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M/S.Nl Technologies Pvt Ltd vs Commissioner Of Customs on 23 July, 2019

IN THE HIGH COURT OF KERALA AT ERNAKULAM

PRESENT

THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM

THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI

TUESDAY, THE 23RD DAY OF JULY 2019 / 1ST SRAVANA, 1941

Cus.Appeal.No.1 of 2019

AGAINST FINAL ORDER NO.21714/2018 BY CESTAT, SZB, BANGALORE DATED
05-11-2018

APPELLANT:

M/S.NL TECHNOLOGIES PVT LTD
CENTRO 1 BUILDING,39/3295A, GROUND FLOOR,ERNAKULAM
SOUTH ,PIN CODE-682 016, REPRESENTED BY C.V.VARGHESE,
DIRECTOR AGED 67 YEARS, S/O. LATE C.A.VAREED,R/O.
CHEMPOOTTIL HOUSE, COURT SIDE ROAD, NADA,
IRINJALAKUDA-680 120

BY ADVS.
SRI.P.A.AUGUSTIAN
SMT.CIMY VARGHESE
SMT.LINDA.M.J.
SRI.M.A.BABY

RESPONDENT:
COMMISSIONER OF CUSTOMS,
COCHIN CUSTOMS HOUSE, WILLINGTON ISLAND,
COCHIN-682 009

BY ADV. SREELAL N.WARRIER, SC, CENTRAL BOARD OF
EXCISE AMP; CUSTOMS

THIS CUSTOMS APPEAL HAVING BEEN FINALLY HEARD ON 23.07.2019, THE
COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
Cus.Appeal No.01/2019
2

“CR”

C.K.ABDUL REHIM

R.NARAYANA PISHARADI, JJ.
**************************
Customs Appeal No.1 of 2019
———————————————-
Dated this the 23rd day of July, 2019

JUDGMENT

R.Narayana Pisharadi, J

Electronic waste (e-waste), ordinarily, means waste

electronics/electrical goods or equipments which have become

unfit for use. E-waste poses danger to environment as it

contains toxic materials. Implementation of an environmentally

sound e-waste management process is the object of introducing

E-waste (Management) Rules, 2016 (hereinafter referred to as

‘the Rules’). The present appeal involves an issue relating to

effective implementation of the Rules.

2. The appellant company (hereinafter referred to as ‘the

company’) purchased two shipments of barcode printers,

scanners, printer parts, power adapters etc. from M/s.Sato

Argox India Private Limited, Haryana as per ‘high seas sale

agreement’ dated 23.02.2018. The goods arrived at Kochi and
Cus.Appeal No.01/2019
3

they were examined by the officer concerned. It was then found

that the company had not obtained Extended Producer

Responsibility – Authorisation (for short “EPR-Authorisation”)

which was required for importing the printers. The company

waived the service of show cause notice on it as it wanted re-

export of the goods. After hearing the representative of the

company, the Commissioner of Customs (hereinafter referred to

as ‘the Commissioner’) confiscated the goods but allowed the

company to redeem the goods for re-export on payment of

redemption fine of Rs.4,00,000/-. The Commissioner also

imposed a penalty of Rs.50,000/- on the company.

3. The company filed appeal against the order of the

Commissioner before the Customs, Excise and Service Tax

Appellate Tribunal, South Zonal Bench, Bangalore. Meanwhile,

the supplier of the goods had obtained EPR-Authorisation. As

per the impugned order dated 05.11.2018 in the appeal, the

Tribunal found that the Commissioner should have considered

the request of the company to amend the Bill of Entry for

enabling the supplier to clear the goods. The Tribunal further

found that the Customs Officer has power to confiscate the

goods in the absence of EPR – Authorisation. However, the
Cus.Appeal No.01/2019
4

Tribunal reduced the redemption fine to Rs.2,00,000/- and

penalty to Rs.25,000/-. The Tribunal also directed the

department to consider the request of the company to amend

the Bill of Entry. The aforesaid order of the Tribunal is

challenged in this appeal.

