ORDER
Jyoti Balasundaram, Member (J)
1. The validity of the import of goods purported to be wool waste and their valuation is the subject matter for consideration in this appeal.
2. The appellants, who are manufacturers of woollen yarn, imported wool waste of the following description viz. job lot containing card droppings, condensor liable to contain some skin pieces having wool content about 80%. The indent dated 17.6.1985 was placed for a quantity of 2400 kgs. at a price of Sterling pence 140 per kg. cif. On arrival of the goods the importers filed a bill of entry for home consumption. The importers at the request of the Customs Department supplied the Department a copy of the test report furnished by Wool Testing Services International Ltd. of England showing that the goods contained 84.85% of wool. Samples were drawn from the bales and the test report revealed as under
(i) three of five bales contained grey and white soft fibres and cut pieces of loosely spun yarn with incidental impurities. The test report said–it is composed of all animal hair (rabbit hair) or mainly composed of animal hair.
(ii) Remaining two bales contained:
(a) White short fibres with a few bits of skin and composed of all animal hair and;
(b) Black coloured short fibres and small cut pieces of loosely spun yarn, coloured yarn–it is mainly composed of animal hair (rabbit hair) with wool fibre.
3. Therefore, a show cause notice was issued alleging that the goods were not wool waste covered by the Licence and that the value declared was not representative of the correct value. The adjudicating authority confiscated the goods under Section 111(d) holding that the import licence did not cover the goods in question and also imposing a penalty under.Section 111(m) for misdeclaration of the goods as wool waste. The lower appellate authority having confirmed the order of the Deputy Collector, this appeal has been preferred before us.
4. We have heard Shri L.P. Asthana, earned Counsel and Shri J.N. Nair, learned DR and perused the documents.
5. The 3-fold contentions put forth on behalf of the appellants are
(a) Prior to the introduction of the Harmonised Tariff, the trade understanding of wool was not restricted so as to exclude rabbit hair and, therefore, animal hair waste is wool waste.
(b) Alternatively, the Tariff does not contain any definition of wool waste and as the goods are in the nature of waste, the imported mixture of rabbit hair and waste is to be treated as wool waste.
(c) Regarding valuation, even if the goods are not considered as wool waste, the Department cannot arbitrarily arrive at a value of 25% of the price of prime quality wool, relying upon a price list which is in the nature of a mere invitation to offer.
6. The learned DR, in reply, contends that the test reports are categoric and in response to specific queries, and therefore, are to be accepted in preference to the test report of the Wool Testing Services International Ltd. that the goods are not wool waste as the fleece of only sheep and lamb are understood as wool and the hair of rabbit was never understood as wool and, therefore, rabbit hair, even if in the form of waste, is not wool waste which alone is covered by import licence and that Rule 8 of the Valuation Rules has been properly applied as allowance has been made for waste as compared to the price of prime quality animal hair.
7. The Customs authorities had drawn samples from each of the five bales and sent them for test to the Custom House Laboratory with the following queries:
(a) Nature and composition;
(b) Whether it is wool waste;
(c) If wool waste, percentage of wool and other fibres
The reports which are contained in three Test Memos do not furnish any direct answer to the query whether the sample was wool waste; nor was the percentage of wool fibre determined by the laboratory. It would be useful to reproduce the reports which are asunder:
(a) Sample with # 1 (lab. 16848) Sample is in the form of white short fibres with few bits of skins. It is composed of all animal hair (Rabbit hair)
(b) Sample with # 2 flab. 16849) Sample contains mainly black coloured short fibres and small cut pieces of loosely spun cream coloured yarn. It is mainly composed of all animal hair (Rabbit hair)
(c) Sample is in the form of grey and white short fibres and cut pieces of loosely spun yarn with incidental impurities. It is composed of animal hair (Rabbit hair)
(d) # 4 & # 5 Each of the two (2) samples contains black and white short fibres and small cut pieces of loosely spun yarns. Each is mainly composed of animal hair (rabbit hair) with wool fibre. Individual percentage could not be determined.
8. Thus, besides saying in each case that the sample was in the form of short fibres, it is also indicated that they were composed of animal hair (rabbit hair) with wool fibre. The question for consideration is whether based on these findings of the Custom House Laboratory, it could conclusively be said that the samples were not of wool waste. While considering this question, it is important to remember that the term “wool waste” has not been defined anywhere. The lower authorities appear to have been guided by the presence of animal hair (rabbit hair) in the samples to arrive at the conclusion that they were not wool waste. The description of the goods in the invoice shows that the goods consisted of card droppings/condensor waste liable to contain some skin pieces having wool content above 80%. If the Custom House Laboratory has not been able to determine the percentage of wool, the authorities were not justified in concluding that it did not have more than 80% wool content. The presence of animal hair (rabbit hair) cannot be said to exclude the goods from the purview of wool waste and take them to the category of animal hair unless the percentage of wool fibres and animal hairs were separately determined.
9. We were informed at the hearing that the goods have not been cleared by the appellants. In these circumstances, it would be appropriate to draw fresh samples in adequate quantities from each bale and refer them to the Custom House laboratory for specific opinion inter alia, about the percentage content of wool fibre. This would enable the authorities to verify the declaration of the appellants and then decide the matter on the basis of complete information.
10. In this situation, the orders of the lower authorities are set aside and the matter is referred back to the Deputy Collector of Customs for fresh adjudication in the light of the test results which should be communicated to the appellants soon after receipt. Since the goods were imported in 1985 it is necessary to take expeditious action at all stages. It should be possible for the authorities to complete the testing and thereafter, if necessary, the adjudication, within three months from the date of this order. The appellants would also be required to co-operate in expeditiously completing the proceedings should it ultimately become necessary to do so.
11. In the result, the impugned order is set aside and the appeal is allowed by way of remand.
