JUDGMENT MAMOON KAZI, J.-l. The petitioners have imported 66 M. Tons of waste and scrap of iron and steel falling under PCT heading No. 7204.4900 after obtaining a licence for the said purpose.
However, after arrival of the said goods at the Karachi Port, the petitioners were informed that 95% of the consignment considered of serviceable auto parts and thus the same were liable to confiscation by the Customs. Thereafter, release of the consignment was delayed as the issue could not be satisfactorily resolved and thus the petitioners were constrained to i.e the present petition.
2. When the petition came up for hearing before a Division Bench of this Court on 14th December, 1993, the Court ordered release of the petitioners' goods after payment of customs duty and other charges on the declared amount and in respect of the excess amount as demanded by the customs authorities, the petitioners were directed to deposit the said amount in cash with 14% mark up with the Nazir of this Court. However, this order was partially modified by another order, dated 6th January, 1994 as it was ordered by consent that the respondents would issue a show- cause notice to the petitioners in regard to classification of goods and thereafter the case would be referred for examination by a Committee consisting of a Deputy Collector of Customs and some specialists of automobile industry for examination and report. The petitioners were also permitted to nominate a person of their choice on the said Committee. Such report, dated 13th January, 1994 was thereafter given by the said Committee which opined that the said consignment consisted of auto parts of motor cars and light and heavy transport vehicles. The Committee also found that such parts were mostly old and used with some of them in a sound condition. However, generally the parts yere found to be damaged and rusty.
3. During the hearing of some miscellaneous applications filed in the case, it transpired that serviceable auto parts, according to the instructions of the Central Board of Revenue, were liable to be confiscated and hence they could not be released even on payment of redemption i.e. However, since the entire controversy revolved around the question whether notwithstanding the fact that the consignment consisted of serviceable auto parts, the whole consignment was nevertheless classifiable as scrap, by consent of the counsel respectively appearing for the parties, this petition was posted for final disposal. 4.
As pointed out earlier, the goods of the petitioners were imported as waste and scrap of iron and steel. It is a common ground between the parties that such goods fall under PCT heading 72.04 which refers to ferrous waste and scrap; or melting scrap ingots of iron or steel. Mrs. Navin Merchant, learned counsel for the petitioners, has strongly contended before us that the goods imported by the petitioners consist of broken and damaged automobile parts and therefore, there can be no justification whatsoever for classifying them under any heading other than the said heading. The learned counsel has further argued that mere serviceability of such parts cannot justify their classification differently. Reference has been made by her to the meaning received by the term Scrap in different dictionaries. Reference has also been made to some of the cases earlier decided on the point to support the -said contentions.
5. The word "Scrap" has been defined by the Concise Oxford Dictionary (Seventh Edition) as "rubbish, waste material of metal, iron etc. Metal collected for reworking; heap, collection of waste material". According to Collins Dictionary of the English Language (Second Edition), "scrap" has been defined as "small pieces, of something larger, fragmentariness material or used articles, esp. Metal, often collected and reprocessed. To discard as useless". Webster's third new International Dictionary describes the meaning of the said term as "to make into unpredisposed of as scrap often for salvage, to abandon or get rid of as no longer of enough worth, merit, use, or effectiveness". A more comprehensive definition of the term relevant to the point in issue can be found in Ballentine's Law Dictionary as the said Dictionary defines it as "metal from worn out machines and vehicles, particularly automobiles, of value only for reprocessing or as an ingredient in the making of steel. Clawson & Bales v. Harrison (CA 7 III) 108 F2d 991. Reference may also be made to the explanatory notes under the said heading in the Brussels Tariff Nomenclature. According to the said Notes, the expression "waste and scrap" would include "articles of iron or steel, definitively not usable as such because of breakage, cutting up, wear or other reasons". Among the other material covered by the said expression is also included fragmentation (Shredding) of motor vehicles bodies and other light scrap, followed by separation (which may be magnetic) with a view to obtaining high density product that is fairly clean". The notes further indicate that waste and scrap is generally used for recovery of metal by remelting or for manufacture of chemicals. However, tis has been pointed out further, the heading excludes articles which, with or without repair or renovation, can be reused for their former purposes or can be adopted for other uses. It also excludes articles which can be fashioned into other goods without first being recovered as metal. Thus, it excludes, for example, structural steel work usable after renewal of worn out parts, worn railway lines which are usable as pitprops or may be converted into other articles by rerolling; steel files capable of reuse after cleaning and sharpening.
