Import restrictions and penalty requirements for used electronics: confiscation sustained, but exemption, ETA, and misdeclaration findings were narrowed.

Old and used multi-function devices were treated as second-hand capital goods falling within the restricted import category under the Foreign Trade Policy, so DGFT authorisation was required and confiscation under the Customs Act was sustained; however, the redemption fine and importer's penalty were reduced. The goods were also found to satisfy the objective exemption criteria for Highly Specialised Equipment under the Compulsory Registration Order, and no ETA requirement was proved because wireless functionality was not affirmatively established. Alleged Hazardous Wastes Rules violations were not proved, and re-determination of value alone did not establish misdeclaration. Penalty under Section 114AA failed for want of proof of knowing use of false documents, while the importer's penalty was reduced.

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Issues: (i) Whether the imported old and used multi-function devices were covered by Paragraph 2.31(I)(b) of the Foreign Trade Policy, 2023 and required DGFT authorisation; (ii) whether the goods were exempt as Highly Specialised Equipment under Paragraph 8 of the Electronics and Information Technology Goods (Requirements of Compulsory Registration) Order, 2021; (iii) whether Equipment Type Approval from the Wireless Planning and Coordination Wing was required; (iv) whether the alleged contravention of the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 was established; (v) whether re-determination of value by itself established misdeclaration; (vi) whether penalty under Section 112(a)(i) of the Customs Act, 1962 was sustainable; and (vii) whether penalty under Section 114AA of the Customs Act, 1962 was sustainable.

Issue (i): Whether the imported old and used multi-function devices were covered by Paragraph 2.31(I)(b) of the Foreign Trade Policy, 2023 and required DGFT authorisation.

Analysis: The goods were treated as second-hand capital goods covered under electronics and IT goods. Paragraph 2.31(I)(b) of the Foreign Trade Policy, 2023 was read as placing such goods in the restricted category, making DGFT authorisation a precondition for import. In the absence of such authorisation, the goods were held liable to confiscation under Section 111(d) of the Customs Act, 1962. The confiscation was sustained, while the quantum of redemption fine and penalty was found excessive and reduced.

Conclusion: The issue was decided against the assessee on liability to confiscation, but in its favour on reduction of redemption fine and penalty.

Issue (ii): Whether the goods were exempt as Highly Specialised Equipment under Paragraph 8 of the Electronics and Information Technology Goods (Requirements of Compulsory Registration) Order, 2021.

Analysis: Paragraph 8 was held to contain objective and exhaustive criteria for exemption, without importing any sector-specific limitation. The imported machines were found to satisfy the prescribed criteria for exemption as Highly Specialised Equipment. The rejection of the exemption claim in the impugned order was found unsustainable.

Conclusion: The issue was decided in favour of the assessee.

Issue (iii): Whether Equipment Type Approval from the Wireless Planning and Coordination Wing was required.

Analysis: The alleged wireless capability was based on secondary material referring to optional features in brochures and internet sources. No cogent evidence showed that the imported machines were actually fitted with wireless modules. In the absence of affirmative proof, the requirement of ETA was not established.

Conclusion: The issue was decided in favour of the assessee.

Issue (iv): Whether the alleged contravention of the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 was established.

Analysis: The assessee had placed an EPR authorisation on record, relied on documentary compliance, and the record did not support the allegations regarding country-of-origin documents, annual returns, or printing-capacity conditions. The order was also found to proceed on inconsistent appreciation of the Chartered Engineer's report. The alleged violation of the HOW Rules was not established to the required standard.

Conclusion: The issue was decided in favour of the assessee.

Issue (v): Whether re-determination of value by itself established misdeclaration.

Analysis: The enhancement of assessable value on expert assessment in respect of second-hand machinery was held not to automatically prove deliberate misdeclaration. Mere acceptance of the re-determined value for duty purposes did not amount to an admission of wilful false declaration, and value revision alone could not sustain confiscation or penalty.

Conclusion: The issue was decided in favour of the assessee.

Issue (vi): Whether penalty under Section 112(a)(i) of the Customs Act, 1962 was sustainable.

Analysis: Since the goods were held to have been imported without the required DGFT authorisation under the restricted category, liability to penalty in principle was affirmed. However, in the absence of clandestine importation or description misdeclaration, the quantum imposed in the impugned order was considered excessive and was reduced.

Conclusion: The issue was decided partly against the assessee and partly in its favour.

Issue (vii): Whether penalty under Section 114AA of the Customs Act, 1962 was sustainable.

Analysis: The essential requirement of knowing or intentional use of a false declaration or document was not proved. The record did not establish conscious involvement, and mere similarity of names or subsequent cancellation of BIS registrations was insufficient to attract the provision.

Conclusion: The issue was decided in favour of the appellant concerned.

Final Conclusion: The confiscation of the goods was maintained on the restricted-import ground, the claims based on compulsory registration, ETA, and hazardous-waste compliance were rejected in favour of the assessee, the valuation ground was not accepted as an independent basis of liability, the penalty on the importer was reduced, and the penalty on the director was set aside.

Ratio Decidendi: A statutory import restriction must be applied according to the text and structure of the governing policy or order, while penal provisions require proof of their specific ingredients and cannot be sustained on conjecture, optional technical features, or mere revaluation of second-hand goods.

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