2019 (10) TMI 671 - HC - Customs

Authorization for important clearance of secondhand digital multifunction print and copying machines - HELD THAT - Writ petitions for similar prayer have been entertained and interim orders issued - Therefore, without going into the aspect of suppression and consequently maintainability of the writ petitions, and having regard to the main prayer sought for, and the interim orders granted earlier, we deem it fit to order provisional release of goods on the same terms, as done in the case of M/S. ASIAN COPIERS VERSUS THE COMMISSIONER OF CUSTOMS, ADDITIONAL COMMISSIONER, THE ASSISTANT COMMISSIONER, THE DIRECTOR GENERAL OF CUSTOMS, THE UNION OF INDIA 2019 (2) TMI 1659 - MADRAS HIGH COURT . It is directed that applicable duty on the enhanced value, as determined by the Chartered Engineer, would come to around ₹ 2 lakhs and above. Goods need not be detained for the disputed amount to be paid - Petitioners are directed to pay the duty applicable on the enhanced value, as determined by the Chartered Engineer. On payment of the same, goods detained in the Custom Fleet Stations, licensed by the Customs, be released. Till the date of release of goods, demurrage charges be waived. Other disputes raised in the writ petitions, would be decided. The request of the writ petitioners, is reasonable and therefore, hope that the respondents would implement the interim order of this Court, without any delay - petition dismissed.

Issues Involved:
1. Legality of para 2.31 of the Foreign Trade Policy (2015-2020).
2. Authority of DGFT under the FTDR Act, 1992.
3. Compliance with Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016.
4. Principles of Restrictions in FTP 2015-2020.
5. Office Memorandum issued by DGFT regarding policy review.
6. Impact on domestic industry and lack of guidelines for authorization.
7. Amendments to Hazardous and Other Waste Rules, 2016.
8. Compliance with the Hazardous and Other Waste Rules.
9. Registration requirements under the Compulsory Registration Order (CRO).
10. Applicability of BIS Act and rules for used goods.
11. Policy conditions specified in DGFT notifications.
12. Provisional assessment and release of goods under Customs Act, 1962.
13. Judicial precedents regarding the release of goods.
14. Discretion under Section 125 of the Customs Act for redemption of goods.
15. Consistency in judicial decisions across different ports and tribunals.

Detailed Analysis:

1. Legality of para 2.31 of the Foreign Trade Policy (2015-2020):
The petitioners challenged para 2.31 of the FTP (2015-2020) issued by the DGFT, which requires authorization for the import clearance of secondhand digital multifunction print and copying machines. They contended that this requirement is ultra vires, unconstitutional, excessive of authority, and without jurisdiction. They argued that the DGFT's imposition of such a restriction was beyond the powers conferred on him as a delegated authority and contrary to the provisions of law and Supreme Court judgments.

2. Authority of DGFT under the FTDR Act, 1992:
The petitioners argued that the restriction imposed by the DGFT is against the mandate of Section 6(3) of the FTDR Act, 1992, which does not authorize the DGFT to deal with policy provisions concerning the import and export of goods. They cited the Supreme Court decision in Asian Food Industries to support their claim that any prohibition, restriction, or regulation of goods for export or import must be notified by an order published in the official gazette by the Central Government.

3. Compliance with Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016:
The petitioners contended that the Central Government had notified the import of used machines as free trade until such time manufacturing of such goods commenced in India, subject to conditions imposed in Schedule VIII of the said rules. They argued that since they had fully complied with these conditions, the provisions in para 2.31 of the FTP issued by the DGFT could not be legally sustained and should be held invalid and unenforceable.

4. Principles of Restrictions in FTP 2015-2020:
The petitioners further argued that para 2.07 of the FTP 2015-2020 outlines the principles on which restrictions can be imposed on the import of goods into India. They claimed that none of these principles applied to the import of the subject goods and that the restrictions imposed in para 2.31 of the FTP were contrary to the policy of the Central Government as expressed in the Hazardous and Other Waste (Management and Transboundary Movement) Rules.

