ORDER
K. Prakash Anand, Member (T)
1. What is wool waste?
This is the issue to be determined in the present appeal.
2. Appellants have imported 45 bales of what is described in the Bill of Entry as wool waste (coloured wool thread waste-wool content not less than 60%). The goods are also invoiced accordingly.
3. The department issued a Show Cause Notice to the appellants stating that on examination of 6 bales, 59.11% of the goods were found to be serviceable yarn in hanks which could not be considered as wool waste because the yarn could be used straightway. Accordingly, this quantity of yarn, as per the Show Cause Notice, was not classifiable as waste but as normal serviceable yarn attracting duty at the rate of 100% plus 25% plus C.V.D. at Rs. 25/- per Kg. Wool waste attracted duty at the rate of only 5%. It was pointed out in the Show Cause Notice that there had been mis-declaration in regard to this import resulting in loss of duty, apart from the fact that the goods were not covered by the Import Licence.
4. We have heard Shri L.U. Balani, advocate for the appellants and Smt. Dolly Saxena, SDR for the department.
5. Appellants claim that the goods are classifiable under Heading 53.01/05 read with Notification No. 240/76-Cus., dated 2-8-1976 as amended by Notification No. 155/79-Cus., dated 4-7-1979 under which the goods are fully exempted from payment of basic Customs duty. The goods are also claimed to be exempted from levy of Additional Duty (C.V. Duty) vide Notification No. 172/72-C.E., dated 24-7-1972.
6. The learned advocate submits that while issuing the Show Cause Notice, the department has not furnished any evidence in support of the charge that the goods in question were found to be serviceable yarn. It is said that appellants, therefore, approached the department for such evidence to which a reply was sent that the goods were found to be serviceable yarn in hanks as a result of visual examination. The advocate of the appellants protested against the department coming to a conclusion merely on visual examination and it was then that the department responded by saying that market enquiries were conducted and that samples had been shown to a leading indentor in wool trade. It was further stated that the impugned goods were in the nature of yarn in hanks which could be rewound after being put on cones and put to use for making carpets, mufflers etc. The communication from the department contained this interesting comment : “An Australian expert also expressed the view that the yarn in question was serviceable and looking to the quality of Indian products (which are not always upto international standards), the subject yarn could be Straightway used in the manufacture of carpets and mufflers etc.”
7. Shri Balani stated that the departments were requested to give the full text of the opinion(s) obtained, but at the time of the hearing, they were informed by the Deputy Collector of Customs that the evidence of the indenting agents and the Australian experts will not be relied upon by the department in coming to the conclusion in the matter. However, it is now pointed out before us that apart from the evidence of indenting agents and Australian experts on which the department initially seemed to rely, there was no indication of any other evidence to support the charge that the goods imported were serviceable yarn. It is urged that the department has admitted that the goods are in different colours, counts and types and this is evident enough to show that the product is nothing but wool waste.
8. It is also argued by Shri Balani that it is odd that the Original Authority has accepted the impugned goods to be wool waste for purposes of import licence, but has failed to take the logical step and to accept the nature of the goods for purposes of Customs duty, thereby creating double standards. It is stated that this is contrary to order issued by the Central Board of Excise & Customs – 1982 E.L.T. 424.
9. The learned advocate has pointed out that when appellants went in appeal before the Collector of Customs (Appeals), the stand taken by the appellants was rejected on the ground merely that the goods in question were in hank form.
10. It is emphasized that the Collector (Appeals) seemed to ignore the fact that the hard waste is also wool waste. Referring to the Fairchild Dictionary of Textiles, it is pointed out that ‘wool waste’ is described as wool discarded, at least temporarily during manufacture (in hard waste, soft waste). On the other hand, ‘hard waste’ is described as yarn waste which contains spinning twist, as distinguished from soft waste. Hard waste is made in spinning and later operations such as winding, warping, weaving etc.
