AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (3) TMI 1560
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....detained from October 2016 and the importers were saddled with demurrage for the use of the ware house wherein the goods were detained. The Commissioner, by the orders impugned before the Tribunal, imposed redemption fine and penalties with a rider that the redemption of the goods shall solely be for the purpose of re-export as specified in Rule 15(2) of the Hazardous and Other Waste (Management and Transboundary Movement) Rules, 2016 [for brevity "H&OW Rules, 2016"]. 3. The Commissioner, as against M/s. Atul Automation Pvt. Ltd., imposed a redemption fine of Rs. 1 Crore and penalty under Section 112(a) of the Customs Act, 1962 [for brevity "Customs Act"] of Rs. 50 lakhs, under Section 114AA of Rs. 10 lakhs and also penalty under the aforesaid provisions on the Director respectively of Rs. 10 lakhs and Rs. 1 lakh. With respect to M/s Parag Domestic Appliances, the redemption fine imposed was Rs. 30 lakhs, penalty under Sections 112(a) and 114AA on the importer respectively were Rs. 16 lakhs and Rs. 3 lakhs. On the Director of the said importer, the penalties imposed under Section 112(a) and 114AA were Rs. 3 lakhs and Rs. 30,000/-. The Tribunal, by the impugned order, reduced the....
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....nt, did not say anything further on it. However, we notice that the Tribunal had at the first instance when considering whether the goods were "waste" referred to the certificates issued by the Authorised Chartered Engineers. The third requirement was of an Extended Producer Responsibility [for brevity "EPR"]. The Tribunal found that a Technical Review Committee under the H&OW Rules, 2016 had decided to defer the implementation of EPR; to commence only from 01.05.2017. It was held, the goods which were imported in October, 2016 did not require such EPR. The Tribunal also noticed that subsequent to the order of the Commissioner the importers had obtained EPR authorisation under the H&OW Rules, 2016. The 4th requirement was that the MFD shall be for printing A3 size and above, which, as admitted by the department, is satisfied. The 5th condition was an acknowledged copy of the annual return filed with the concerned State Pollution Control Board [for brevity "SPCB"] for import in the last financial year. The Tribunal found that the annual return has to be filed at the end of the year and the same can be effected only after the importation of goods. The Tribunal found that the importat....
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....efinition of "waste" under the Hazardous and Other Waste (Management and Transboundary Movement) Rules, 2016 to permit release of the goods when the original authority had specifically found the goods to be as defined under "other waste" of the very same Rules? (ii) Whether the Tribunal was justified in ordering release of goods on payment of redemption fees merely relying on the principles of redemption when the subject goods were prohibited from being imported without sanctions and authorizations as per the Foreign Trade Policy framed under the Foreign Trade (Development and Regulations) Act, 1992, Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 and e-Waste (Management and Handling) Rules, 2011? (iii) Whether the Tribunal acted erroneously in law in permitting the release of goods which come under the category of "other waste" as defined in Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 when an illegal traffic of such goods, under Rule 15, mandates re-export of the goods at the importer's cost or transmission to authorized treatment, storage and disposal facility? (iv) Whether the Tribunal seriously erred....
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....matter was elaborately heard on 15th, 16th and 17th of January, 2018 then on 23.01.2018 and on 16th & 21st of February 2018, on which last date judgment was reserved. 8. The learned Standing Counsel for the appellant, Sri. Sreelal Warriar, took us through various enactments and the Foreign Trade Policy (for brevity "FTP" only) to point out the gross illegalities committed by the importers, which, if permitted to continue and the goods released, would result in converting this country into a dumping ground for e-waste. Section 47 of the Customs Act, casts a bounden duty on the Customs authorities to satisfy themselves that the goods entered for home consumption are not prohibited goods and the importer has paid the import duty as assessed, failing which the authorities are entitled to confiscate the goods. The FTP as formulated by the Government of India, Ministry of Commerce and Industry, for the period between 01.04.2015 to 31.03.2020, has statutory force insofar as it being notified in exercise of the powers conferred by Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (for brevity "Foreign Trade Act" only). Clause 2.06 of the FTP speaks of the mandatory d....
