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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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 LTDANNEXURE-C TRUE COPY OF THE LETTER DATED 27.08.18
SUBMITTED BY APPELLANTANNEXURE-D TRUE COPY OF THE LETTER DATED 27.08.18
SUBMITTED BY M/S. SATO ARGOX INDIA PVT
LTDANNEXURE-E TRUE COPY OF THE JUDGMENT DATED
16.10.18 IN WRIT PETITION NO.30134 OF
2018ANNEXURE-F CERTIFIED COY OF THE FINAL ORDER
NO.21714/2018 DATED 02.11.18ANNEXURE-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
27.12.18TRUE COPY
PS TO JUDGE