5. Office Memorandum issued by DGFT regarding policy review:
The petitioners relied on an Office Memorandum issued by the Ministry of Commerce and Industry, which referred to a meeting held to review the policy for the removal of secondhand digital multifunction print and copying machines from the restricted list. They argued that the pending clarification from the Ministry of Electronics and Information Technology (MeitY) indicated a vested interest in restricting these items, which was inconsistent with the treatment of other electronic equipment and machinery.

6. Impact on domestic industry and lack of guidelines for authorization:
The petitioners submitted that the DGFT's refusal to grant authorization, based on the recommendations of the Department of Industrial Policy and Promotion (DIPP) to protect the domestic industry, was excessive and unsupported by law. They also pointed out that no guidelines or procedures had been framed for granting authorization, effectively enforcing a prohibition on the import of the subject goods.

7. Amendments to Hazardous and Other Waste Rules, 2016:
The petitioners highlighted an amendment to the Hazardous and Other Waste Rules, 2016, which provided that the policy for free trade for multifunction print and copying machines would be reviewed once domestic manufacturing commenced. They argued that subsequent notifications permitted the import of these machines freely, even by traders, making the position clear and unambiguous for any trader to import these machines into India.

8. Compliance with the Hazardous and Other Waste Rules:
The petitioners claimed that they had fully complied with the requirements of the Hazardous and Other Waste (Management and Transboundary Movement) Rules, 2016, by producing relevant documents showing the machines' functionality, residual life, and possession of the Extended Producer Responsibility (EPR) granted by the Central Pollution Control Board (CPCB). They argued that the goods should be cleared without any permission as contemplated under Rule 13(2) of the said rules.

9. Registration requirements under the Compulsory Registration Order (CRO):
The petitioners contended that the insistence on registration under the CRO for the import of secondhand digital multifunction print and copying machines was unfounded. They argued that the CRO registration for safety standards could only be issued to goods manufactured in India and not to any trader, and that no manufacturing of these machines was undertaken in India.

10. Applicability of BIS Act and rules for used goods:
The petitioners argued that the BIS Act and the rules framed under it only applied to articles manufactured in India and did not specifically cover used and secondhand goods. They contended that the machines under import were used goods brought into India without any refurbishment or repair, negating the claim for CRO registration.

11. Policy conditions specified in DGFT notifications:
The petitioners pointed out that the DGFT notification No.36/2015-2020 dated 17.01.2017 did not specify any policy conditions for the impugned goods. They argued that the insistence on compulsory registration under the CRO was improper and incorrect, as the notification only prescribed registration for printers and scanners, not for digital multifunction print and copying machines.

12. Provisional assessment and release of goods under Customs Act, 1962:
The petitioners argued that the goods in question were not prohibited within the meaning of the Customs Act, 1962, and therefore, no absolute confiscation could be ordered. They cited judicial precedents to support their claim that the goods should be provisionally assessed and released upon payment of applicable duties.

13. Judicial precedents regarding the release of goods:
The petitioners referred to various judicial precedents, including decisions of the High Courts and the Supreme Court, which had allowed the release of goods upon payment of redemption fines or provisional assessment. They argued that the customs authorities should follow these precedents and release the goods.

14. Discretion under Section 125 of the Customs Act for redemption of goods:
The petitioners contended that even if the goods were prohibited for import, the customs authorities had the discretion under Section 125 of the Customs Act to release the confiscated goods upon payment of a fine. They cited judicial decisions to support their claim that the discretion provided under Section 125 should be exercised to allow the redemption of the goods.

15. Consistency in judicial decisions across different ports and tribunals:
The petitioners argued that different ports in India had been permitting the clearance of the subject goods upon adjudication and payment of redemption fines. They cited a decision of the Tribunal in the case of Yakub Ibrahim Yusuf, which had been accepted by the department, to support their claim that the discretion under Section 125 should be exercised consistently across different ports and tribunals.

Interim Directions:
The court ordered provisional release of the goods on the same terms as done in earlier similar cases. The petitioners were directed to pay the applicable duty on the enhanced value as determined by the Chartered Engineer. The goods detained in the Custom Fleet Stations were to be released upon payment of the duty, and demurrage charges were to be waived until the date of release. The court also directed the respondents to release the goods provisionally as expeditiously as possible, within a period of one week from the date of receipt of the order.

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