Commissioner Of Customs, Jaipur-I vs Industries Limited

[Arising out of Order-in-Appeal No. 01(VC)Cus/JPR-I/2014 passed by Shri Vinay Chhabra, Commissioner Central Excise (Appeals) Jaipur-I]

1. Whether Press Reporter may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy of the order?

4. Whether order is to be circulated to the Department Authorities?

Commissioner of Customs, Jaipur-I Appellant

Vs.

Shri Krishna Paper Mills &

Industries Limited Respondent

Appearance: Sh. M.S. Negi, CDR for the appellant

Sh. A.K. Sharma, Sr. Vice-President for the respondent.

Coram: Honble Sh. Rakesh Kumar

Per: Rakesh Kumar

Final Order No. 50430/2015

The facts leading to filing of this appeal by Revenue, in brief, as under:

1.1 The respondents are manufacture of paper including craft paper by recycling waste paper and for this purpose, they import waste paper subject to actual user condition at a concessional rate under notification no. 21/2002CUS dated 1/3/2002. Serial No. 152 of notification no. 21/2002 CUS prescribes concessional rate of duty for the goods heading 4707 (waste paper) for use in the manufacture of paper/paper board or newsprint. The appellant during July, 2011 imported eight consignments declared to be containing waste paper-used kraft paper and filed eight bills of entry for their clearance. The total ClF value declared for these eight consignments of paper waste was Rs. 52,47,174/- and the total quantity imported was 272.793 MTs. The goods had been imported at ICD Concor, Kanakpura-Jaipur where the bills of entry had been filed. The goods were examined by the officers of the Customs along with the officers of ICD Concor-Jaipur. According to the department, the goods in the said containers were found in the form of rolls of kraft papers of different size 4 to 5 feet in width and while 15 to 25 per cent paper was in waste form, the remaining appeared to be fresh and serviceable kraft paper.

The department was of the view that the quantity of paper which was fresh karft paper, would not be eligible for exemption under notification no. 21/2002-CUS. The department also drew samples from the imported consignments and got the same tested through CPPRI-Saharanpur and the report of CPPRI-Saharanpur indicated that the paper imported cannot said to be waste kraft paper. The department was accordingly of the view that the imported paper, which is in good condition, is not only ineligible for duty exemption under notification no.21/2002-CUS, but its declared transaction value is also on lower side. The matter was adjudicated by the Additional Commissioner vide Order-in-Original dated 31/1/2014 by which the Additional Commissioner while accepting the declared transaction value held that the goods are not eligible for duty exemption under notification no. 21/2002 CUS and on this basis, he confirmed duty demand of Rs. 9,23,079/- under section 28 of the Customs act, 1962 along with interest on it under section 28AB. Besides this, he also ordered confiscation of 230.98 MTs of serviceable kraft papers valued at Rs. 44,42,078/- under section 111 (m) of Customs Act, 1962 with option to be redeemed on redemption fine of Rs. 10,00,000/-.

Besides this, he also ordered confiscation of the waste kraft paper weighing 41.809 MTs, of waste paper under section 119 of the Customs Act, 1962 with option to be redeemed on redemption fine of Rs. 1,00,000/- as the same was held to have been used for concealing the goods kraft paper which was alleged to have been imported in the guise of waste paper. He also imposed penalty of Rs. 9,23,079/- on the appellant. The appellant filed an appeal to the Commissioner (appeals) against this order of the Additional Commissioner. Commissioner (appeals) vide Order-in-Appeal dated 27/2/2013 set aside the Additional Commissioners order and allowed the appeal. Against this order of the Commissioner (appeals), this appeal has been filed by the Revenue.

2. Heard both sides.

3. Sh. M.S. Negi, ld. DR assaulted the impugned order by reiterating the ground of appeal in the Revenues appeal and pleaded that the goods imported by the respondent consist of rolls of kraft paper; that while the goods were declared in the bills of entry as waste paper/used kraft or waste paper/used brown kraft, on examination, only 41.8096 MTs of the paper was found to be waste paper and the remaining quantity of 230.983 MTs was found to be fresh/serviceable paper; that the samples of the paper which appeared to be fresh kraft paper were drawn and were tested by CPPRI-Saharnpur whose report indicated that tensile strength and bursting strength of the sample paper was comparable with these parameters of prime quality kraft paper; that the kraft paper, in question, can be used for various purposes including making grocery bags, wrapping paper, bituminized paper, etc.,; that the same cannot be called waste or scrap of paper and paper board; that the Commissioner (appeals) has erred in holding that the paper, in question, is waste and scrap of paper, that just because, the Adjudicating Authority has accepted the declared value of the consignment, the goods cannot be treated as waste paper, as this fact has to be ascertained on basis of the actual condition of the goods, that just because the pre-shipment inspection certificate and other documents described the goods as waste paper as per the internationally accepted parameters, these goods cannot be treated as waste paper when the physical examination of the goods shows that the same are serviceable paper which can be used for various purposes like, making of grocery bags, wrapping paper, bituminized paper etc; that besides the report of CPPRI-Saharanpur, the report of Director of Kumarappa National Handmade Paper Institute-Jaipur, M/s. Nisha Enterprises- Jaipur and the market enquiry also shows that the goods, in question, are serviceable kraft paper which would be useful for various purposes and cannot be considered as waste and scraps of paper; that Commissioner (appeals) has wrongly relied upon the end use certificate issued by the Jurisdictional Assistant Commissioner of Central Excise, Alwar as evidence that the goods were waste paper; that this certificate has not been issued on the basis of any type of physical verification, that the said goods have actually been used in the manufacture for the specified goods and that in view of the above submissions, the impugned order is not correct.

