TaxTMI 
TaxTMI 
2026 (6) TMI 1241
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....00 001. 1.1. Customs Appeal No. 75371 of 2026 has been filed by Shri Atul Kamdar, Director of M/s. Atul Automation Private Limited, (hereinafter referred to as the appellant no. 2) against the same order, contesting the imposition of penalty on him under Section 114AA of the Customs Act, 1962. 1.2. Since both the appeals emanate from the same impugned order and involve common questions of fact and law, they were heard together and are being taken up for disposal by way of this common order. 2. Briefly stated, the facts leading to the present proceedings are that M/s. Atul Automation Private Limited, Mumbai (the appellant-company), imported four consignments of Old and Used Multi-Function Copying Printer Machines (MFDs) through Kolkata Port under Bills of Entry bearing Nos. 8965697 dated 28.11.2023, 9293207 dated 18.12.2023, 9471935 dated 30.12.2023 and 9667906 dated 15.01.2024, classifying the said goods under Customs Tariff Heading 84433100. The consignments comprised old and used MFDs of various makes and models and were declared accordingly in the respective Bills of Entry. 3. The imported goods were subjected to first-check assessment and were examined by Government....
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.... consequences under the provisions of the said Act were also attracted. 6.1. Upon completion of the adjudication proceedings, the Ld. Principal Commissioner of Customs, Port Commissionerate, Kolkata, passed Order-in-Original No. KOL/CUS/PR. COMMR/PORT/ GR.V/49/2025 dated 14.10.2025, whereby the imported goods were held liable to confiscation under Section 111(d) of the Customs Act, 1962. However, an option was granted to redeem the same upon payment of redemption fine amounting to Rs.25,00,000/- under Section 125 of the Customs Act, 1962. Further, penalty amounting to Rs.45,00,000/- came to be imposed upon the appellant-company under Section 112(a)(i) of the Customs Act, 1962. Insofar as Shri Atul Kamdar, Director of the appellant company (appellant no. 2 herein) is concerned, a separate penalty amounting to Rs.1,85,00,000/- was imposed upon him under Section 114AA of the Customs Act, 1962 on account of his alleged role in the transactions in question. 6.2. Aggrieved by the aforesaid Order-in-Original dated 14.10.2025, the appellant-company as well as Shri Atul Kamdar have filed the present appeals. 7. It is submitted by the Ld. Counsel appearing on behalf of the appellant....
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....ng decisions: - * M/s. Simple Machines v. Commissioner of Customs [(2024) 14 Centax 68 (Mad.)] * M/s. Taanish Enterprises & Others v. Customs (W.P. No. 29418 of 2024) (v) That the Hon'ble Supreme Court of India has, in identical matters involving MFD importers, consistently directed provisional release of similar goods and stayed confiscation orders - an unequivocal recognition by the Apex Court that MFDs are not prohibited or absolutely restricted goods. It would be wholly incongruous if the lower adjudicating authority were to treat such goods as prohibited for import while the Apex Court has been granting reliefs to identically placed importers. (vi) In light of the above, it is submitted that the Respondent's reliance on Para 2.31(I)(b) of the FTP 2023 to confiscate the goods is legally unsustainable and the confiscation order on this ground deserves to be set aside in its entirety. GROUND II - THE GOODS ARE EXEMPTED FROM BIS REGISTRATION AS HIGHLY SPECIALISED EQUIPMENT (HSE) (i) The Respondent has alleged that the MFDs require BIS registration under the Electronics and IT Goods (Requirements of Compulsory Registrati....
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....had been exceeded. The Tribunal in Final Order No. FO/C/A/7791277915/2025-CU[DB] dated 16.12.2025 set aside even that limited restriction. The Respondent cannot be permitted to take diametrically opposite positions with respect to the same appellant and similar goods. (vii) Without prejudice to the above, it is submitted that the BIS certificates bearing Registration No. R-41265640 and R-41264172, relating to printers of Canon Inc. and Xerox Corp. respectively, were duly issued by the BIS authority and were available in the public domain. The appellants relied upon these certificates in good faith. Any alleged infirmity in the manner in which these certificates were obtained must be attributed exclusively to the overseas supplier - M/s. Atul International LLC, USA - which is a legally separate and independent entity incorporated under US law, with no corporate control or shareholding link with the appellant-company. The Respondent cannot transfer liability arising from the overseas supplier's conduct to the Indian importer. GROUND III - NO ETA FROM WPC IS REQUIRED; EVIDENCE RELIED UPON IS HEARSAY (i) The Respondent has held that the MFDs require Equip....