4. The memorandum of appeal contains various grounds

on which the order of the Tribunal is challenged. Subsequent to

the order of the Tribunal, the Commissioner had rejected the

application for amendment of the Bill of Entry. The

memorandum of appeal contains grounds of challenge also

against the aforesaid order of the Commissioner. However,

learned counsel for the appellant pressed for hearing only the

question of law relating to confiscation of goods by the customs

authority at the time of import itself on the ground of non-

production of EPR- Authorisation and the consequent imposition

of redemption fine and penalty on the company. Therefore, the

only substantial question of law for consideration in this appeal

is the following:

“Whether non-production of Extended
Producer Responsibility – Authorisation under
the Rules at the time of import of the goods is
a sufficient ground for confiscation of the
Cus.Appeal No.01/2019
5

goods under the SectionCustoms Act, 1962
(hereinafter referred to as ‘the Act’)?”

5. Heard the learned counsel for the appellant and also the

learned Standing Counsel for the department.

6. There is no dispute with regard to the fact that the

goods imported by the company included printers. There is also

no dispute with regard to the fact that the company had not

obtained EPR-Authorisation for the printers imported by it.

7. Learned counsel for the appellant contended that the

company is only an importer of the goods and the Rules are not

applicable to an importer. Learned counsel would point out that

the expression “importer” is not included in the category of

persons specified in Rule 2 to whom the Rules are made

applicable.

8. Rule 2 states that the Rules shall apply to every

manufacturer, producer, consumer, bulk consumer, collection

centres, dealers, e-retailer, refurbisher, dismantler and recycler

involved in manufacture, sale, transfer, purchase, collection,

storage and processing of e-waste or electrical and electronic

equipment listed in Schedule I, including their components,

consumables, parts and spares which make the product
Cus.Appeal No.01/2019
6

operational. Schedule I of the Rules specifies the equipments for

which EPR-Authorisation is required. Printer is one of the

equipments specified in Schedule I of the Rules.

9. True, Rule 2 does not contain the expression “importer”.

The category of persons specified in Rule 2, to whom the Rules

are made applicable, does not include an “importer” of the

goods mentioned in Schedule I of the Rules.

10. However, the Rules are applicable to every producer.

The term “producer” is defined under Rule 3(cc) of the Rules.

As per Clause (iii) of Rule 3(cc), “producer” means any person

who, irrespective of the selling technique used such as dealer,

retailer, e-retailer etc, offers to sell imported electrical and

electronic equipment and their components or consumables or

parts or spares. The appellant company has no case that it has

imported the printers not for sale. The company was involved in

purchase and sale of the printers imported. Therefore, the

company comes within the definition of “producer”, who is

specified in Rule 2, to whom the Rules are applicable. As per

Rule 13(1), every producer has obligation to make an

application for EPR-Authorisation. It follows that the company

had the obligation to obtain EPR-Authorisation for import of the
Cus.Appeal No.01/2019
7

printers.

11. Learned counsel for the appellant contended that it is

necessary to produce EPR-Authorisation only at the time of

clearance and transport of the imported goods and that such

authorisation is not necessary for mere import of goods.

Learned counsel would contend that the customs authority had

no power to confiscate the goods which were imported without

EPR-Authorisation.

12. Section 111(d) of the Act provides that any goods

which are imported or attempted to be imported or are brought

within the Indian customs waters for the purpose of being

imported, contrary to any prohibition imposed by or under the

Act or any other law for the time being in force, shall be liable to

confiscation. Section 2(33) of the Act defines the expression

‘prohibited goods’. It states that ‘prohibited goods’ means any

goods the import or export of which is subject to any prohibition

under the Act or any other law for the time being in force but

does not include any such goods in respect of which the

conditions subject to which the goods are permitted to be

imported or exported, have been complied with.

13. Section 111(d) of the Act empowers the customs
Cus.Appeal No.01/2019
8

authority to confiscate goods imported contrary to any

prohibition imposed not only under the Act but under any other

law. The definition of prohibited goods under Section 2(33) of

the Act is a broad one. The said provision not only brings within

its sweep an import or export of goods which is subject to any

prohibition under the Act but also any other law for the time

being in force (SectionSee Commissioner of Central Excise and

Customs v. Suresh Jhunjhunwala: (2007) 12 SCC 391).

