2019 (1) TMI 1324 - SC - Customs

Detention of imported item - prohibited goods or not? - import of Multi- Function Devices (Digital Photocopiers and Printers) - violation of the Foreign Trade Policy, 2015 2020 framed under Sections 3 and 5 of the Foreign Trade Act and the Wastes Management Rules - penultimate direction for deposit of Bond without sureties - Held that - 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. 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. 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 E- waste Rules 2016 certificate had since been issued to the respondents by the Central Pollution Control Board before the goods have been cleared. In the statutory scheme of the Foreign Trade Act, there is 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 - appeal dismissed.

Issues:
1. Import of Multi-Function Devices (MFDs) in violation of Foreign Trade Policy and Waste Management Rules.
2. Imposition of redemption fine and penalties under Customs Act.
3. Interpretation of provisions of Foreign Trade Act and Customs Act.
4. Compliance with Waste Management Rules for import of MFDs.
5. Discretion of authorities in levying fines and granting redemption.
6. Classification of MFDs as "other wastes" and utility life assessment.
7. Decision on re-export of MFDs and issuance of necessary certificates.
8. Authority's power to release goods on payment of redemption charges.
9. Compliance with documentation requirements for import of used MFDs.
10. Determination of extended producer responsibility and utility period.
11. Applicability of E-waste Rules and issuance of necessary certificates.
12. Decision on deposit of bond and potential confiscation of goods.

Analysis:
1. The case involved the import of Multi-Function Devices (MFDs) in violation of the Foreign Trade Policy and Waste Management Rules. The Commissioner of Customs imposed redemption fine and penalties under the Customs Act due to the non-compliance with the regulations.

2. The Tribunal reduced the redemption fine and penalties imposed by the Commissioner, citing compliance with certain requirements of the Waste Management Rules. The High Court upheld the decision, classifying MFDs as "other wastes" and allowing release upon payment of redemption charges.

3. The High Court's decision was based on a detailed analysis of the provisions of the Foreign Trade Act and Customs Act. It highlighted the distinction between prohibited and restricted items for import, emphasizing the authority's discretion in levying fines and granting redemption for restricted goods.

4. The compliance with Waste Management Rules for the import of MFDs was a crucial aspect of the case. The Court noted the substantial compliance by the respondents with the documentation requirements, except for the country of origin certificate, which was deemed vague.

5. The authorities' discretion in levying fines and granting redemption was a point of contention. The Court emphasized the need for a harmonious reading of the statutory provisions to determine the redemption of restricted goods imported without authorization, based on market value assessment.

6. The classification of MFDs as "other wastes" and the assessment of their utility life were significant factors in the judgment. The Court considered the certification by a Chartered Engineer regarding the utility of MFDs for 5 to 7 years without major repairs.

7. The decision on re-export of MFDs and the issuance of necessary certificates, including compliance with E-waste Rules, played a crucial role in determining the release of the consignment. The Central Pollution Control Board's certificate was obtained before clearing the goods.

8. The authority's power to release goods on payment of redemption charges was discussed, emphasizing the need for compliance with the statutory provisions of the Foreign Trade Act and Customs Act to determine the release or potential confiscation of goods.

9. The compliance with documentation requirements for the import of used MFDs was thoroughly examined, with the Court finding the respondents substantially compliant with the necessary documents, except for the country of origin certificate, which was deemed vague.

10. The determination of extended producer responsibility and utility period for MFDs was crucial in assessing the applicability of the E-waste Rules and the issuance of necessary certificates by the Central Pollution Control Board.

11. The decision on the deposit of a bond without sureties and the potential confiscation of goods was based on the statutory scheme of the Foreign Trade Act, highlighting the authority's discretion in deciding on confiscation or release based on redemption at market value.

12. Ultimately, the appeals were dismissed, affirming the decisions of the lower courts regarding the release of the consignment of MFDs upon payment of redemption charges and compliance with the relevant regulations and documentation requirements.

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