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.... Rule 3(q) contains the definition of a "producer" which takes in any person "who offers to sell imported electrical and electronic equipment". Rule 4 speaks of responsibility of producer to collect the e-waste generated on manufacture and on "end of life" of their products to channel it for recycling or disposal. The responsibility to dispose of the products at the "end of life" is the "Extended Producer Responsibility" as spoken of under the Rules. Rule 4(7) refers to an authorisation from the concerned SPCB in accordance with the procedure under Rule 9. Rule 9 speaks of grant of authorisation, which mandates every producer to obtain an authorisation from SPCB and by sub-rule (8) of Rule 5 mandates maintaining of records of the e-waste handled; which records are to be made available for scrutiny by SPCB. Schedule I of the said rules includes printers including cartridges and copying equipment. Rule 3 (l) defines 'extended producer responsibility' of any producer who is made responsible for environmentally sound management of their end of life products. Hence any producer who either manufactures or sell electrical and electronic equipment would be obliged to dispose of ....
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....ommittee under the H&OW Rules, 2008 considered the implementation of H&OW Rules of 2016 and took a decision to defer the implementation of EPR till 30.04.2017 and insist on it only from 01.05.2017. It is also pointed out that e-Waste Rules 2016 came into effect from 04.10.2016 and the consignments reached Kochi Port in the months of October and November, 2016. The requirement as per the H&OW Rules of 2016, specifically Rule 13(4) is the verification of of documents prior to clearing. Even now the goods have not been cleared and the importers have now received the EPR- Authorisation under the e-waste Rules of 2016.It is submitted that in accordance with the e-waste Rules, 2016, Atul Automation had applied for an EPR, which was granted by the Central Pollution Control Board as per communication No.B-29016(22A)/(EPR)/16/WM-III/Division dated 21.04.2017. The authorisation is valid for a period of 5 years and, hence, there can be no defect found on the importer having no EPR. Parag Domestic Appliances also obtained EPR Authorisation from the CPCB by communication No.B-29016(39A)/(EPR)/17/WM-IIIDivision dated 21.04.2017. The authorisations were verified by the Tribunal as seen from its o....
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....Rules. As pointed out, Rule 13(2) does not require any authorisation from the Central Government. Hence, there can be no mandate of an authorisation and in the absence of such mandate, Rule 15 is not attracted. There can, hence, be no redemption fine imposed solely for the purpose of re-export of the goods. The learned Senior Counsel relies on Commissioner of Customs (Sea Port-Import), Chennai v. City Office Equipments [2016 (336) E.L.T. 19 (Mad.)], wherein the issue of provisional release of MFDs, imported without authorisation was considered. It was found that the Commissionerates at different Ports were taking inconsistent views and, hence, there was a direction to bring out proper guidelines, so as to avoid discrimination and arbitrariness. The goods were directed to be provisionally released by the Division Bench of the Madras High Court. 14. Before we venture into a decision on the questions of law, there are certain essential facts and circumstances which are to be borne in mind. As we see from the records and as admitted by both sides, there is no manufacturing of MFDs within the country. The Central Government has permitted import of MFDs, that too used ones and it is a....
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....m to the shipping details provided in the movement documents; or (iv) it results in deliberate disposal (i.e., dumping) of hazardous or other waste in contravention of the Basel Convention and of general principles of international or domestic law. (2) In case of illegal import of the hazardous or otherwaste, the importer shall re-export the waste in question at his cost within a period of ninety days from the date of its arrival into India and its implementation will be ensured by the concerned Port and the Custom authority. In case of disposal of such waste by the Port and Custom authorities, they shall do so in accordance with these rules with the permission of the Pollution Control Board of the State where the Port exists. (3) In case of illegal import of hazardous or otherwaste, where the importer is not traceable then the waste either can be sold by the Customs authority to any user having authorisation under these rules from the concerned State Pollution Control Board or can be sent to authorised treatment, storage and disposal facility." 17. The learned Senior Counsel appearing for the respondents would assert that there is no illegal traffic as discernibl....
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....re not otherwise sales are deemed to be sales independently operates only in that sub-clause. 107. While the true scope of the amendment may be appreciated by overall reading of the entirety of Article 366(29-A), deemed sale under each particular sub-clause has to be determined only within the parameters of the provisions in that sub-clause. One sub-clause cannot be projected into another sub-clause and fiction upon fiction is not permissible. As to the interpretation of fiction, particularly in the sales tax legislation, the principle has been authoritatively laid down in Bengal Immunity Co. Ltd. v. State of Bihar (1955) 2 SCR 603, SCR at p. 647: "The operative provisions of the several parts of Article 286, namely, clause (1)(a), clause (1)(b), clause (2) and clause (3) are manifestly intended to deal with different topics and, therefore, one cannot be projected or read into another." (S.R. Das, Actg. C.J.) We can also see pp. 720 and 721 (N.P. Bhagwati, J.)." 19. As a corollary it can also be stated that the deeming fiction does not exclude the ordinary transactions which would come within the ambit of a "sale or purchase of goods". Just as each sub-clause therein ac....
