COMMISSIONER OF CUSTOMS vs. M/S. ATUL AUTOMATIONS PVT LTD.

NON­REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO(s). 1057 OF 2019 (arising out of SLP(C) No. 12471 of 2018)   COMMISSIONER OF CUSTOMS ....APPELLANT(S) VERSUS M/S. ATUL AUTOMATIONS PVT. LTD.       ...RESPONDENT(S) WITH CIVIL APPEAL NO(s).  1058  OF 2019 (arising out of SLP(C) No.12704 of 2018) COMMISSIONER OF CUSTOMS ....APPELLANT(S) VERSUS M/S. PARAG DOMESTIC APPLIANCES       ...RESPONDENT(S) CIVIL APPEAL NO(s).  1060  OF 2019 (arising out of SLP(C) No.16325 of 2018) COMMISSIONER OF CUSTOMS ....APPELLANT(S) VERSUS M/S. ATUL AUTOMATIONS PVT. LTD.       ...RESPONDENT(S) CIVIL APPEAL NO(s). 1059  OF 2019 (arising out of SLP(C) No.16204 of 2018) COMMISSIONER OF CUSTOMS ....APPELLANT(S) VERSUS M/S. PARAG DOMESTIC APPLIANCES       ...RESPONDENT(S) JUDGMENT NAVIN SINHA, J. Signature Not Verified Leave granted. Digitally signed by R NATARAJAN Date: 2019.01.24 17:05:25 IST Reason: 1 2. The respondents during October­November, 2016 imported certain   consignments   of   Multi­Function   Devices   (Digital Photocopiers and Printers) (hereinafter referred to as “MFDs”). The Commissioner  of   Customs   held  that  the   imports   were   in violation of the Foreign Trade Policy framed under the Foreign Trade   (Development   and   Regulation)   Act,   1992   (hereinafter referred to as the “Foreign Trade Act”) and Rule 15(1)(2) of the Hazardous and Other Wastes (Management and Transboundary Movement)   Rules,   2016   (hereinafter   referred   to   as   “Waste Management   Rules”).   Redemption   fine   was   imposed   under Section   125   of   the   Customs   Act,   1962   and   the   consignment released   for   re­export  only.     Penalty   was   also   imposed   under Section 112(a) along with penalty under Section 114AA of the Customs Act as also penalty was imposed on the Directors.  3. In   appeal   before   the   Tribunal,   the   respondents   did   not contest that the import was in violation of the Foreign Trade Policy   having   been   made   without   the   necessary   prior authorisation.     The   Tribunal   held   that   the   MFDs   did   not constitute “waste” under Rule 3(1)(23) of the Waste Management 2 Rules and had a utility life of 5 to 7 years, as certified by the Chartered Engineer.   Release of the consignment was directed under Section 125 of the Customs Act as the respondents were held to have substantially complied with the requirements of Rule 13 of the Waste Management Rules read with Schedule VIII Entry 4(j) except  for the   country  of  origin  certificate.   The  Tribunal further   noticed   that   earlier   also   similar   consignments   of   the respondent   and   others   had   been   released   at   the   Calcutta, Chennai and Cochin ports upon payment of redemption fine. The redemption fine was reduced as also the penalty under Section 112(a) of the Customs Act was reduced including that on the Director also.  The penalty under Section 114AA was done away with.  4. In the appeal preferred by the Revenue, the High Court held that the MFDs correctly fell in the category of “other wastes” under Rule 3(1)(23) of the Waste Management Rules read with Part B and Part D of Schedule III Item B1110 dealing with used Multi­Function Printer and Copying Machines. Adverting to the provisions of the Foreign Trade Act and the Foreign Trade Policy 3 framed   thereunder,   it   was   held   that   the   MFDs   were   not prohibited but restricted items for import.   Section 11(8) and (9) of the Foreign Trade Act provided for confiscation and redemption of goods imported without authorisation upon payment of market value.  The order for release of the goods was upheld subject to execution   of   a   simple   bond   without   sureties   for   90%   of   the enhanced   assessed   value,   with   further   liberty   to   the   Director General of Foreign Trade (hereinafter referred to as “the DGFT”), along with directions. 5.     Shri Maninder Singh, learned senior counsel appearing for the   appellant   submitted   that   import   of   the   MFDs   without authorisation permit and in violation of the Foreign Trade Policy is not in dispute.   The imported MFDs having been held to be “other wastes”, documentation being incomplete under Part D of Schedule   III   of   the   Waste   Management   Rules,   re­export   was rightly ordered under Rule 15 of the Waste Management Rules while imposing redemption fine.  Section 125 of the Customs Act could not have been relied upon, in the facts of the case, to hold that   fine   in   lieu   of   confiscation   would   suffice   for   purpose   of 4 redemption   permitting   import.     Even   if   the   MFDs   were   a restricted   and   not   prohibited   item,   absence   of   the   necessary authorisation under the Foreign Trade Policy would give it the character   of   a   prohibited   item.     The   respondents   had   been habitual in the illegal import of similar consignments.   Merely because on earlier occasions, similar consignments imported in violation   of   the   law   may   have   been   released   on   payment   of redemption fine, it did not vest a legal right in the respondent to claim similar relief always.  The customs authorities, in the facts of the case, cannot be said to have detained the consignment without justification.  6. Shri Mukul Rohatgi, learned senior counsel appearing for the respondent submitted that MFDs were imported in October­ November,   2016.   The   requirement   of   extended   producer responsibility under the E­waste (Management) Rules, 2016 was deferred till 30.04.2017 by the Technical Committee under the Ministry   of   Environment   and   Forest.     In   any   event,   the respondent   has   obtained   the   same   before   release   of   the consignment.  The question for disposal of the imported machine 5 at this stage is premature as it has a utility life of 5 to 7 years. The   consignment   was   not   a   prohibited   but   restricted   item. Section 125 of the Customs Act vests discretion in the authority to levy fine in lieu of confiscation. The discretionary power has to be tampered   with  reason   and   has   to  be   read   along   with   the Foreign Trade Act and the policy framed under the same.   