To conclude that a particular good is a waste product or not under Customs Tariff Act, it depends on who is purchasing and how it would be used therefore : Madhya Pradesh High Court
The Madhya Pradesh High Court in the case of Uwas Recyclers Llp vs Customa Authority Of Advance (OTA No. 3 of 2021) upheld that to conclude that a particular good is a waste product or not under Customs Tariff Act, it depends on who is purchasing and how it would be used. Therefore an advanced ruling cannot be treated as blanket permission to the importers to import the goods of all kinds of waste and scrap.
Facts of the case: The appellant had filed an appeal under Section 28 KA of the Customs Act, 1962 against the order dated 27.08.2021 passed by Customs Authority for Advance Rulings, Mumbai whereby classification of ”mill processed non-allow ferrous waste metal goods wound in a coil” has not been treated as waste material under the Tariff item 72044900 of the First Schedule to the Customs Tariff Act, 1975.
The appellant is a limited liability partnership firm. The appellant intended to import the goods in question from South Africa, and submitted an application under section 28H before the Custom Authority for Advance Rulings (in short ”CAAR”) seeking the classification of the goods in question as “waste and scrap” under Custom Tariff Item (CTI) 72044900 as defined as waste and scrap under the Note 8(a) of Section XV. The appellant has applied for obtaining the order from CAAR in order to get exemption under Serial No. 368 of Notification No.50/2017-Cus dated 30.06.2017 as amended vide notification No.02/2021-Customs dated 01.02.2021. Respondent No.1 vide order dated 27.08.2021 had held that the goods in question cannot be classified as waste and scrap as the same is classifiable under Tariff Item 7209 90 00.
Being aggrieved by the aforesaid order, the appellant has preferred this Other Tax Appeal under Section 28 KA of the Customs Act, 1962 before this Court. The appellant has filed this appeal contending that the goods in question are indeed metal waste and scrap which are obtained from the mechanical working of metals. The goods in question generated during this process of cold rolling cannot be used as prime cold roll products. Hence, they are being sold as a waste product. Learned counsel argued that goods in question are nothing but waste and scrap of steel, therefore they are classifiable under CTI 72044900 i.e. Ferrous Waste and Scrap.
Respondent No.1, learned authority has decided the issue on the basis of the aforesaid definition of waste and scrap, however, w.e.f. 01.01.2022, section 8 has undergone change and according to which all metals are defined as waste and scrap therefore, now the authority is required to reconsider the claim of the appellant in view of the change in the definition of waste and scrap note 8 (a) (ii) Section-XV, hence, liberty may kindly be given to the appellant to apply again in order to seek an advance ruling, in view of the change of circumstances.
Judgment: The court held that in general terminology the waste and scrap materials are not liable to be used in the same form, they are treated as waste and scrape unless melted but Flate products are being used in manufacturing sectors like automobiles, railway, shipping, pressure vessel, boiler pipe, domestic appliances etc. It might be waste and scrap to the manufacturer but purchasers manufacturers of any other product can use this by cutting or finishing as these goods in question can be used as raw material to make a new finished product. The learned authority had considered IS 2549:1994 i.e. code for classification of processed ferrous scrap which provides the standard for classification of processed ferrous scrap and found it does not apply to the product in question. As per the appellant, the goods in question are not used for recovery of metal by re-melting by way of repair, renovating or re-rolling these goods can be adapted for other use, hence, it is not wholly metal waste and scrap and is not liable to be classified under subheading 7204.
The metal waste is invariably subject to physical examination, as there are various factors to be considered to conclude that particular good is a waste product or not, it depends on who is purchasing and how it would be used therefore, an advanced ruling cannot be treated as blanket permission to the importers to import the goods of all kinds of waste and scrap. In view of the above discussion, the court did not find any grounds to interfere, hence OTA is hereby dismissed.
JUDGMENT REVIEWED BY : SHUBHANGI CHAUDHARY