2020 (10) TMI 184 - HC - Customs

Tribunal Orders Redemption Fine and Penalty Review, Emphasizing Compliance with Regulations

The Tribunal upheld the decision to set aside absolute confiscation and remand the matter for determining redemption fine and penalty. Relying on the ... Vacation of Interim Order - levy of redemption fine and penalty - import of consignments of multifunctional printers/devices (MFD) - whether, the Tribunal exercised its discretion in accordance with law, in light of the violations complained by the Department? - HELD THAT:- We have already referred to the contentions of the learned counsel for appellant – Department in detail. He drew our attention to two principal violations in the matter of import of the goods in question. The first being no compulsory registration under the Government Order dated 07/09/2012 and having regard to Sl.Nos.7 and 8 of the Schedule thereto, made under the provisions of BIS Act, 1986. In that regard, learned counsel for appellant also drew our attention to Notification of the Ministry of Communications and Information, Technical Department of Information Technology dated 07/11/2014, issued under the BIS Act, with reference to Sl.No.26, which deals with copying machines/duplicators. The original schedule refers to only printers, plotters and scanners. On a combined reading of the same, we find that the goods in question namely, MFDs do not fall in either of these two Schedules i.e., Schedule as per Notification dated 07/11/2014 or in the Schedule as originally appended to the Order dated 07/09/2012. In the circumstances, on the facts of this case, we hold that it was unnecessary for the respondents herein to register under the provisions of the Electronics and Information Technology Goods [Requirements for Compulsory Registration] Order, 2012. Non-compliance with Rule 13(2)(a), (b) and (c) of the H&OW Rules, 2016 - HELD THAT:- There is force in the contentions of learned counsel for respondents, inasmuch as under the Order for compulsory registration of 2012, MFDs do not find a place and secondly, under the H&OW Rules, submission of Form No.6 under Sl.No.4(j) of the Schedule VIII of H&OW Rules, 2016 does not arise - Admittedly, Form No.7 deals with an application form for one time authorization of traders for Part-D of Schedule III, which deals with “other wastes”, under H&OW Rules - Admittedly, the MFDs in question are category of “other wastes”. Noticing the fact that there was seizure of the goods in question and after the order of the Original Authority, the goods were held liable for confiscation and being aggrieved that respondents herein had challenged the order of the Authorities before the Tribunal. In the instant case, the Tribunal has applied the dictum of the Hon’ble Supreme Court in COMMISSIONER OF CUSTOMS VERSUS M/S. ATUL AUTOMATIONS PVT. LTD., AND PARAG DOMESTIC APPLIANCES [2019 (1) TMI 1324 - SUPREME COURT] and has held that there was a substantial compliance in all respects and there was only a procedural aberration and hence, it granted relief in those cases which has been followed by the Tribunal in the instant cases also. While doing so, the Tribunal has also noticed Section 11(8) and (9) of the Foreign Trade Act, 1992 read with Rule 17(2) of the Foreign Trade (Regulation) Rules, 1993 also under Section 3(3) of the Foreign Trade Act. Hence, we find that the dictum of the Hon’ble Supreme Court in Atul Automations would squarely apply in the instant cases also, which has been followed by the Tribunal. Therefore, the substantial questions of law raised by the Department in these cases with regard to the applicability of the judgment of the Apex Court in Atul Automations, would not arise. Appeal dismissed. Issues Involved:1. Compliance with Rule 13(2)(a), (b), and (c) of the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016.2. Requirement for compulsory registration under the Electronics and Information Technology Goods (Requirement of Compulsory Registration) Order, 2012.3. Applicability of the Foreign Trade Policy, particularly paragraph 2.31, concerning the import of restricted goods.4. Tribunal’s reliance on the judgment of the Supreme Court in Atul Automations Pvt. Ltd.5. Applicability of the OM issued by the Department of Information Technology.Detailed Analysis:1. Compliance with Rule 13(2)(a), (b), and (c) of the H&OW Rules, 2016:The Department contended that the imported MFDs did not comply with Rule 13(2)(a), (b), and (c) of the H&OW Rules, which require specific documentation for importing 'other wastes.' The respondents failed to provide Form Nos. 6 and 7, leading to non-compliance. However, the Tribunal noted that Form No. 6 is not applicable to MFDs as per Schedule VIII, Entry 4(j), and hence, there was substantial compliance with the requirements.2. Requirement for Compulsory Registration under the Electronics and Information Technology Goods (Requirement of Compulsory Registration) Order, 2012:The Department argued that the MFDs required compulsory registration under the BIS Act, 1986, as per the Electronics and Information Technology Goods (Requirement of Compulsory Registration) Order, 2012. However, the Tribunal found that MFDs do not fall under the categories listed in the Schedule appended to the Order dated 07/09/2012 or the Notification dated 07/11/2014, which includes printers, plotters, scanners, and copying machines/duplicators. Therefore, the requirement for compulsory registration did not apply to the imported MFDs.3. Applicability of the Foreign Trade Policy, particularly paragraph 2.31, concerning the import of restricted goods:The Department highlighted that the MFDs are restricted items under the Foreign Trade Policy and require authorization for import. The Tribunal referred to the Supreme Court's judgment in Atul Automations, which clarified that MFDs are restricted but not prohibited items. The Tribunal exercised discretion under Section 125 of the Customs Act, allowing the release of goods on payment of redemption fine and penalty, considering the substantial compliance with the Foreign Trade Policy.4. Tribunal’s Reliance on the Judgment of the Supreme Court in Atul Automations Pvt. Ltd.:The Tribunal relied on the Supreme Court's judgment in Atul Automations, which dealt with the import of MFDs and the applicability of the Foreign Trade Policy and H&OW Rules. The Supreme Court held that MFDs are restricted items and can be released on payment of redemption fine and penalty. The Tribunal found that the facts of the present case were similar and applied the same principles, granting relief to the respondents.5. Applicability of the OM issued by the Department of Information Technology:The Department argued that the OM issued by the Department of Information Technology was applicable to the imported MFDs. However, the Tribunal did not find this argument persuasive, as the OM did not specifically address the compulsory registration requirement for MFDs under the Electronics and Information Technology Goods (Requirement of Compulsory Registration) Order, 2012.Conclusion:The Tribunal's decision to set aside the absolute confiscation and remand the matter for determination of redemption fine and penalty was upheld. The Tribunal's reliance on the Supreme Court's judgment in Atul Automations was deemed appropriate, and the substantial questions of law raised by the Department were answered against the Revenue. The adjudicating authority was directed to complete the re-adjudication process within two weeks.