On import of paper and paper board if some plastic contents are found but does not indicate any malafide intention on the part of importer, whether the penalty would be imposed?

PJ/CASE LAW/2015-16/2748

Case-GORAYA STRAW BOARD MILLS PVT. LTD. Versus COMMR. OF C. EX., MEERUT-II

Citation-2015 (316) E.L.T. 302 (Tri. - Del.)

Brief Facts-As per facts on record, the appellant is manufacturing unit engaged in the manufacture of paper and paper board. As waste paper is one of the raw materials, they imported the same from USA and filed a bill of entry dated 1-9-2006. On examination, out of total weight of 121.84 MT, 29.96 MT was found to be ‘plastic waste of road sweepings’ and the rest 91.88 MT was ‘waste paper collected as road sweeping’. Inasmuch as the plastic contents in the consignment which were sent to Central Institute of Plastic Engineering and technology, Lucknow were found to be toxic substance and inasmuch as the percentage of the same was found to be on the higher side, proceedings were initiated against the appellant for confiscation of the goods as also for imposition of penalty upon them. The original adjudicating authority absolutely confiscated the plastic contents of the consignment and allowed the appellant an option to redeem the waste paper content on redemption fine of Rs. 5 lakhs. He also imposed penalty of Rs. 7 lakhs upon the appellant. The said order of the Additional Commissioner was upheld by the Commissioner (Appeals). Hence, the present appeal.

Appelants Contention-The appellants’ contention is thatthey had ordered for import of waste paper and there is no evidence on record that toxic plastic content found in the consignment were sent by the exporter with the knowledge of the appellant. Inasmuch as the appellants were not a party to the consignment of the plastic materials, they should not be penalized. He further submits that appellant is a paper manufacturing unit and has no use for the plastic.

Respondents Contention-On the other hand, Revenue hasreferred to the clause 7 of the Sale Contract entered into between the appellant and the foreign supplier, which is to the effect that - “FINAL LOAD POINT QUALITY INSPECTION FEE FOR SELLER’S ACCOUNT. QUALITY SURVEYORS TO BE MUTUALLY AGREED UPON.” From this, Commissioner (Appeals) has observed that inasmuch as there was a provision for prior inspection of the goods by the surveyor and if it was the intention of the importer to only import waste paper, they were very well equipped for that. If there was no mala fide intention, there is no reason as to why the supplier passed the toxic waste of plastic along with waste paper.

Reasoning Of Judgement-The tribunal find no merit in the above observation of the Commissioner (Appeals). Merely because there was a checking clause by quality surveyor, the same does not lead to indicate any mala fide on the part of the importer. Further, tribunal have to keep in mind that quality inspection and certification is done at the exporter’s end and the importer in India has no hand in the same. Further, it is also on record that waste paper was also in the nature of road sweeping as also toxic plastic substance. In the absence of any evidence on record to reveal that the appellant was a party to the presence of such plastic contents in the consignment of waste paper, the Revenues’ finding are based upon assumption and presumptions for which the appellant cannot be penalized. Inasmuch as the appellant is notinterested in clearance of the goods, the tribunal set aside the penalty imposed upon him by modifying that part of the impugned order only. The appeal is allowed to that extent only with consequential relief to the appellant.

Decision-Appeal party allowed

Comment-The analogy in the case is that where quality inspection and certification is done by the exporter and there is just a mere clause for checking by the quality surveyor which was not followed by the importer, it cannot be assumed that the importer assessee has a malafide intention and therefore the assessee could not be penalized in accordance with Sec 112 of Customs Act,1962.

Prepared By-Neelam Jain

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PJ/CASE LAW/2015-16/2748

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