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....tion in a manufacturing activity. The used MFDs which are subject of import, are not waste as has been defined in the H&OW Rules as rightly found by the Tribunal, but that alone cannot result in an order for release. The MFDs are "other wastes", which definition on the contrary, do not answer the normal terminology of waste, as plainly understood. "Other wastes" are those items enumerated under Part 'B' and Part 'D' of Schedule III, which is permissible of import or export and includes all such waste generated indigenous, within the country. Hence, the definition of "other wastes" include such electronic and electrical equipment which, over a period of time, after its utility expires, becomes waste. These "other wastes", which have a utility period, if manufactured within the country or imported from outside, have to be dealt with when its utility ceases. This is why there is an EPR imposed on the manufacturer or importer or trader of such electrical and electronic equipment to ensure that the said goods supplied to the market is taken back after its utility expires and disposed of by environmentally sound measures. This would indicate that the Union Parliament and ....
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....tion issued by the DGFT. FTP by clause 2.06 in addition to the Bill of Lading, Commercial Invoice and Bill of Entry, makes the import or export subject to any restriction or policy conditions or products specific compliance, as stipulated under any statute. The import policy as per clause 2.31, permits second hand goods to be imported and categorizes them as "free" and "restricted". Photocopier Machines/Digital Printer Machines are restricted and are importable only against authorisation. The respondents have produced an authorisation issued from the Ministry of Environment, Forests and Climate Change, which is not required in the case of MFDs. But no authorisation from the DGFT is produced. The said authorisation is not required if the import is made by an actual user. The respondents herein are not the actual users and have imported used MFDs for further sale within the country. As per the amendment made to the H&OW Rules, 2016 the actual user condition has been now deleted. Clause 2.13 of the FTP speaks of clearance of goods from Customs against Authorisation, which Authorisation can be issued even subsequently to the arrival of the goods; but makes it clear that the facility wi....
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....orter had engaged an approved agency which made random checking of goods and issued a certificate of functionality of more than five years (specifically seven years). This was doubted by the Commissioner insofar as the entire numbers of machinery having not been verified and only a random checking carried out. The Department itself carried out an inspection of the individual machinery, through another approved agency, which has resulted in that agency furnishing a certificate. From the Commissioner's order it is seen that the certificate disclosed that certain machinery on attempting to be operated, was not functioning. There were defects noticed and it was reported that there should be some repair carried out to make it functional. We cannot agree with the Commissioner that this would indicate that such machinery is not functional and has been brought into the country for disposal and would result in environmentally sensitive waste being dumped within the country. If that be so, then there should have been a finding that the goods are "waste" as defined in H&OW Rules. The Department on the contrary asserts that the goods are "other wastes", the import of which is only restrict....
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....edule III; which alone could be considered as an authorisation from the Central Government. The DGFT is a person appointed by the Central Government under Section 6 of the Foreign Trade Act and the Authorisation required from the DGFT as per the FTP, is not one from the Central Government. The importer also has to furnish information as per Form 6 to the Customs authorities accompanied with documents shown as (a), (b) and (c) in addition to those listed in Schedule VIII; wherever applicable. Schedule VIII lists out the documents required for "used multifunction print and copying machines (MFDs)" as below:- "(a) The country of Origin Certificate along with bill of lading and packaging; (b) The certificate issued by the inspecting agency as certified by the exporting country or the inspection and certification agency approved by Directorate General Foreign Trade (DGFT) for functionality, having residual life of not less than five years and serial number. (c) Extended Producer Responsibility - Authorisation under e-waste (Management and Handling) Rules, 2011 as amended from time to time as Producer; (d) The MFDs shall be for printing A3 size and above. (e) An acknowledg....