11. The learned advocate has further submitted that the department, in the absence of statutory definition, was required to rely on trade understanding and usage – 1983 ELT 385 (CEGAT). It is submitted that appellants had requested that the consignment as a whole should be shown to an expert for opinion, but this request was rejected.
12. It is also urged that the OCCN could have persuasive value in deciding the classification, but no final view could be taken on the basis of CCCN. It is added that the Explanatory Notes of the CCCN are not specifically covering all varieties of yarn waste, since the definition uses the word “such as,” “etc.”..
13. It is submitted that the appellate authority has erred in holding that the impugned goods, being in hanks, are not covered by Heading 53.03 of the CCCN. It is submitted that nowhere do the Explanatory Notes of the CCCN state that the waste yarn should not be in hanks.
14. Appellants have submitted that hank yarn, in respect of which, the dyeing is not perfect, can be discarded as waste, even though it is in hanks, such hanks can be found in different colours, counts and types.
15. It is also submitted that the Original Authority has itself agreed that the single strands of the yarn are irregular in shape, but it has been held that such yarn could be converted into serviceable yarn. The department, it is submitted, obtained no evidence to show that the yarn was intended for knitting or making of carpets.
16. Finally, it is denied that the goods are inferior type of yarn as held by the Original Authority.
17. Smt. Dolly Saxena, SDR responds briefly by submitting in the first instance, that the learned Dy. Collector of Customs who passed the order-in-original had erred in accepting the goods as waste for ITC purposes, and Appellants cannot be given the benefit of this error insofar as their claim to Customs classification is concerned. It is reiterated that the yarn in hank form is useable directly for weaving. In fact, it is submitted that the appellants themselves are licenced for weaving. Further, it is submitted that it was for the appellants to disclose to the department as to what is the use to which the goods being imported were to be put. It is added that apart from the bland claim, there is no evidence that such yarn was to undergo garnetting.
18. We have carefully considered the facts of the case and the submissions made by both sides. We observe that the goods are invoiced as wool waste (coloured wool thread waste). This is how the goods were also described in the Bill of Entry. In the circumstances, as has been held in numerous decisions of this Tribunal, if the department is refusing to accept the description and classification of the goods, as evidenced by the invoice and the Bill of Entry, then the onus of proving that the goods are different, is on the department.
19. It is true that the importer, in claiming a particular classification can always furnish the department with any additional evidence that he might have to support his case. But if the classification claimed is not acceptable to the department, then it is for the department to give the reasons therefor and to establish the alternative classification. The Revenue Department has large investigating machinery to look into matters which need -further enquiries. There are various technical authorities who can aid and assist the department with expert opinion after physical examination or chemical tests of the impugned products. Often an enquiry as regards the pricing of the product is helpful in determining the nature of the product or to provide evidence as regards any attempt to hoodwink revenue.
20. There can be no short-cut to the need to investigate the matter thoroughly where the department is refusing to accept classification claimed by an Importer. It cannot help the department to take the stand, as has been done in this case, that the Importer’s claim as regards classification is being rejected on a mere visual inspection by the officers. As has been rightly pointed out in his defence by the Importer, it is elementary that the department should try to ascertain the trade understanding.
21. In fact, the department appears to have done that but such, enquiries appear to have been superficial. Therefore, although the importer had earlier been informed of the basis for the charge levelled against him, later on, the department assured the appellants that such enquiries as had been made are not being relied upon in taking a view in the matter.
22. But the question arises that if the information so collected was not to be relied upon, what remained for the department to fall back upon, to sustain the charge against the appellants? Nothing at all, it seems to us.
23. We do not agree that “hank yarn cannot go waste or merely because such wasted yarn happens to be in hank form, therefore, it would merit classification as good yarn or normal serviceable yarn. The fact that the appellants are licenced for weaving is no evidence against them. Nor, we feel, is it essential for them to furnish evidence that such waste is to be subjected to garnetting.
24. All in all, this is one of those cases in which the department has denied the classification claimed by the importer, on the basis of a charge which remains entirely unsubstantiated.
Appeal allowed.