6. Among the cases referred to by Mrs. Navin Merchant on the point reference may first be made to the case of M/s. Waseem Traders v. Government of Pakistan 1985 CLC 2796. In this case, the goods were imported as "iron steel scrap" but on examination, they were found to be serviceable auto parts. Consequently, it was held by the Customs Authorities that there was a misdeclaration in the bill of entry in regard to the nature of goods. After appeal and the revision filed by the petitioner was dismissed, the decision was challenged before this Court under its constitutional jurisdiction and it was held that parts which were still usable nevertheless can still be called scrap. In M/s. Radaka Corporation v. Collector of Customs 1989 SCM R 353 the question as to the interpretation of the expression "waste and scrap" came up before the Supreme Court and the conclusion based on the explanation contained in note 6 of the Brussels Tariff Nomenclature was that only such waste or scrap metal which is fit for recovery falls within the scope of the expression "waste and scrap". A somewhat similar question was once again raised before the Supreme Court in the case of The Benco Agencies Limited v. The karachi Municipal Corporation 1987 SCM R 1642. The question that was canvassed before the Supreme Court was that "scrap iron" which was covered by Pakistan Customs Tariff, item No. 73.03 for the purpose of octroi, referred to completely worn out iron which had no utility otherwise then for melting purposes. However, the submission was not considered in absence of a clear finding of fact. Similar question was once again raised before a Division Bench of this Court in the case of M/s. Yaseen Sons v. The Collector of Customs 1990 CLC 1797. The learned Division Bench after review of the case law on the point, observed as follows:-- "...There can be no doubt whatsoever that a particular commodity or class of goods which falls under a particular heading would continue to fall under the same heading even though imported in a second had or used condition. However, if such commodity is imported in a worn out, broken or shredded state and is incapable of being used, for a purpose other than that described under an heading such as 73.03 and also otherwise qualifies within such heading, it is in such P.C.T. Heading that it should, plausibly be assessed. Thus, if the various items ostensibly falling under PCT Headings 73.06 to 73.40 cannot be used for any purpose other than "Waste and Scrap metal of Iron or Steel" the same may fall under the later heading and this conforms to the opinions expressed in the dicta cited above. However, as said elsewhere, the discretion of the Customs in such matters is a very limited one and they must in this behalf be guided by well-established principles duly documented in Brussels Nomenclature of CCCN, etc. As the case may be."
7. As would appear from the various dictionary meanings assigned to the word "scrap" the said word refers to waste material or used articles. The different meanings referred to above further indicate that only such material which no longer can be used in the same form can be called swap. Such material would also include metal from worn out machines, vehicles or automobiles. The only value left in such material must be for reprocessing purposes or for being used as an ingredient in the making of steel. while judged from this angle, classification of auto parts as scrap can some times pose a problem because, on the one had such parts are recovered from automobiles which cannot be used again in their original form but on the other had the parts recovered may retain some serviceability in them. No doubt, in the case of M/s. Waseem Traders 1985 CLC 2796 it was held that serviceable auto parts could be classified as scrap or steel recovered from a collapsed building was also classifiable as such, notwithstanding the fact that it could be used again after refinement but the question would always be that of fact, to be determined according to the facts and circumstances of each case.
The consensus, however, appears to be that only such articles which cannot be used for purpose other than waste and scrap can be classifiable as such. However, if such articles can be used for any other purpose the same, in our opinion, cannot be called scrap. In case of auto parts, any element of serviceability still retained by them, in such circumstances, would be of no consequence unless they are found to be capable of use other than that as scrap. However, this is a pure question of fact which has to be determined by the Customs Authorities themselves. As the goods have already been examined, as pointed out earlier, further action by the Customs would depend upon their decision in the light of this judgment. We would however, like to point out that such questions must be determined by the Customs Authorities as expeditiously as possible because any unreasonable delay in this regard can cause tremendous inconvenience to the parties besides causing irreparable injury in the shape of heavy demurrage.
8. In the result, this petition is allowed to the extent pointed out above and the case is remanded to the Customs Authorities for disposal. The Customs Authorities will reprocess the case strictly in the light of this judgment. C.M.A. No. 136 of 1994 is disposed of in terms of this judgment. C.M.A No. 135 of 1994 is dismissed as the order, dated 14th December, 1993 was modified further by subsequent orders passed by the Division Bench. Hence, in our opinion, no action is necessary for Contempt of Court.
The parties are left to bear their own costs in view of the questions raised.