KARACHI: A customs appellate bench of High Court of Sindh dismissed a Special Custom Reference Application (SCRA) filed by Collector of Customs against M/s. Sajid Plastic Factory.

At the outset of hearing, Khalil Dogar Advocate, counsel for applicant read out the order and submits that the Tribunal has erred in law by allowing the Appeal in as much as pursuant to determination of classification of goods under HS Code 3915.3000, Serial No.51 of Part-I of Appendix-B of the Import Policy Order, 2013 is attracted.

He further submitted that the respondent has not fulfilled the said conditions of the Import Policy; hence Order in Original be restored, whereby, part of the consignment was allowed to be released against redemption fine, whereas, the other part was liable for outright confiscation.

The Counsel for the respondent in his arguments supported the impugned order and submits that primarily the dispute is factual as no question of law arises out of the Order of the Tribunal. In support he has relied upon 2016 PTD 2902 (Collector of Customs V. Bashir Sons).

The bench noted the precise facts as available on record which depicted that respondent imported a consignment of 104 M. Tons, declaring the goods as “recycled plastic granular in grey colour”, packed in four containers and filed Bill of Entry claiming Assessment under HS Code No. 3901.9000 chargeable to customs duty at the rate of 5%. The goods were examined and two containers were found as per Declaration i.e. “recycled plastic granular in grey colour”, whereas, in the remaining two containers according to the applicant goods contained “plastic crushed chips” classifiable as scrap under HS Code 3915.3000 and were hit by Serial No.51 of Part-I of Appendix-B of the Import Policy Order, 2013 which requires fulfillment of certain conditions. Samples were sent for test in Customs Laboratory and thereafter a show cause notice was issued pursuant to which Orderin-Original was passed, whereby, two containers were allowed to be released against imposition of fine and penalty, whereas, remaining two containers were confiscated out rightly.

The court upon perusal of memo of appeal find that the Tribunal through impugned order has set-aside the Order-in-Original with directions to release the consignment.

“ After perusal of the record placed before us, we are in agreement with the arguments of the respondent’s Counsel that primarily the issue before us is more of a factual nature inasmuch as the Applicant Department has come to a conclusion that the goods in question are Scrap on the basis of their physical appearance. However, admittedly in the test report no such finding was given by the Laboratory and it is a mere opinion of the Adjudicating Authority that two containers, in which, allegedly the description was found to be “plastic crushed chips” falls under Heading of Scrap (HS Code 3915.3000), which then is subject to certain restrictions under Para51 (ibid). Such finding has been overturned by the Tribunal thereafter. It would be advantageous to refer to the two test reports of the Customs own laboratory, which reads as under: (i) “The sample on test is found to be synthetic resin composed of Polyvinyl Chloride (PVC). It is in the form of grey color irregular crushed pieces. (ii) Report of the same GD No. 55475 dated 20.10.2015 vide Receipt No.032164 has already been sent to the Group, now another same received which on test is found to be synthetic resin composed of Polyvinyl Chloride (PVC). It is in the form of grey color irregular crushed pieces.” 5. Perusal of the aforesaid report reflects that according to the opinion of the Laboratory the goods were in the form of grey color irregular crushed pieces, whereas, the Applicant being still not satisfied, referred the matter once again for retest and again the opinion was that the goods in question are in the form of grey color irregular rushed pieces. The Applicant department, on the basis of the above report, has classified the goods in question as Scrap, under HS Code 3915.3000 (with applicability of restrictions at Serial No.51 ibid) whereas, the Appellate Tribunal, after going through the record, has not agreed with this contention and the relevant finding of the Tribunal is as under:-

“ In our view, the Respondent No.1 has erred by finding the second part to contain plastic flakes scrap falling under Tariff Heading 3915.3000 and attracting S.No.51 of the IPO for following reasons; Whether plastic is scrap or not cannot be determined solely on the basis of shape it may take. Firstly, we take up the task of considering the meaning of the word ‘scrap’. We are of the view that the word “scrap” can be interpreted as being an item which is discarded, used, condemned, or otherwise tainted, but not able to be put to its original use, the bench held.

The bench while referring to a case law said held that “ it is the nature of the item that lends to its character as ‘scrap’, and not merely shape and / or size by itself. In fact, if the contention of the Respondents was to be accepted, it would mean that recycled plastic shaped as flakes would also be considered as plastic scrap, whereas plastic scrap that has been shaped as granules would be considered to be recycled plastic. The Respondents have alleged that ‘flakes / crushed pieces’ are actually raw material for granular plastic, which is ‘recycled plastic’. In this respect, both sides submitted what may be processes for recycling. It has been stated before us by the Appellant, and has been supported by various online resources on the subject, that in order to obtain recycled plastic, plastic scrap is used as raw material and that, at the conclusion of the recycling process, recycled plastic usually takes shape as ‘flakes / crushed’ plastic, also known as `regrind’. This ‘regrind’ is then processed and ‘granular’ and / or ‘pulverized’ plastic may be obtained. It is immaterial if this final process is made a seamless part of the process, as the nature /character of the plastic would remain to be `recycled’.” 6. When the above finding is read in juxta-position with the test reports and finding of the Adjudicating Authority, we are of the considered view that the same is primarily dependent on facts and does not give rise to any question of law, which could be entertained by this Court under its Reference Jurisdiction under Section 196 of the Customs Act, 1969. The Tribunal being the last fact finding forum has given appropriate reasons for its disagreement with the findings of the Adjudicating authority. Moreover, in the given facts whether the goods in question are scrap or otherwise is not a question of law but a question of fact; which we cannot attend to in our Reference jurisdiction. We may add

that if it had been merely a question of classification of goods on admitted facts, then it could have been dealt with by us in this Reference Jurisdiction as the question of classification is not always purely a question of fact; but a mixed question of fact and law. However, this is not so in this matter as facts are in dispute, whereas, the Tribunal has given a finding of fact in favor of the Respondent which in our view in the given facts and circumstances does not warrant any interference.

In view of hereinabove facts and circumstances of this case, we do not find any substance in the arguments of the Applicant’s Counsel, whereas, no question of law arises out of the Order of the Tribunal, which in fact has given its finding after overturning the opinion on facts arrived at by the Adjudicating Officer pursuant to the reports of the Customs Own Laboratory; hence Reference Application, being misconceived, is hereby dismissed. Let copy of this order be sent to Appellate Tribunal Customs in terms of sub-section (5) of Section 196 of Customs Act, 1969, the judgment said.