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....MSMED Act, for services, there could have been any exemption from e-Waste Rules for the activity of import and trading in used MFDs which the Rules treat to be, akin to a production as per the definition of "producer". The MSMED Act under Section 7 classifies enterprises as engaged in the manufacture or production of goods pertaining to any industry specified in the First schedule to the Industries (Development and Regulation) Act, 1951 [under sub-clause (a)] and those engaged in providing or rendering of services [under sub-clause (b)]. Electrical and Electronic equipment is included in the Schedule and the respondents' registration is not as a manufacturing or production enterprise. The exemption is not applicable to the respondents. The learned Senior Counsel on being queried, with the above reasoning, gave up the contention of exemption; fairly and rightly so. 30. We were then showed a Notification, No. G.S.R.670(E)dated 06.07.2016 issued by Ministry of Environment, Forest and Climate Change amending the H&OW Rules which at Para 3 reads as follows: "3. In the said rules, in Schedule III, in the Note, for the portion beginning with the words "... Import permitted in th....
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....ication filed for authorisation, after satisfaction of the applicant's possession of appropriate facilities, technical capabilities and equipment to handle e-waste safely. As contented by the importer; the activities for which authorisation is to be obtained, under the e-Waste rules of 2011, is for disposal of e-waste. In the import of used MFDs and sale of the same within the country, there is no disposal of e-waste as such. 33. More significantly, the e-Waste Rules of 2011 was found to be insufficient to ensure protection of environment and the e-Waste Rules, 2016 was brought in. The learned Senior Counsel would also specifically refer to the recommendations of the Committee on the issue of retrospective implementation of e-Waste Rules, 2016; the decision on which is as follows: "The need for environmentally sound management of e-waste has been recognized all over the world. In the EU this need took the form of a directive by the EU to its members way back in 2003 to collect e-waste in certain quantity from all households. In India, the 2011 rules was a response to this need in view of the environmental consequences haphazard recycling or disposal of the e-waste. The ma....
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.... those in Column 3 of Schedule VIII. The EPR obtained by the importers are after the orders passed by the Commissioner. The goods have not yet been cleared and we do not find anything to upset the finding of the Tribunal that there is an EPR now obtained by the importer; thus satisfying the requirement under Schedule VIII of the H&OW Rules. 35. Yet another objection of the Commissioner was with respect to the absence of acknowledged copy of the annual return filed with the concerned SPCB for import during the previous financial year. The Tribunal found that the consignment was just imported and only at the end of the financial year could there be an annual return filed. As was noticed by the Committee appointed under the e-Waste Rules of 2011, which went into the implementation of the e-Waste Rules of 2016, a provision has been made for every EPR authorization holder to collect and channelize e-waste with respect to annual specified target only by e-Waste Rules of 2016. As is indicated in the EPR Authorisation obtained by the importers, under the e-waste Rules of 2016, their disposal is yet to commence. There cannot hence be any insistence for the annual returns. 36. The lear....
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....er the H&OW Rules, since the subject goods, MFDs, were 'other wastes' under the said Rules. However, there would be no consequence adverse to the importer merely for the goods being classified as 'other wastes' since then it only means that they are restricted items possible of import if they have a functionality of minimum five years. With respect to questions raised as Nos.(ii) to (vii) it cannot but be observed that the primary document required for import of restricted goods,viz: the Authorisation of the DGFT is not available. The importers do not even have a case that they had applied for one. They assert that the DGFT refuses to issue such an authorisation and in such circumstance, considering the requirement of MFD's, which is even evident from the policy of the Central Government, they have been importing the same and getting release of the goods on payment of redemption fine. We cannot countenance such a contention but the fact remains that even in the teeth of the violation alleged the goods can be redeemed. 39. The violation being evident only to the extent of the authorisation under the FTP, the redemption under Section 11 of the Foreign Trade Act....
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....ods since there is a redemption possible by the Adjudicating Authority under the Foreign Trade Act, who has not even been apprised of the violation. 40. Questions (viii) to (x) relate to the issue of reduction of redemption fee. The Tribunal relied on the consistent practices in reducing the redemption fee and penalty and has relied on two decisions of this Court, Office Devices and Navpad Enterprises, as cited herein above. Obviously the decisions were cited by the Tribunal, without looking into it, since on a reading we find that it is the same decision twice reported in two volumes of the same journal. Be that as it may, the principle of redemption fine in lieu of confiscation, as the importer in the afore-cited decision, stated correctly, is with a view "to prevent the importers from earning any profits by such import done contrary to the exemption rules". This was accepted by the Division Bench of this Court. We do not think we should interfere with the reduction of the redemption fine as made by the Tribunal. 41. Admittedly the goods were imported without an authorisation from the DGFT, which was an essential requirement as per the FTP. In the present case, the Commissi....