release because in that case section 110A of the Customs Act would be rendered otiose;
(xi) The reliance on the allegations made in the show cause notice for denying provisional release is improper as in every case 18 Customs Appeal No. 75224 of 2023 there would be allegations of contravention and section 110A of the Customs Act would be rendered otiose; and
(xii) Statements, before being admitted by following procedure under section 138B of the Customs Act, cannot be used straightaway.'"
11. The appellant also cited judgment of Hon'ble Bombay High Court in the case of Sidharth Vijay Shah vs. Union of India reported in 2021 (375) ELT 53 Bom in support of the virtues and scope of Sec. 110A of the Customs Act.
12. The Learned Commissioner (Appeals) dismissed the appeal without dealing with the contentions raised by the Appellant. The judgement of Hon'ble Gujarat High court in the case of Satguru Polyfab Pvt. Limited vs. Union of India reported in 2022 (380) ELT 55 GUJ covers the field and in view of the proposition of law set out in the two constitution bench judgments discussed in prepares viz., Commissioner of Income Tax vs. Vatika Township Private Limited (supra) and Kolhapur Cane Sugar Works Limited vs. Union of India (supra), the issue is no longer res integra that new OM would be applicable for adjudicating the imported goods which provides for examination and release of the goods containerwise, within the overall limits, specified in the said OM in percentage terms, of non paper materials/contaminants and other conditions set out in the said OM dated 10.01.2023.
13. In view of our discussions above, the Department is directed to examine the goods as per terms of the revised OM (F. No. 23/107/2022HSMD dated 10.01.2023) containerwise and to be so done in presence of the importer. The containers of paper waste where the goods are found in conformity with OM dated 10-01-2023, may be 19 Customs Appeal No. 75224 of 2023 provisionally released on Bond/Undertaking. Where paper waste is found to be contaminated in a container, it would be dealt with under the new OM dated 10-01-2023 and such goods would be either re- exported or allowed to be disposed of in terms of the said OM dated 10- 01-2023. The adjudicating authority shall adjudicate the show cause notice after the exercise of provisional release is undertaken, which would be subject to final adjudication.
14. Since new OM would be the governing law which provides for re- export and quantified penalty for local disposal, the Department shall be free to take legal undertaking from the importer to comply with conditions of disposal of the goods under new OM. Needless to mention the Department would be at liberty to supervise such disposal of the goods locally/re export of contaminated container if so found.
15. In view of the above discussions, the appeal filed by the Appellant is allowed with consequential relief as per law.
16. Stay Petition also gets disposed off.
(Operative part of the Order was pronounced in the open court.) Sd/-
(P. K. Choudhary) Member (Judicial) Sd/-
(Rajeev Tandon) Member (Technical) Pooja