The Customs   Department   has   consistently   in   the   past   been permitting the release of MFDs on levy of redemption fine.  The discriminatory treatment with regard to the present consignment is unjustified.   The DGFT had declined to issue authorisation certificate.   There   was   substantial   compliance   with   the requirements of Rule 13 of the Waste Management Rules read with Schedule VIII Entry 4(j).  7.  We   have   considered   the   submissions   on   behalf   of   the parties.   The MFDs were imported in October­November 2016. They were detained by the customs authorities opining that the imports had been made in violation of the Foreign Trade Policy, 2015­2020 framed under Sections 3 and 5 of the Foreign Trade Act and the Wastes Management Rules. 6 8.  Clause   2.01   of   the   Foreign   Trade   Policy   provides   for prohibition and restriction of imports and exports. The export or import of restricted goods can be made under Clause 2.08 only in accordance   with   an   authorisation/permission   to   be   obtained under Clause 2.11.  Photocopier machines/Digital multifunction Print   and   Copying   Machines   are   restricted   items   importable against   authorisation   under   Clause   2.31.   Indisputably,   the respondents did not possess the necessary authorisation for their import.  The customs authorities therefore  prima facie  cannot be said   to   be   unjustified   in   detaining   the   consignment.   Merely because earlier on more than one occasion, similar consignments of   the   respondent   or   others   may   have   been   cleared   by   the customs authorities at the Calcutta, Chennai or Cochin ports on payment of redemption fine cannot be a justification simpliciter to demand parity of treatment for the present consignment also. The   defence   that   the   DGFT   had   declined   to   issue   such authorisation does not appeal to the Court. 7 9.  Unfortunately, both the Commissioner and the Tribunal did not advert to the provisions of the Foreign Trade Act. The High Court dealing with the same has aptly noticed that Section 11(8) and (9) read with Rule 17(2) of the Foreign Trade (Regulation) Rules,1993   provides   for   confiscation   of   goods   in   the   event   of contravention   of   the   Act,   Rules   or   Orders   but  which   may   be released   on  payment  of   redemption   charges   equivalent  to  the market value of the goods.  Section 3(3) of the Foreign Trade Act provides that any order of prohibition made under the Act shall apply   mutatis mutandis   as deemed to have been made under Section 11 of the Customs Act also.  Section 18A of the Foreign Trade Act reads that it is in addition to and not in derogation of other laws.  Section 125 of the Customs Act vests discretion in the authority to levy fine in lieu of confiscation. The MFDs were not prohibited but restricted items for import.   A harmonious reading of the statutory provisions of the Foreign Trade Act and Section 125 of the Customs Act will therefore not detract from the   redemption   of   such   restricted   goods   imported   without authorisation upon payment of the market value.  There will exist a fundamental distinction between what is prohibited and what is 8 restricted.  We therefore find no error with the conclusion of the Tribunal affirmed by the High Court that the respondent was entitled to redemption of the  consignment on payment of the market price at the reassessed value by the customs authorities with fine under Section 112(a) of the Customs Act,1962.                       10.  The Central Government had permitted the import of used MFDs with utility for at least five years keeping in mind that they were   not   being   manufactured   in   the   country.   The   Chartered Engineer commissioned by the customs authorities had certified that the MFDs were capable of utility for the next 5 to 7 years without any major repairs.  Considering that at import they had utility, the High Court rightly classified them as “other wastes” under Rule 3(1)(23) of the Waste Management Rules, which reads as follows :­  “Other wastes means wastes specified in Part B and Part D of Schedule III for import or export and   includes   all   such   waste   generated indigenously within the country.” 11.  Rule 13(2)     provides the procedure for import of other wastes listed in Part D Schedule III.  Item B1110 of the Schedule 9 mentions   used   Multifunction   Print   and   Copying   Machines (MFDs).  Entry 4(j) lists out five documents required for import of used   MFDs.     The   respondents   have   been   found   to   be substantially compliant in this regard and the requirement for the country of origin certificate has been found to be vague by the   High   Court.     Form   6   has   rightly   been   held   to   be   not applicable to the subject goods. 12.  Rule 15 of the Waste Management Rules dealing with illegal traffic, provides that import of “other wastes” shall be deemed illegal if it is without permission from the Central Government under the Rules and is required to be re­exported.  Significantly the Customs Act does not provide for re­export.   The Central Government under the Foreign Trade Policy has not prohibited but restricted the import subject to authorisation.   The High Court   therefore   rightly   held   that   the   MFDs   having   a   utility period, the Extended Producer Responsibility would arise only after the utility period was over.  In any event, the E­waste Rules 2016 certificate had since been issued to the respondents by the 10 Central   Pollution   Control   Board   before   the   goods   have   been cleared. 13.  We therefore find no reason to interfere with the impugned orders.   In the statutory scheme of the Foreign Trade Act as discussed, we further find no error in the penultimate direction to the respondents for deposit of bond without sureties for 90% of the enhanced valuation of the goods leaving it to the DGFT to decide whether confiscation needs to be ordered or release be granted on redemption at the market value, in which event the respondents shall be entitled to set off.  14.  The appeals are dismissed.  ………............................CJI. [RANJAN GOGOI] …………............................J. [NAVIN SINHA] …………............................J. [K.M. Joseph] NEW DELHI JANUARY 24, 2019. 11