Restricted scrap imports, SEZ hazardous waste controls, and pre-shipment certificate penalties were narrowed by proportionate enforcement.

Import of restricted copper scrap was permitted without a separate DGFT licence where the relevant licensing note allowed import by units registered with the competent pollution control authority, so confiscation of the druid grade copper scrap and ordinary copper scrap was set aside. Plastic scrap remained liable to confiscation because the required licence was not produced. The Hazardous Waste (Management and Handling) Rules, 1989 continued to apply to SEZ imports, but the redemption fine and penalty were reduced in view of regulatory uncertainty and surrounding circumstances. Penalties for non-production of a pre-shipment inspection certificate were also set aside where most consignments predated the circular and customs examination disclosed no prohibited content.

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Issues: (i) whether the confiscation of "druid" grade copper scrap and copper scrap imported by units registered with the pollution control authority was sustainable in the absence of a DGFT licence; (ii) whether the Hazardous Waste (Management and Handling) Rules, 1989 applied to imports made by a unit located in a Special Economic Zone and, if so, what would be the proper fine and penalty; and (iii) whether penalties could be sustained for non-production of a pre-shipment inspection certificate in respect of scrap consignments imported before or around the date of the relevant Board circular.

Issue (i): whether the confiscation of "druid" grade copper scrap and copper scrap imported by units registered with the pollution control authority was sustainable in the absence of a DGFT licence.

Analysis: The import policy for Chapter 74 treated the relevant copper scrap as restricted but permitted import without licence for units registered with the competent environmental authority. Where such registration existed, the absence of a separate DGFT licence did not, by itself, justify confiscation of the "druid" grade copper scrap or ordinary copper scrap. Plastic scrap stood on a different footing because licence was required and was admittedly not produced.

Conclusion: Confiscation of the "druid" grade copper scrap and ordinary copper scrap was set aside. Confiscation of the plastic scrap was sustained.

Issue (ii): whether the Hazardous Waste (Management and Handling) Rules, 1989 applied to imports made by a unit located in a Special Economic Zone and, if so, what would be the proper fine and penalty.

Analysis: The SEZ status did not displace other applicable legal requirements, and the hazardous waste regime continued to apply where permission was required under that law. At the same time, the record showed uncertainty in the regulatory position and prior clearance by customs, which justified treating the case as mitigated for purposes of quantifying the sanction. In the case where confiscation was upheld, the redemption fine and penalty were reduced to align with the value of the goods and the surrounding circumstances.

Conclusion: The hazardous waste requirements were held applicable to the SEZ import, but the fine and penalty were reduced on mitigating circumstances.

Issue (iii): whether penalties could be sustained for non-production of a pre-shipment inspection certificate in respect of scrap consignments imported before or around the date of the relevant Board circular.

Analysis: Most consignments were covered by bills of lading and contracts predating the circular, and the goods had been examined by customs with no material indicating any prohibited content. In these circumstances, imposition of penalties on the importing appellants was not justified.

Conclusion: The penalties for non-production of the pre-shipment inspection certificate were set aside.

Final Conclusion: The appeal succeeded in part: only the plastic scrap confiscation and the confiscation of the "druid" grade copper scrap imported by the main appellant survived, with reduced redemption fine and penalty, while the remaining confiscations and all other penalties were set aside.

Ratio Decidendi: Import under a restricted policy entry may proceed without a separate licence where the governing licensing note so provides, but SEZ status does not exclude compliance with other applicable statutory controls; sanctions must also be proportionate to the facts and the degree of regulatory uncertainty.

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