Clause (d) of Section 111 of the Act states that any goods

which are imported or attempted to be imported contrary to

“any prohibition imposed by or under the Act or any other law

for the time being in force” is liable to be confiscated. “Any

prohibition” referred to in that section applies to every type of

“prohibition”. That prohibition may be complete or partial. The

expression “any prohibition” in Section 111(d) of the Act

includes restrictions. “Any prohibition” means every prohibition

or in other words, all types of prohibitions. Restriction is one

type of prohibition (SectionSee Sheikh Mohd. Omar v. Collector of

Customs : AIR 1971 SC 293).

14. In the instant case, the printers imported by the

company were prohibited goods within the meaning of Section
Cus.Appeal No.01/2019
9

2(33) of the Act as they were goods for which EPR-Authorisation

was required under the Rules. Therefore, the customs authority

had the power to confiscate them.

15. At this juncture, it is also to be noted that, as per the

entry in item No.4 in Schedule IV of the Rules, customs

authority under the Act has the duty to verify the EPR-

Authorisation and to inform the Central Pollution Control Board

of any illegal traffic for necessary action and also to take action

against the importer for violations under the Act.

16. In the aforesaid circumstances, the contention of the

appellant that, production of EPR-Authorisation was not

necessary for importing the printers but it was necessary only at

the time of collection and transport of the imported goods, is

only to be rejected. Learned counsel for the appellant invited

our attention to the judgment of the Division Bench of this

Court in Customs Appeal No.19/2017 (SectionCommissioner of

Customs v. M/s Atul Automations Private Limited) and

contended that production of EPR-Authorisation is necessary

only at the time of clearing of the imported goods. We find no

such dictum laid down in the aforesaid judgment. What is stated

in that judgment is only that, since the importers had obtained
Cus.Appeal No.01/2019
10

EPR subsequent to the orders passed by the Commissioner but

before clearance of the goods, they had satisfied the

requirement under the Hazardous and Other Wastes

(Management and Transboundary Movement) Rules, 2016. This

observation was made by this Court in that judgment after

referring to Rule 13(4) of the abovementioned Rules which

provides that before clearing of consignment of wastes, the

customs authorities shall verify the required documents.

17. The company had requested the Commissioner to

grant permission for re-export of the goods. The Commissioner

allowed the company to redeem the goods for re-export on

payment of redemption fine of Rs.4,00,000/-, which was

reduced by the Tribunal to Rs.2,00,000/-.

18. Section 125(1) of the Act provides that whenever

confiscation of any goods is authorised by the Act, the officer

adjudging it may, in the case of any goods, the importation or

exportation whereof is prohibited under the Act or under any

other law for the time being in force, and shall, in the case of

any other goods, give to the owner of the goods or, where such

owner is not known, the person from whose possession or

custody such goods have been seized, an option to pay in lieu of
Cus.Appeal No.01/2019
11

confiscation such fine as the said officer thinks fit. Section

126(1) of the Act states that when goods are confiscated under

the Act, such goods shall thereupon vest in the Central

Government.

19. When the goods are confiscated, the authority

concerned has to address the question as to giving option to the

importer to pay such fine as considered appropriate in lieu of

confiscation of the goods (SectionSee Hargovind Das K. Joshi v.

Collector of Customs: AIR 1987 SC 1982). When goods are

found to be offending goods and order of confiscation is passed,

then the goods shall vest in the Central Government and if they

are to be restored to the owner, adjudicating authority can do so

only under the provisions of Section 125 of the Act which

prescribes imposition of fine in lieu of confiscation. Fine

envisaged thereunder is only to get over the order of

confiscation, irrespective of whether the goods are cleared for

re-export (SectionSee M/s Afzal Agency v. Customs, Excise and

Service Tax Appellate Tribunal: 2005 (4) KLT 821). The

provision for confiscation under Section 111 of the Act lists

various contingencies in which such confiscation can be

proceeded with. When confiscation is provided and the
Cus.Appeal No.01/2019
12

Commissioner effects confiscation, then the goods becomes the

property of the Central Government. A mitigation is provided

insofar as the owner of the goods to opt for redemption under

Section 125 of the Act (SectionSee Commissioner of Customs v.

