2019 (9) TMI 434 - HC - Customs

Detention of imported goods - Digital Multifunction Machines (DMM) - prohibited/restricted goods or not - non-compliance with the requirement of producing Extended Producers (EPR) certificate as per E-waste Management Rules (EMR), 2016 - case of petitioner is that the broad classification or entry under which the goods are imported comes under restricted category but not prohibited category? - section 110 of CA. HELD THAT - The inspection of goods imported under the Bill of Entry has not been taken so far by the respondent. There is a serious dispute on whether the subject goods comes under restricted category or prohibited category under various Enactments, Rules and Regulations referred to above. This Court, without determination on the aspect by the authorities in accordance with law ought not to accept one view or the other strenuously canvassed by the parties. Section 110 deals with seizure of goods, documents and things by the officer authorized by the Act. Section 110(2) deals with a situation where notice under clause (a) of Section 124 is not issued within six months of the seizure of the goods under subsection (1) and such omission obligates the officer to return the goods to person from whose possession it is seized. Condition precedent for complying Section 110(2) is an order of seizure under Section 110 of Customs Act. It is not the case of petitioner that order for seizure of goods imported through Ext.P2 has been made by respondent. The allegations in the writ petition are to the effect that there is complete inaction notwithstanding the decision of Courts of competent jurisdiction on the very same point. While arguing the writ petition an attempt was made on one hand by the petitioner to get a declaration from this Court that the goods imported through Ext.P2 are entitled to be provisionally released albeit payment of applicable tariffs. On the other hand, an attempt is made by the respondent to get a decision on the goods imported, that the goods imported through Ext.P2 come under prohibited category. This Court is not pursuaded at this juncture to assume that the goods imported through Ext.P2 come either under restricted category or prohibited category. But at the same time the Court is not convinced with the continued inaction on the part of respondent in taking up the goods imported through Ext.P2 consignment, for inspection or get the goods inspected by authorities empowered by various Rules and Regulations, receive their reports and then pronounce its view/order. A situation resulting in stalemate is presented by the inaction of respondent. The petitioner notices the objections raised by the respondent in the counter affidavit filed in this behalf and the petitioner is given liberty to request within two weeks from today, the respondent herein or, through the respondent, such competent authority, to inspect the goods imported and obtain report or certificate, as the case may be, on the specification, nature etc of goods imported. By referring to the certificate/authorization/ report made available in this behalf the respondent passes an order whether the goods imported, comes under restricted category or prohibited category. If the goods imported come under restricted category what are the obligations the petitioner is required to comply with for customs clearance. The respondent passes orders as are deemed within five weeks from today.

Issues Involved:
1. Whether the imported Digital Multifunction Machines (DMM) fall under the 'restricted' or 'prohibited' category.
2. Compliance with the E-waste Management Rules, 2016 and other relevant regulations.
3. The legality of the detention of goods without issuing a show-cause notice within the stipulated time.
4. The petitioner's entitlement to provisional release of the goods.

Issue-wise Detailed Analysis:

1. Classification of Imported Goods:
The petitioner contends that the imported DMMs do not fall under the 'prohibited' category and should be classified as 'restricted' goods. The petitioner relies on previous judgments involving similar cases (M/s. Parag Domestic Appliances and M/s. Atul Automation) to argue that the issue is no longer res integra. The respondent, however, asserts that the imported goods are 'prohibited' due to non-compliance with various regulations. The Court notes the necessity of physical inspection and certification by competent authorities to determine the exact classification of the goods.

2. Compliance with E-waste Management Rules and Other Regulations:
The respondent argues that the petitioner violated multiple provisions under the Foreign Trade Policy (FTP), Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 (H&OW Rules, 2016), E-waste (Management) Rules, 2016, and Electronics and Information Technology Goods (Requirement of Compulsory Registration) Order 2012 (EITG Order 2012). Specific violations include the lack of mandatory authorization from DGFT, non-production of required certificates and forms, and failure to comply with direct reuse conditions. The petitioner, however, claims to have fulfilled the necessary requirements, including obtaining an Extended Producer Responsibility (EPR) certificate.

3. Detention of Goods Without Show-Cause Notice:
The petitioner argues that the respondent did not issue a show-cause notice within six months as required under Section 124 of the Customs Act, which obligates the respondent to release the detained goods. The Court notes that there is no evidence of an order of seizure under Section 110 of the Customs Act, making it premature to determine the legality of the detention based on the six-month rule.

4. Entitlement to Provisional Release:
The petitioner requests provisional release of the goods, arguing that the continued detention is causing financial hardship and damage to the goods. The respondent, however, insists that the goods cannot be released without proper inspection and compliance with all regulatory requirements. The Court emphasizes the need for inspection and certification by authorized agencies before any decision on provisional release can be made.

Judgment:
The Court directs the petitioner to request the respondent or the competent authority to inspect the imported goods and obtain the necessary reports or certificates within two weeks. The respondent is then required to determine whether the goods fall under the 'restricted' or 'prohibited' category and outline any compliance obligations for customs clearance. This entire process must be completed within four weeks to prevent the misuse of India as a dumping ground for prohibited goods and to avoid unnecessary detention of 'restricted' goods. The same terms and conditions apply to W.P.(C) No.10366 of 2019.

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