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....n the grounds of: (i) absence of country-of-origin certificate; (ii) absence of DGFT-approved inspection agency certificate; (iii) non-filing of annual return with SPCB; and (iv) failure to meet A3 size printing capacity criteria. (ii) It is submitted that each of these allegations/findings are factually incorrect or legally misconceived: A. EPR Authorization - Duly Obtained and Submitted * The appellant holds a valid EPR Authorization bearing Ref. No. B29016(2582)/EPR/22/WM-III dated 05.02.2023, duly issued by the competent authority. * The Respondent has rejected this document on the ground that it is a "documentary requirement for import, not a permission for import." This reading is manifestly incorrect. The EPR Authorization is the substantive compliance document required under the HOW Rules and the E-Waste Management Rules, 2016/2022. B. Country-of-Origin Certificate - Submitted; and In-Country Inspection Conducted * Country-of-Origin Certificate was submitted along with the Bill of Lading and packaging. * In any event, as per CBIC Circular No. 07/2020-Cus dated 05.02.2020, in c....
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....ted the re-determined values for the purpose of duty payment. However, it is emphatically submitted that acceptance of a revised valuation does not, ipso facto, constitute misdeclaration. The valuation of second-hand goods is inherently subjective and estimation based. Chartered Engineers and importers frequently arrive at different but equally plausible value assessments for used machinery. A mere difference of opinion on value cannot be elevated to the level of a punishable misdeclaration. (iii) Accordingly, the valuation ground cannot provide any justification for confiscation or imposition of penalty. GROUND VI - NO PENALTY ON THE APPELLANTS (i) The penalty of Rs. 45,00,000/- on M/s. Atul Automation Pvt. Ltd. under Section 112(a)(i) and the penalty of Rs. 1,85,00,000/- on Shri Atul Kamdar under Section 114AA are entirely unsustainable for the following reasons: A. No act or omission rendering goods liable to confiscation * For a penalty under Section 112(a)(i) to be attracted, there must be an act or omission by which the goods have been rendered liable to confiscation. As per the submissions above, the goods are not liable to confis....
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.... of the appellant no. 2 which constitutes making, signing, using or causing the use of a false document. F. Statement under Section 108 does not establish guilty knowledge * The Respondent has relied on the statement of the said appellant recorded under Section 108 of the Customs Act, 1962 on 22.02.2024, which does not establish guilty knowledge, but shows the appellants' transparency and bona fides. * The act of applying for DGFT authorization before filing the Bills of Entry, as stated in the said statement, is wholly inconsistent with guilty knowledge or fraudulent intent; the same is evidence of bona fide conduct. 8.1. In view of the above submissions, the appellants inter alia prayed for setting aside the order of confiscation of the goods, imposition of redemption fine and imposition of penalties, as ordered by the ld. adjudicating authority vide the impugned order, and allowing the present appeals filed by them. Additionally, a prayer has also been made for release of the bank guarantee furnished by the appellant-company during provisional release. 9. On the other hand, the Revenue, through its Authorized Representative, has made the followin....
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....rs in the website of the overseas company, the appellant was well aware of the fraudulent means of obtaining the BIS certificates. 9.1. Accordingly, the Ld. Authorized Representative of the Revenue submits that the impugned goods have been rightly confiscated and penalty has been rightly imposed on the appellants. 10. Heard both sides and perused the records available before us. 10.1. Upon hearing the parties, the following issues arise for our consideration: - (I) Applicability of Para 2.31 of the Foreign Trade Policy, 2023 and whether the imported goods are freely importable or otherwise; (II) Applicability of the Electronics and Information Technology Goods (Requirements of Compulsory Registration) Order, 2021 and the appellant's claim for exemption as Highly Specialised Equipment (HSE); (III) Requirement of Equipment Type Approval (ETA) from the Wireless Planning and Coordination Wing (WPC) and the alleged wireless capability of the imported Multi-Function Devices; (IV) Alleged contravention of the provisions of the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016; (V) Re-determination of va....
