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Commissioner Of Customs vs M/S. Atul Automations Pvt Ltd. on 24 January, 2019

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

Digitally signed by R
NATARAJAN
Date: 2019.01.24
Leave granted.

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.

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