4. Sh. A.K. Sharma, Senior Vice-President of the respondent, representing the respondent defended the impugned order by pleading that the goods imported were waste and scrap of kraft paper; that this fact is clear from the photographs of the goods which have been placed on record; that the goods imported were in the form of rolls of assorted size and width and from the photograph it is clear that the rolls were damaged rolls and the papers in those rolls could not be used for writing or printing purposes; that pre-shipment inspection of the goods also certifies the goods as waste and scrap of paper, that just because the tensile strength and bursting strength of the samples of paper were found to be comparable with these parameters of the fresh kraft paper, it cannot be concluded that the goods imported by the respondent were of prime quality fresh kraft paper, when the condition of the goods, as is clear from the photographs, shows that the goods are not fresh/prime quality kraft paper; that just because in each roll some quantity of paper was found to be serviceable paper, the consignments cannot said to be of the fresh/prime quality kraft paper; that when the Additional Commissioner has accepted the declared value of the goods, it is totally incorrect to accuse the respondent of having imported fresh/prime quality paper by mis-declaring the same as waste paper, as price of the fresh/prime quality kraft paper and the waste paper would be totally different; that respondent have used the paper for manufacture of kraft paper and the end use of the goods has been certified by the Jurisdiction Assistant Commissioner; that Tribunal in the case of Mohit Paper Mills Vs. CCE reported in 2012 (285) ELT 379 Tri-DEL has held that when the consignment of the waste paper was found to be containing some good quality paper in rolls and that this discrepancy was noticed by the Customs, but the Customs did not change the value, and as such accepted the declared value of the goods, the department cannot make out the case of mis-declaration of description, that the ratio of this judgment of the Tribunal is squarely applicable to the facts of this case and that in view of the above submissions, there is no infirmity in the impugned order.

5. I have considered the submissions from both the sides and perused the records. The respondent had imported eight consignments declared to be containing waste paper/used kraft or waste paper/used brown kraft by classifying the same under heading 4707 which pertains to the waste and scrap of paper and the exemption under notification no. 21/2002-CUS (S. No. 152) was claimed which prescribes the concessional rate of duty for all the goods of heading 4707 imported for use in or supply to unit for manufacture of paper or paper board, other than newsprint. The exemption is subject to condition that importer furnishes an undertaking to the Deputy/Assistant Commissioner of Customs that the imported goods would be used for the purpose specified and in the event of failure to comply with this condition, the importer shall be liable to pay the differential duty.

6. In this case, there is no dispute that the appellant have enclosed pre-shipment inspection certificate which certifies the goods to be waste paper/board. It is also seen that this is not the case where the complete rolls of prime quality kraft paper had been imported by concealing the same by using waste paper rolls. In this case, the rolls of kraft paper described as waste paper were found to be containing the paper which according to the department is not waste paper but is serviceable paper, which can be used for making paper bags, bituminized paper or can be used for wrapping purposes. The photographs of the goods which have been placed on record show that the rolls of the paper which had been imported were damaged. Therefore, just because some of the paper contained in the damaged rolls was found to be of serviceable quality, the consignment cannot be treated as of prime quality kraft paper more so, when the Adjudicating Authority has accepted the declared transaction value of the goods, we find that the Tribunal in the case of Mohit Paper Mills Limited Vs. CCE-Noida (supra) has held that when the consignment declared to be waste paper was also found to be containing some good quality paper in rolls and when the department has accepted the declared transaction value of the goods and has not changed the same, the department cannot allege mis-declaration of description of the goods and seek confiscation of the same under section 111(m) of the Customs Act, 1962. In our view, the ratio of this judgment of the Tribunal is squarely applicable to the facts of this case.

When for the purpose of value, the department has accepted the goods to be waste paper and has not changed the value, for the purpose of classification and benefit of the exemption notification, the department cannot claim that the goods are not waste paper but are prime quality paper. The departments stand that bulk of the quantity of the goods are prime quality paper, not covered by heading 4707 of the Tariff, is not compatible with its stand of accepting the declared transaction value of the goods which was based on the goods being waste paper, as there would be huge difference between the value of prime quality paper and the value of waste paper. Moreover, the Jurisdiction Assistant Commissioner has also certified that the imported goods have been used for manufacture of kraft paper/paper board. Though the department claims that this certificate was given by the Jurisdiction Central Excise Officers without verification, no action has been taken against the Assistant Commissioner for giving false certificate. Without making allegation against the Assistant Commissioner that he issued a false endure certificate, the department cannot allege that no credibility can be attached to such certificate.

In view of this, I hold that there is no merit in the Revenues Appeal. The same is dismissed.

(Rakesh Kumar)

Member (Technical)

RITU