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....Para 2.31 and, consequently, were liable to be treated as restricted goods requiring authorization. The appellant, on the other hand, has contended that the imported goods do not fall under any of the categories enumerated under Clauses (a), (b) or (c) and would, therefore, be covered by the residuary category under Clause (d), rendering the same freely importable. 11.4. We find that the imported goods are admittedly old and used Multi-Function Devices, which are classifiable as "electronics and IT goods". Paragraph 2.31(I)(b) of the Foreign Trade Policy, 2023 specifically covers second-hand capital goods, other than re-manufactured capital goods, which are covered under electronics and IT goods and categorises the same as "Restricted". Consequently, importation thereof is permissible only upon obtaining the requisite authorization from the Directorate General of Foreign Trade (DGFT). Admittedly, no such authorization had been obtained by the appellant company in the present case. 11.5. Insofar as the reliance placed by the appellant upon the decision of the Hon'ble Madras High Court in Simple Machines v. Commissioner of Customs (Chennai-II), Import [(2024) 14 Centax 68 (....
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....s decided on 08.02.2024], wherein the Hon'ble Court has permitted provisional release of the goods on the above lines. The relevant observations therein are reproduced below: - "26. Thus, for all the aforesaid reasons, it is ordered that let the respondent authorities pass an order on the application filed by the petitioners for provisional release of the goods subject to the conditions that: a) The petitioner shall pay/deposit the enhanced duty amount. On receipt of such enhanced duty amount paid by the petitioners, the goods in question shall be released within a period of four (04) weeks thereafter. b) For payment of such duty, quantification shall be made by the Customs forthwith within one (01) week from the date of receipt of a copy of this order. On receipt of such quantification, the payment shall be immediately made by the petitioners and on receipt of the payment in entirety, the goods shall be released as indicated above at the outer limit of four (04) weeks. c) It is made clear that this order will not stand in the way for ahead with the further Customs Department to go proceedings including the adjudication in the manner known to law....
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....,00,000/- (Rupees Twenty Five Lakhs only) to Rs.10,00,000/- (Rupees Ten Lakhs only) and reduce the penalty imposed upon M/s. Atul Automation Private Limited under Section 112(a)(i) from Rs.45,00,000/- (Rupees Forty Five Lakh only) to Rs.15,00,000/- (Rupees Fifteen Lakhs only). 11.11. The issue stands answered accordingly. Issue No. II : Applicability of CRO, 2021 and claim of exemption as Highly Specialised Equipment (HSE) 12. The next issue which falls for consideration pertains to the applicability of the Electronics and Information Technology Goods (Requirements of Compulsory Registration) Order, 2021 (CRO, 2021) and, more particularly, the appellant's claim that the subject goods are entitled to exemption as Highly Specialised Equipment (HSE) in terms of Paragraph 8 thereof. 12.1. The ld. adjudicating authority has proceeded on the basis that the BIS certificates furnished by the appellant, pertaining to M/s. Atul International LLC, USA, were inapplicable since the country of origin of the imported goods was stated to be China, Thailand, Japan and Malaysia and, consequently, concluded that the imported goods were non-compliant with the provisions of CRO, 2021. ....
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....ployed by the legislature is plain and unambiguous, effect must be given to the same in its ordinary sense. The Hon'ble Supreme Court in Collector of Central Excise, Vadodara v. Dhiren Chemical Industries [(2002) 2 SCC 311] reiterated that the words used in a statutory provision must ordinarily be construed according to their natural meaning and no words can be added thereto under the guise of interpretation. In our considered view, the ld. adjudicating authority has travelled beyond the four corners of the statutory provision and sought to import restrictions which are not borne out from the text of Paragraph 8 of the CRO, 2021. 12.7. It has further been brought to our notice that the respondent's stand on this issue is contradictory to his own earlier stand taken in respect of similar goods imported by the same appellant as well as others where he has ordered release of MFDs upto 100 pieces per model, treating those as HSEs, without insisting on BIS registration. 12.8. Having regard to the totality of the facts and circumstances and upon a harmonious construction of Paragraph 8 of the Electronics and Information Technology Goods (Requirements of Compulsory Registration)....
