2024 (8) TMI 34 - HC - Customs

Legality of the import - Import of hazardous waste or e-waste? - used haemodialysis machines - case of Revenue was that the import of Used Critical Care Medical Equipment has been prohibited under the policy condition and the provisions laid down for the import of Old and Used Medical Equipment under Rule 12 (6) and Basel No. B-1110 of Schedule VI of the said Rules - no discussion or finding on the issue of hazardous waste in the impugned order. HELD THAT - Once the show cause notice is issued making certain allegations and petitioner is called upon to show cause as to why action should not be taken and petitioner has replied to it and attended the personal hearing, not giving a finding on that issue after recording copiously the submissions of petitioner would mean that respondent no. 3 was satisfied with the explanation given by petitioner. Support for this view taken from a judgment of this Court in Aroni Commercials Limited Vs. The Deputy Commissioner of Income Tax-2 (1) 2014 (2) TMI 659 - BOMBAY HIGH COURT , where the Court, while dealing with the provisions of Section 148 of the Income Tax Act, 1961, held that once a query is raised during the assessment proceedings and assessee has replied to it, it follows that the query was subject matter of consideration of Assessing Officer while completing the assessment and same is deemed to have been accepted. The Court also held that it is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the each and every query raised - Therefore, since there is no discussion or finding on the issue of hazardous waste in the impugned order, respondent no. 3 should be taken as having accepted petitioner s explanation. In the impugned order, respondent no. 3 has strangely gone ahead and rejected the assessable value as Rs. 50,14,653/- and redetermined the value of the said goods as Rs.56,79,450/-. Based on this finding, he has also ordered confiscation of the said goods under Section 111 (d) of the Customs Act and given an option to petitioner to redeem the said goods on payment of redemption fine of Rs.3,00,000/- under Section 125 of the Act for the purpose of re-export only. Penalty of Rs. 1,00,000/- also was imposed upon petitioner under Section 112 (a) (i) of the Act - petitioner has been called upon to show cause as to why the goods should not be confiscated or why penalty should not be imposed. But considering the entire show cause notice, the proposed confiscation and penalty was due to allegation that petitioner had imported the prohibited goods and not for mis-declaration of the assessable value. This is a fit case to exercise jurisdiction under Article 226 of the Constitution of India and it is also a fit case to set aside the impugned order dated 21st April 2021. Petition disposed off.

Summary

Issues Involved:
1. Legality of the import of "used haemodialysis machines" under the Hazardous and Other Wastes (Management, Handling and Trans-Boundary Movement) Rules, 2016.
2. Interpretation of "hazardous waste" and "waste" under the said Rules.
3. Validity of the show cause notice and the subsequent order issued by respondent no. 3.
4. Re-determination of the assessable value of the imported goods.
5. Imposition of penalty and confiscation under the Customs Act, 1962.

Detailed Analysis:

1. Legality of the Import of "Used Haemodialysis Machines":
The petitioner challenged an order dated 21st April 2021, issued by respondent no. 3, which objected to the clearance of imported "used haemodialysis machines" alleging a violation of the Hazardous and Other Wastes (Management, Handling and Trans-Boundary Movement) Rules, 2016. The petitioner argued that these machines were not hazardous waste or e-waste, as certified by Chartered Engineers, and thus did not violate the said Rules.

2. Interpretation of "Hazardous Waste" and "Waste":
The petitioner contended that the imported goods were not "hazardous waste" or "waste" as defined under Rule 3 (17) and Rule 3 (38) of the said Rules. The petitioner emphasized that the goods were finished products and not materials for which the generator had no further use. The respondent no. 3's interpretation of the rules was deemed erroneous by the petitioner.

3. Validity of the Show Cause Notice and Subsequent Order:
Respondent no. 3 issued a show cause notice under Section 124 of the Customs Act, 1962, alleging that the import of "Used Critical Care Medical Equipment" was prohibited under Rule 12 (6) and Basel No. B-1110 of Schedule VI of the said Rules. The show cause notice called for the confiscation of the goods and imposition of a penalty. However, the court found that respondent no. 3 did not provide a finding on whether the goods were "hazardous waste" or "waste," implying acceptance of the petitioner's explanation. The court referenced a judgment in Aroni Commercials Limited Vs. The Deputy Commissioner of Income Tax-2 (1), where it was held that if a query is raised and replied to during assessment, it is deemed accepted if not discussed further.

4. Re-determination of the Assessable Value:
In the impugned order, respondent no. 3 rejected the declared assessable value of Rs. 50,14,653/- and re-determined it as Rs. 56,79,450/-. This re-determination led to the confiscation of the goods under Section 111 (d) of the Customs Act and the imposition of a redemption fine and penalty. The court noted that the show cause notice did not call upon the petitioner to show cause for mis-declaration of the assessable value, indicating that the proposed confiscation and penalty were due to the alleged import of prohibited goods, not mis-declaration.

5. Imposition of Penalty and Confiscation:
The court found that the impugned order imposed a penalty of Rs. 1,00,000/- and a redemption fine of Rs. 3,00,000/- without proper grounds in the show cause notice. The court held that respondent no. 3's actions were not justified as the petitioner was not given a fair opportunity to respond to allegations of mis-declaration of value. Consequently, the court exercised its jurisdiction under Article 226 of the Constitution of India to set aside the impugned order dated 21st April 2021.

Conclusion:
The court set aside the impugned order dated 21st April 2021, and allowed the petitioner to apply for a refund of Rs. 5,00,000/- deposited as redemption fine. The petition was disposed of with no order as to costs.