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Classification of Imported Goods to be done by adjudicating authorities and not the writ courts: Bombay High Court [Read Judgment]

Imported Goods - adjudicating authorities - writ courts - Bombay High Court - Taxscan

The Bombay High Court held that the classification of Imported Goods to be done by adjudicating authorities and not the writ courts.

The petitioner, Mumbai Fabrics Pvt. Ltd. is a company incorporated under the Companies Act, 1956 and is engaged in recycling of “waste tires scrap” into “rubber crumbs granulation” at its factory.

The process is a green category industry and is environmentally friendly for which the petitioner has been granted consent by the Maharashtra Pollution Control Board, Navi Mumbai on 11th February 2019.

The Petitioner has also been granted permission objection certificate by the Ministry of Environment, Forest and Climate Change, Government of India for import of old and used rubber tires scrap (multiple cuts/pressed baled/ shredded) for manufacture of crumb rubber.

The Respondent authority who it is stated in the proper officer under the Customs Act, 1962 for examination, assessment, and clearance of imported goods at Nhava Sheva Port, ordered that the imported goods be subjected to 100% examination under dock supervision.

The goods imported by the petitioner were subjected to 100% examination and on such examination it was found that those were tyres scrap in pressed bales. After such examination respondents assessed the imported goods to duty under the customs tariff heading 4004000 as waste and scrap of rubber. After the assessment was made, the petitioner paid the assessed duty.

Thereafter, respondent authority passed orders for clearance of the imported goods i.e., out of charge.

However, before the imported goods could be cleared from the Container Freight Station (CFS), the respondent directed the authorities at the CFS to put on hold the seven consignments.

This was followed by an examination of the goods by a customs approved Chartered Accountant. Based on his report, five seizure memos were issued from the ofce of respondent Nos.2 and 3 dated 26th August, 2020 in respect of the consignments covered by fve bills of entry. As per the seizure memos, the imported goods detained were grossly miss declared and undervalued, thus, contravening provisions of the Customs Act rendering those goods liable for confiscation.

Accordingly, the goods were seized under section 110(1) of the Customs Act. Such putting on hold and thereafter seizure of the goods has been questioned by the petitioner on the ground that when the proper officer i.e. respondent authority had subjected the goods to 100% examination under docks supervision, thereafter assessed the goods and levied duty, and upon payment of duty by the petitioner had issued out of charge, the respondent authority could not have put on hold and seized the goods.

The issue raised before the court was whether the seized goods imported by the petitioner are old and used rubber tyres reusable as tyres or are old and used rubber tyres scrap being in pressed baled form.

The division bench of Justice Abhay Ahuja and Justice Ujjal Bhuyan it may not be proper for the writ court to step in at this stage to render a finding as to whether the seized goods are old and used rubber tires scrap in pressed baled form or rubber tire in reusable form.

In other words, whether the imported goods fall under the customs tariff heading of 4004000 or under the heading of 4012, which will basically be a finding of fact. Therefore, we are of the view that this aspect should be best left to the adjudicating authority to decide if it requires adjudication.

The court held that the petitioner may avail the offer of provisional release of the seized goods under section 110A of the Customs Act as per the offer letter, which shall be without prejudice to the claim of the petitioner.

The petitioner, Mumbai Fabrics Pvt. Ltd. is a company incorporated under the Companies Act, 1956 and is engaged in recycling of “waste tires scrap” into “rubber crumbs granulation” at its factory.

The process is a green category industry and is environmentally friendly for which the petitioner has been granted consent by the Maharashtra Pollution Control Board, Navi Mumbai on 11th February 2019.

The Petitioner has also been granted permission objection certificate by the Ministry of Environment, Forest and Climate Change, Government of India for import of old and used rubber tires scrap (multiple cuts/pressed baled/ shredded) for manufacture of crumb rubber.

The Respondent authority who is stated in the proper officer under the Customs Act, 1962 for examination, assessment, and clearance of imported goods at Nhava Sheva Port, ordered that the imported goods be subjected to 100% examination under dock supervision.

The goods imported by the petitioner were subjected to 100% examination and on such examination, it was found that those were tires scrap in pressed bales. After such examination respondents assessed the imported goods to duty under the customs tariff heading 4004000 as waste and scrap of rubber. After the assessment was made, the petitioner paid the assessed duty.

Thereafter, respondent authority passed orders for clearance of the imported goods i.e., out of charge.

However, before the imported goods could be cleared from the Container Freight Station (CFS), respondent directed the authorities at the CFS to put on hold the seven consignments.

This was followed by an examination of the goods by a customs approved Chartered Accountant. Based on his report, five seizure memos were issued from the office of respondent Nos.2 and 3 dated 26th August, 2020 in respect of the consignments covered by fve bills of entry. As per the seizure memos the imported goods detained were grossly misdeclared and undervalued, thus, contravening provisions of the Customs Act rendering those goods liable for confiscation.

Accordingly, the goods were seized under section 110(1) of the Customs Act. Such putting on hold and thereafter seizure of the goods has been questioned by the petitioner on the ground that when the proper officer i.e. respondent authority had subjected the goods to 100% examination under docks supervision, thereafter assessed the goods and levied duty, and upon payment of duty by the petitioner had issued out of charge, the respondent authority could not have put on hold and seized the goods.

The issue raised before the court was whether the seized goods imported by the petitioner are old and used rubber tyres reusable as tyres or are old and used rubber tyres scrap being in pressed baled form.

The division bench of Justice Abhay Ahuja and Justice Ujjal Bhuyan it may not be proper for the writ court to step in at this stage to render a finding as to whether the seized goods are old and used rubber tires scrap in pressed baled form or rubber tire in reusable form.

In other words, whether the imported goods fall under the customs tariff heading of 4004000 or under the heading of 4012, which will basically be a finding of fact. Therefore, we are of the view that this aspect should be best left to the adjudicating authority to decide if it requires adjudication.

The court held that the petitioner may avail the offer of provisional release of the seized goods under section 110A of the Customs Act as per the offer letter, which shall be without prejudice to the claim of the petitioner.

The petitioner, Mumbai Fabrics Pvt. Ltd. is a company incorporated under the Companies Act, 1956 and is engaged in recycling of “waste tires scrap” into “rubber crumbs granulation” at its factory.

The process is a green category industry and is environmentally friendly for which petitioner has been granted consent by the Maharashtra Pollution Control Board, Navi Mumbai on 11th February, 2019.

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