Nalin Choksey: 2018 (2) KLT 349).

20. In the instant case, the company had requested the

Commissioner to grant permission for re-export of the goods

and exercised the option to redeem the goods for that purpose.

Therefore, the Commissioner imposed a redemption fine of

Rs.4,00,000/- on the company to enable it to re-export the

goods. The Tribunal has reduced the amount of redemption fine

to Rs.2,00,000/-. We find no sufficient ground to further reduce

the amount of redemption fine.

21. The Commissioner imposed a penalty of Rs.50,000/-

on the company. Learned counsel for the appellant has

contended that the company was not aware of the requirement

of obtaining EPR-Authorisation for import of the printers and

since the omission to obtain the authorisation was not wilful or

deliberate, imposition of penalty was not justified.

22. Section 112(a) of the Act provides that any person,

who, in relation to any goods, does or omits to do any act
Cus.Appeal No.01/2019
13

which act or omission would render such goods liable to

confiscation under Section 111, shall be liable to pay penalty not

exceeding the value of the goods or Rs.5,000/-, which is

greater. Mens rea is not an essential element/ingredient to

impose penalty, unless the language of the statute indicates the

need to establish the same. When it is provided in the statute

that the act which attracts levy of penalty shall be committed

‘knowingly’, ‘falsely’, ‘intentionally’, ‘fraudulently’, ‘wilfully’ etc.,

then it can be found that it requires mens rea for imposing

penalty. The use of such expressions indicates the intention of

the legislature in clear terms that mens rea is an essential

element. Section 112(a) of the Act does not contain any such

expression. In the absence of any such expression used in

Section 112(a) of the Act, mens rea is not essential to impose

penalty in exercise of the power under that provision. The

Tribunal has reduced the penalty from Rs.50,000/- to

Rs.25,000/-. There is no sufficient ground to further reduce the

amount of penalty.

23. In the light of the discussion above, we answer the

substantial question of law raised in favour of the revenue,

holding that non-production of EPR-Authorisation under the
Cus.Appeal No.01/2019
14

Rules at the time of import of the goods constitutes sufficient

ground for confiscation of the goods under Section 111(d) of the

Act.

Consequently, the appeal fails and it is dismissed. No costs.

(sd/-)

C.K.ABDUL REHIM, JUDGE

(sd/-)

R.NARAYANA PISHARADI, JUDGE
jsr/19/07/2019
Cus.Appeal No.01/2019
15

APPENDIX
PETITIONER’S/S EXHIBITS:

ANNEXURE-A TRUE COPY OF THE ORDER-IN -ORIGINAL
NO.COC-CUSTOMS-000-COM-17/2018-19 DATED
03.07.18

ANNEXURE-B TRUE COPY OF HE EPR AUTHORIZATION NO.B-

29016 (601)/(EPR)/18/WM-III DIVISION
DATED 24.08.18 OBTAINED BY M/S. SATO
ARGOX INDIA PVT LTD

ANNEXURE-C TRUE COPY OF THE LETTER DATED 27.08.18
SUBMITTED BY APPELLANT

ANNEXURE-D TRUE COPY OF THE LETTER DATED 27.08.18
SUBMITTED BY M/S. SATO ARGOX INDIA PVT
LTD

ANNEXURE-E TRUE COPY OF THE JUDGMENT DATED
16.10.18 IN WRIT PETITION NO.30134 OF
2018

ANNEXURE-F CERTIFIED COY OF THE FINAL ORDER
NO.21714/2018 DATED 02.11.18

ANNEXURE-G TRUE COPY OF THE LETTER DATED 12.11.18

ANNEXURE-H TRUE COPY OF THE ORDER -IN ORIGINAL
NO.COC-CUSTOMS-000-42/2018-19 DATED
27.12.18

TRUE COPY
PS TO JUDGE

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