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....nd derivative in nature. Reliance upon such material, without disclosing the underlying documents to the appellant and without affording an opportunity to controvert the same, does not appear to satisfy the requirements of fair procedure. It is trite that material adverse to a party ought ordinarily to be disclosed so as to enable an effective opportunity of rebuttal. 13.5. More importantly, the mere existence of a provision for optional wireless functionality in certain models cannot, ipso facto, lead to the conclusion that the machines imported by the appellant were equipped with such functionality. Suspicion, however grave, cannot substitute proof. In the absence of any positive material evidencing that the imported MFDs were, in fact, fitted with wireless modules necessitating Equipment Type Approval from WPC, the allegation remains in the realm of conjecture and surmise. 13.6. We also take note of the appellant's reliance upon CBIC Instruction No. 23/2021-Cus dated 23.11.2021 dealing with import of wireless equipment operating in licence-exempt frequency bands. In the facts and circumstances of the present case, we observe that the Department has failed to establish,....
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....easoning. 14.3. The EPR authorization is itself one of the substantive requirements envisaged under the statutory framework governing e-waste management. Once the appellant had obtained the said authorization from the competent authority and had placed the same on record, the same could not have been lightly disregarded while evaluating compliance with the provisions of the HOW Rules, 2016. 14.4. We are also unable to agree with the finding in the impugned order regarding the alleged non-submission of country-of-origin certificate. The appellant has consistently maintained that the requisite documents, including the country-of-origin certificate, accompanied the Bills of Lading and packaging. Be that as it may, CBIC Circular No. 07/2020-Cus dated 05.02.2020 itself contemplates a situation where the exporting country certificate is unavailable and permits post-import inspection by an approved Chartered Engineer in India. Admittedly, in the present case, the consignments were subjected to first-check examination and were inspected by a Chartered Engineer on a 100% basis. In such circumstances, the insistence upon the exporting country certificate, despite the alternative mechan....
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....ortions of the Chartered Engineer's report which support the Revenue and discarding those which operate in favour of the appellant. It is a settled principle that findings recorded in quasijudicial proceedings must rest upon a consistent appreciation of evidence and cannot be founded upon contradictory assumptions. 14.9. The appellant has further submitted that the Hon'ble Madras High Court in Taanish Enterprises (supra) has categorically held that there is no prohibition on import of MFDs under the HOW Rules. 14.10. Having regard to the totality of the materials available on record, we are of the considered view that the allegations regarding contravention of the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 have not been established in a satisfactory manner. Consequently, the alleged non-compliance with the HOW Rules cannot be regarded as furnishing an independent or additional basis for confiscation of the goods under Section 111(d) of the Customs Act, 1962. 14.11. Accordingly, to the aforesaid extent, the findings recorded in the impugned order on this issue are unsustainable and are liable to be set aside. The issue is answered in ....
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....le deciding Issue No. I hereinabove. In the present case, the appellant-company imported the subject goods, which are "electronics and IT goods" falling within the restricted category under Para 2.31(I)(b) of the Foreign Trade Policy, 2023, without obtaining the requisite authorization from the Director General of Foreign Trade. Such import, being in contravention of the provisions of the Foreign Trade (Development and Regulation) Act, 1992 read with the applicable provisions of the Foreign Trade Policy, rendered the goods liable to confiscation under Section 111(d) of the Customs Act, 1962 and, consequently, attracted penal consequences under Section 112(a)(i) of the said Act. 16.2. While upholding the confiscation of the goods and the liability to penalty in principle, we have, for the reasons recorded in paragraph 11.10 of this Order, taken note of the peculiar facts and circumstances of the case, including the nature of the dispute, the fact that the goods had been provisionally released pursuant to judicial orders passed in similar matters and the absence of any material suggestive of deliberate or contumacious conduct warranting imposition of penalty to the extent determin....
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....s as furnished by the overseas supplier. In the absence of any evidence demonstrating that appellant no. 2 had knowledge of any alleged infirmity in the said certificates or had consciously participated in the making or use of any false document, the consequences, if any, arising out of the conduct of the overseas supplier cannot automatically be attributed to appellant no. 2. 17.4. Significantly, the impugned order is conspicuously silent as regards the specific act attributable to appellant no. 2 which would constitute making, signing, using or causing the use of any false declaration or document. Mere similarity of names or the subsequent cancellation of the BIS registrations cannot retrospectively lead to an inference that appellant no. 2 possessed the requisite knowledge at the time of import. 17.5. In our considered view, the Revenue has failed to discharge the burden of establishing that appellant no. 2 had knowingly or intentionally committed any act so as to attract the provisions of Section 114AA of the Customs Act, 1962. The essential ingredients required for invocation of the said provision are, therefore, found to be absent in the case on hand. 17.6. Consequen....