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2018 (3) TMI 1560 - HC - CustomsRedemption of goods - violation of H&OW Rules, 2016 - import of Multi Function Devices being Digital Photocopiers and Printers - whether the imported goods would come under the definition of waste as per the H&OW Rules, 2016? Whether Rule 15 of the H&OW rules is attracted? - Held that - the deeming fiction does not exclude the ordinary transactions which would come within the ambit of a sale or purchase of goods . Just as each sub-clause therein acts independently, so does the sub-clauses and sub-rules in Rule 15 of the H&OW Rules. An illegality simply defined, is something done in contravention of and against law. Any import which is carried out flouting the laws is an illegality, within which ambit is also taken the four instances as specified in Rule 15, by a deeming fiction. We would also notice that sub-clause (iv) also takes in any deliberate dumping of hazardous or other wastes in contravention of Basel Convention, and general principles of international and domestic law. When even violation of the general principles of law are deemed to be illegal, it cannot be said that violation of enacted laws are not illegal. What we have to see is whether there was any illegality attracting the rigor of re-export. There were defects noticed and it was reported that there should be some repair carried out to make it functional - The damages or defects noticed would not result in completely compromising their functionality according to the approved agency. The certifying agency appointed by the Department certified that the machines could be used for more than five years. We do not find any reason to find that the import is of machines which are not functional as provided under the H&OW Rules. The imported goods are other wastes which have a potential of becoming an e-waste after its functionality expires till which time it can be used. Redemption of goods - Held that - The importers do not even have a case that they had applied for one. They assert that the DGFT refuses to issue such an authorisation and in such circumstance, considering the requirement of MFD s, which is even evident from the policy of the Central Government, they have been importing the same and getting release of the goods on payment of redemption fine. We cannot countenance such a contention but the fact remains that even in the teeth of the violation alleged the goods can be redeemed. As far as the violation of FTP is concerned we answer the question in favour of the importer in so far as the release of the goods since there is a redemption possible by the Adjudicating Authority under the Foreign Trade Act, who has not even been apprised of the violation. Admittedly the goods were imported without an authorisation from the DGFT, which was an essential requirement as per the FTP. In the present case, the Commissioner has thought it fit to impose 20% of the value as redemption fine, obviously without looking into the Foreign Trade Act. The Tribunal reduced it to 10%. We would not interfere with that, since the appeal to the Tribunal was only by the importer. The penalty imposed under Section 114AA has been deleted by the Tribunal, which, we find, to be proper. There cannot be any allegation of false or incorrect material, statement or declaration having been produced - The penalty under Section 112 (a) sustained by the Tribunal cannot also be interfered with. Appeal allowed in part.
Issues Involved:
1. Definition and classification of imported goods as "waste" or "other waste" under the Hazardous and Other Waste (Management and Transboundary Movement) Rules, 2016 ("H&OW Rules, 2016"). 2. Legality of the Tribunal's order for the release of goods on payment of redemption fees. 3. Applicability of Foreign Trade Policy (FTP) and the necessity of authorizations for import. 4. Compliance with the e-Waste (Management and Handling) Rules, 2011 and 2016. 5. Consistency and justification of the redemption fine and penalties imposed. 6. The role and authority of the Commissioner and the DGFT in adjudicating violations and imposing penalties. Detailed Analysis: 1. Definition and Classification of Imported Goods: The Tribunal examined whether the imported Multi-Function Devices (MFDs) could be classified as "waste" under the H&OW Rules, 2016. The Tribunal found that MFDs did not meet the definition of "waste" but were classified as "other waste." The Tribunal relied on certificates from authorized Chartered Engineers, confirming the functionality and residual life of the MFDs, thus concluding that the H&OW Rules, 2016 were inapplicable. The High Court, however, found that the Tribunal erred in applying the definition of "waste" instead of "other waste," which includes used MFDs. 2. Legality of the Tribunal's Order for Release of Goods: The Tribunal ordered the release of the goods on payment of redemption fees, deleting the condition of re-export imposed by the Commissioner. The High Court found that the Tribunal was not justified in releasing the goods solely based on the definition of "waste" and that the goods, classified as "other waste," were restricted items requiring specific authorizations. 3. Applicability of Foreign Trade Policy (FTP) and Authorizations: The FTP mandates specific documents and authorizations for the import of restricted items like MFDs. The High Court noted that the importers did not possess the necessary authorization from the Directorate General of Foreign Trade (DGFT). The absence of such authorization constituted a violation of the FTP and the Foreign Trade (Development and Regulation) Act, 1992. The High Court emphasized that the Commissioner could not adjudicate violations under the Foreign Trade Act and that the matter should be referred to the DGFT for adjudication. 4. Compliance with e-Waste Rules: The Tribunal found that the importers had obtained Extended Producer Responsibility (EPR) authorizations under the e-Waste Rules, 2016, after the importation of goods. The High Court agreed with the Tribunal's finding that the EPR authorizations were now in place, satisfying the requirements under the H&OW Rules, 2016. The High Court also noted that the returns to be filed with the State Pollution Control Board (SPCB) pertained to the disposal of e-waste, which had not yet commenced for the imported MFDs. 5. Consistency and Justification of Redemption Fine and Penalties: The Tribunal reduced the redemption fine and penalties, citing consistent practices and previous decisions. The High Court upheld the Tribunal's reduction, noting that the principle of redemption fine is to prevent importers from profiting from illegal imports. The High Court found no reason to interfere with the reduction of the redemption fine and penalties imposed by the Tribunal. 6. Role and Authority of the Commissioner and DGFT: The High Court clarified that the Commissioner could not adjudicate violations under the Foreign Trade Act and that the matter should be referred to the DGFT. The High Court directed the release of the goods on payment of the modified redemption fine and penalties, subject to further adjudication by the DGFT. The High Court emphasized the need for compliance with the statutory requirements and the proper authority's role in adjudicating such violations. Conclusion: The High Court partly allowed the appeals, directing the release of the goods on payment of the modified redemption fine and penalties, and referred the matter to the DGFT for further adjudication. The Court emphasized the importance of compliance with the statutory requirements and the proper authority's role in adjudicating violations under the Foreign Trade Act.
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