2024 (4) TMI 540 - HC - Customs

Seeking provisional release of the goods - release of various models of second hand Highly Specialised Equipment digital Multifunction Print, Copying Scanning Machines, imported by the petitioner - authorization for importing multi-functional device - HELD THAT - Keeping in view of the foreign trade policy of the Government, the Order of 2012 which stood replaced by the Order of 2021 and subsequent amendments brought to Order 2021 by inserting clauses 6, 7 and 8, what is apparently evident is that in Order, 2012 the product multi-functional device was not a notified item. What was notified so far the writ petitions are concerned was only printers and plotters and the Order, 2012 was also preceded by a decision of the Government exempting highly specialized equipment from the coverage of Order, 2012. The Order, 2012 stood preceded by subsequent Order, 2021 which was issued and brought into force w.e.f 18.03.2021 and the schedule attached to Order, 2021 stood modified to the extent that in addition to printers and plotters the Government also notified multi-functional devices as an item so far as the foreign trade policy is concerned. This change in Order, 2021 so far as adding multi-functional devices in the schedule makes it amply clear that prior to Order, 2021 MFDs were not a notified item and since 18.03.2021 when the Order, 2021 was notified, MFDs became restricted goods under the foreign trade policy. Though the learned Senior Standing Counsel for CBIC tried to give various interpretations to this clause, but on its plain reading, has its literal meaning and with the literal interpretation of the contents of clause 8, there does not seem to be any restrictions put by the Government so far as the classifications of highly specialized equipment is concerned. There also does not seem to be any mention of the said exemption not being applicable upon a second hand product as is envisaged under clause 2.31 of the foreign trade policy. Thus, we are in agreement to the submissions made by the learned counsel for the petitioner so far as the import made by the petitioner of MFDs being a highly specialized equipment and the same being one which falls within the purview of an exempted category as per clause 8 of Order, 2021. Thus, we are of the considered opinion that it is a fit case where the petitioner can be permitted for provisional release of the goods seized by the respondent authorities. Thus, it is ordered that let the respondent authorities pass an order on the application filed by the petitioners for provisional release of the goods subject to the conditions. In addition, the petitioners are also directed to provide a bank guarantee worth 10 percent of the total price of the goods imported by them. Further, it is also ordered that in the event if the petitioners upon release of the goods provisionally make and sell the supply to their customers, details of the customers that of relevant price and details of the respective transactions shall be maintained and made available to the respondent authorities from time to time. The present writ petitions accordingly stands allowed.

Summary

Issues Involved:
1. Legality of the seizure memo issued by respondent No. 1.
2. Provisional release of the imported consignments.
3. Applicability of the Electronic and IT Goods (Requirements Of Compulsory Registration) Orders, 2012 and 2021.
4. Classification of imported goods as restricted under the foreign trade policy.
5. Exemption for highly specialized equipment under the Order, 2021.

Summary:

1. Legality of the Seizure Memo:
The petitioners challenged the seizure memos issued by respondent No. 1, arguing that the seizure was in violation of the foreign trade policy. The goods seized were multi-functional devices (MFDs) used for printing, photocopying, and scanning, imported from UAE and Singapore.

2. Provisional Release of Imported Consignments:
The petitioners sought provisional release of the seized goods. The applications for provisional release were still pending with the respondent authorities. The petitioners argued that the goods fall under the exemption category and do not require authorization/license.

3. Applicability of Electronic and IT Goods Orders:
The petitioners referred to the Electronic and IT Goods (Requirements Of Compulsory Registration) Orders, 2012 and 2021, which exempt certain highly specialized equipment from compulsory registration. They cited decisions from the High Court and Madras High Court supporting their contention that MFDs are exempted.

4. Classification as Restricted Goods:
The respondents argued that the imported goods fall under the restricted category of the foreign trade policy and require proper authorization/license. They contended that the goods could be classified as e-waste and need to be scrutinized before any provisional release.

5. Exemption for Highly Specialized Equipment:
The court examined the foreign trade policy and the amendments to the Order, 2021, which introduced exemptions for highly specialized equipment. The court found that MFDs were not a notified item under the Order, 2012 but were included in the Order, 2021. However, the exemption clause in the Order, 2021 (Clause 8) allowed for highly specialized equipment to be exempted from registration requirements, provided they met certain criteria.

Judgment:
The court agreed with the petitioners that MFDs fall within the exempted category as per Clause 8 of the Order, 2021. The court directed the respondent authorities to pass an order on the petitioners' applications for provisional release of the goods, subject to the following conditions:
- Payment of enhanced duty amount by the petitioners.
- Quantification of duty by Customs within one week.
- Release of goods within four weeks upon payment.
- Provision of a bank guarantee worth 10% of the total price of the goods.
- Maintenance of transaction details and availability to respondent authorities.

The writ petitions were allowed, and the court ordered the provisional release of the goods. No order as to costs was made, and any pending miscellaneous petitions were closed.