Oil Processors Pvt. Ltd. Vs. Commissioner of Customs

1. This Appeal is directed against the Order-in-Appeal No. 622/95 BCH, dated 5-9-1995 of the Commissioner of Customs Appeal Bombay, confirming with minor modification, the Order-in-Original S/10-76/95 IR, dated 2-5-1995 of the Dy. Collector of Customs Gr. I, Mumbai. The appellants imported used lubricating oil and sought clearances as an OGL Item, they did not have any import licence. The department, objected to the clearance on the ground that the said goods were hazardous waste as laid down in Para 156 (H) Entry No. 8 of EXIM Policy, 1992-97 (as modified upto 31-3-1995). The objection was also raised that the import was not valid vide Para 5 of the said Policy Book, as the Shipment of the goods had taken place on 10-4-1995 and 11-4-1995 and that there was no confirmed contract entered into before the import of hazardous wastes was prohibited by an amendment dated 31-3-1995. The appellants pleaded that this was not the hazardous waste and was no covered under the prohibition and also pleaded that contract was entered into on 20-2-1995 which was confirmed by the supplier on 20-3-1995 and the import was within the grace period of 45 days, both the objections were however, negatived by the authorities below and two consignments imported by the appellants were held liable to confiscation under Section lll(d) of the Customs Act, but the appellants were granted option to pay redemption fine of Rs. 1,50,000/- in respect of one consignment valued at Rs. 1,56,000/- and pay fine of Rs. 75,000/- in respect of the other consignment valued at Rs. 77,083/- personal penalties of Rs. 20,000/- and Rs. 15,000/- respectively, were also imposed. The appellants preferred appeal before the Commissioner (Appeals) who, while confirming the order of confiscation, reduced the redemption fine from Rs. 1,50,000/- to Rs. 1,00,000/- and from Rs. 75,000/- to Rs. 50,000/- and also reduced the personal penalties to Rs. 7,500/- and Rs. 5,000/- respectively.

2. Shri V.N. Deshpande, the ld. Advocate for the appellant submits that what is imported is the used oil and not the waste and that the used oil is not described as Hazardous Waste so as to be covered under Entry No. 8 of sub-para (H) of Para 156 of EXIM Policy Book. He also referred to Hazardous Wastes (Management and Handling) Rules, 1989 and referring to the Schedule, he has pleaded that in waste category No. 10, only Waste Oil, and Oil Emulsions have been covered and used oil being not the one falling within the category of waste oil, cannot be taken to have been prohibited. He has also referred to the literature submitted by American with Canadian Institutions to the effect that used oil would not fall within the category of Hazardous Waste. On the other point the ld. Advocate has submitted that a confirmed contract was already entered into as early as on 20-3-1995 and hence, they were protected by the [transitory] provisions incorporated in Para 5 of the Policy Book.

3. Shri K.M. Mondal, the ld. SDR however has submitted that going by the provisions of Hazardous Waste (Management and Handling) Rules, 1989, Waste Oil and Oil Emulsions have been taken as Hazardous Waste.

Referring to the Invoice and the Bill of Entry, he submits that what is imported is Waste Oil. He also submits that there is no distinction between the used oil and waste Oil, so far as the Policy Provisions are concerned. Referring to the literature that the appellants have produced, he had submitted that the used oil also could be categorized as Hazardous Waste, and there is no distincton made, on the other point, he submits that there is no evidence of firm contract having been entered into before the amendment dated 31-3-1995 in the Policy Book.

4. Considering the submissions the Policy prohibits import of Hazardous Waste except under the licence. The Hazardous Waste as defined in the Hazardous Waste (Management and Handling) Rules, 1989 includes Waste Oil and Oil Emulsions. There does not appear to be any distinction made between the used oil and waste oil. Even going by the letter from the Maharashtra Pollution Control Board, used oil falls within the category No. 10 of the Schedule to the Rules referred to above. When the appellants have not been placed with the foreign suppliers also mentioned the item as waste oil, and in the Bill of Entry the same description is brought out, there could be no distinction between the waste oil and used oil. The phrase waste oil used in the Para 156 (H) at Entry No. 8 has to be read as to also covering the used oil, and the submission of the ld. Advocate that this is not the Hazardous Waste, which they have imported, is also not substantiated by any authentic analysis of the goods. The goods have already been removed for home consumption, and now it is not possible to analyse the same. Report of the analysis conducted by Punjab Test House is in relation to the import by some other persons and in absence of any positive evidence, it cannot be held that the composition of the used oil imported by that party was identical to the one imported by the present appellant. The said test report therefore does not help the appellants in establishing that the oil imported by them is not Hazardous Waste.

5. Under these circumstances it is not possible to accept the contention raised by the appellants as to the oil imported being not covered under the prohibited entry in the Policy.

6. The provisions of Para 5 of the Policy Book also would not assist the appellant as there is no evidence as to a firm contract entered into with the foreign supplier, as no letter of credit was opened. Even if some order was placed, it was open for the appellants to rescind the same as the change in policy was made on 31-3-1995. Para 5 could save such contracts where rescinding of the contract is not possible because of the commitment having already been made. This is not the case which could stand covered under the said provisions.

7. Under the circumstances the authorities below were justified in holding the import as unauthorized and not available under Open General Licence. The order of confiscation therefore requires to be sustained.

8. The appellants have however pleaded that this was their first ever import and they believed to have been protected vide Para 5, and therefore liberal view ought to be taken in relation to the quantum of redemption fine and penalty amount. Considering the said submission, we reduced the redemption fine of Rs. 1,00,000/- to Rs. 75,000/- and of Rs. 50,000/- to Rs. 30,000/-. However we see no justifiable ground to interfering with the penalty amounts, which otherwise appears to be reasonable in view of the fact that the appellant having had the knowledge of amendment in policy, could have arrested the shipment of the goods, which they did not do.

9. Under the circumstances appeal is partly allowed and the order appeal against is modified as indicated above. Consequential reliefs to follow.