By TIOL News Service

MUMBAI, NOV 07, 2013: THE appellant imported 800 pieces of hard disk and filed bill of entry on 18.06.2012. The bill of entry was assessed and the appellant paid duty before clearance of the goods. 5% of the goods were examined. On examination, the goods were found to be hard disk, but the examination report indicated that the goods appeared to be old and used. Thereafter, the goods were re-examined on 100% basis. After 100% examination, the report indicated that the description and quantity tallies and the brand of the goods and model numbers were verified and the goods found to be old. Year of manufacture was found on the goods. The said report did not say that the goods were used. Thereafter, attempts were made to get the goods examined from some experts as also from different sources including an approved laboratory by the Maharashtra Pollution Control Board. However, there was no success. A sealed sample was sent to one M/s Arihant E-Recycling who reported that no data or files were found in the hard disk and it is showing nothing installed previously and it is possible with new hard drive. Not satisfied with the said report, the possibility of examining the goods by a panel was explored. However, that also failed. Thereafter, the Import Shed again re-examined the goods and gave the report as under:-

“(1) Hard Disks are affixed with a label showing the dates which ranges from 2008 to 2010. From the date it cannot be inferred that the goods were manufactured on these dates. In case of another brand of ‘Seagate' Hard Disk, it is found that the date of manufacture is clearly printed on the label affixed on the hard disk. It appears that the date shown on the hard disks the date on which the goods were refurbished.

(2) The outer cartons in which the goods are packed are not the original manufacturer's cartons as no printed marking are found on these cartons. The hard disks are not packed in original sealed packing of manufacturer.

(3) This is also supported by the fact that in the electronic industry where the goods become obsolete very few months after the manufacture, the import of hard disks of these years could be considered as old and obsolete.

In view of the above and seeing the physical condition of the goods, the DC (Import Shed) opined that the Hard Disks are old and used which appear to be refurbished.

Thereafter, a show cause notice was issued to the appellant considering the goods as hazardous waste and proposing to confiscate the said goods.

In the adjudication order, the goods were ordered to be confiscated absolutely and a penalty was also imposed on the appellant. The appellant did not succeed with the Commissioner (Appeals) and so they are before the CESTAT.

The appellant submitted that they are importing old model goods which they are able to get at cheaper price and such goods are supplied to various customers including Educational Institutes after payment of VAT etc.; that at least five consignments were imported earlier and the goods were invariably released by the Customs House without any objection. In this case also, they are not disputing that they have imported goods which were manufactured during 2008 to 2010. However, their contention is that these goods are not used goods, but are new goods . It was also argued that the first report talked of old and used, t he second report which was based upon 100% examination, stated only old but it did not say that the goods are used andthe third report of the Customs House stated that the goods are old and obsolete and appeared to be refurbished .

Inasmuch as the various officers who examined the goods are not experts relating to the electronic items and were only making conjectures and are not even conclusively saying that the goods are used or refurbished.

It is further submitted that Arihant E-Recylcing is a unit which is approved by the Maharashtra Pollution Control Board for recycling of the hazardous waste and who in their report have categorically stated that no data or files were found in the hard disk drive which shows that these were not installed previously and it is possible that it is new hard drive .

As such, there was no reason for the Customs House to ignore the said report and rely upon the report of non-experts and that also a non-categorical report. Incidentally, even second and third report did not say that the goods were used. Moreover, the Customs House cannot call few years old unused models to be hazardous waste and it is for the Customs House to prove that the goods are hazardous waste but instead of that they were only making a bald allegation by saying that the goods are hazardous.

It is finally submitted that they have also produced a certificate from the manufacturer of the goods that post 2006 in the hard disk drives manufactured by them, no hazardous material is used which certificate was also ignored by the authorities.

The Revenue representative probably felt it prudent to reiterate the findings of the lower authorities and draw the attention of the Bench to the Customs House report which mentioned that the goods were old and refurbished and, therefore, have to be considered as hazardous waste.

The Bench considered the submissions and inter alia held that - “ The officers who have examined are not expert in the field and there is no reason not to believe the report of Arihant E-Recycling and the Customs authorities have not been able to bring out any evidence to prove that the goods are used or hazardous waste . ”

In fine, the CESTAT set aside the order of the lower authorities and while allowing the appealand setting aside the penalty ordered that the goods should be released forthwith.

Superlative scrap-old, older, oldest; bad, worse, worst.Zomcom:Go, Goa, Gone!

(See 2013-TIOL-1660-CESTAT-MUM)