2021 (9) TMI 183 - AT - Customs

Confiscation of imported goods - multi-functional devices - requirement to meet the standards as 'printers / plotters' as per Electronics Information Technology Goods (Requirements of Compulsory Registration) Order 2012 or not - scope of Hazardous Other Wastes (Management and Transboundary Movement) Rules, 2016 - prohibited goods or restricted goods - value declared by the respondents in their Bill of Entry, correct or not - revaluation done by the Chartered Engineer correctly or not - levy of redemption fine and penalty - HELD THAT - A perusal of the entire BIS Rules, 1987 shows that just like BIS Act, 1987, BIS Rules 1987 did not provide for regulating or prohibiting import of goods. Therefore, CRO 2012 has, in clause (3), gone beyond the scope of the Act and the Rules in prescribing a standard for import of goods and in prohibiting import of goods which did not meet the standards. Therefore, it is doubtful, whether in the first place, whether the CRO 2012 is legally sustainable. Even if it is ignored that CRO 2012 was issued beyond the scope of the parent Act and Rules, the Schedule to CRO 2012 covers only printers and plotters at Sl.No.7. It did not cover multi-functional devices. The case of the Revenue is that Ministry of Electronics Information Technology has issued a circular No.1/2019 dt. 02.05.2019 clarifying that multi-functional devices are basically printers with additional features and covered under the category of 'printers and plotters' as notified in the order - the case of the Revenue regarding prohibition of import lies on a shaky ground of circular issued by MeitY which effectively enlarged the scope of entry in the order itself. Confiscation of goods - HELD THAT - It is undisputed that the goods were second hand in nature and were examined by the Customs under first check and were verified by expert Chartered Engineer and the import duty was recalculated accordingly under CVR 2007. Neither side is disputing the valuation. Therefore, the valuation of the imported goods does not call for any interference. Consequently, the confiscation of the goods or misdeclaration under Section 111 (m) also need not be interfered with. Mutilation of goods - HELD THAT - CRO 2012 does not cover the impugned goods. Therefore, the question of mutilation of the goods under clause 3 (2) of CRO 2012 does not apply as there was no standard prescribed under the CRO for MFDs. The circulars and letters of the Ministry are at best executive opinions and they cannot take the place of law. We have also observed that the CRO itself has imposed restriction on imports going beyond the scope of BIS Act, 1986 and BIS Rules 1987 neither of which (unlike BIS Act, 2016) provided for prescribed standards or for regulating imports. Therefore, the question of mutilation of goods does not arise. Applicability of Hazardous waste rules - HELD THAT - The requirement of re-export or destruction under Rule 15 does not apply to the impugned goods. Revenue has, in fact, increased the value of imported goods. Had they been a waste, value should have been Nil or something close to it. Therefore, they are useful goods with some residual life and cannot be called hazardous waste by any stretch of imagination. Therefore, the Hazardous Waste Rules do not apply to the impugned goods. Levy of penalty - HELD THAT - Section 49 is an enabling section and is not a prohibiting section. There is nothing in the section failure of which may be construed as contravention. A contravention, by definition, implies an act or omission prohibited by law. In this section, there is nothing which requires the importer to do or not to do something. It says that Assistant or Deputy Commissioner of Customs may permit to deposit of goods in a warehouse and the proviso states that the Commissioner can extend the period of storage - there is neither any obligation to do anything nor prohibition of any act under Section 49. Therefore, there cannot be any contravention under Section 49. It is only an enabling provision for the Assistant Commissioner and the Commissioner. Therefore, no penalty can be imposed under Section 117 for contravention of Section 49 and the Ld. Commissioner (Appeals) is correct in setting aside penalty under Section 117 - there is no dispute regarding reduction of penalty under Section 112 (a) by the Commissioner (Appeals) which is fair and reasonable. Appeal dismissed - decided against Revenue.

Summary

List of Issues:
1. Maintainability of stay applications under Rule 41 of the CESTAT (Procedure) Rules, 1982.
2. Classification and import conditions of used Digital Multi-Functional Printers/Devices (MFDs) under various regulations.
3. Validity of the Commissioner (Appeals)' decision to allow redemption and reduce penalties.
4. Applicability of Hazardous & Other Wastes (Management and Transboundary Movement) Rules, 2016.
5. Compliance with Bureau of Indian Standards (BIS) requirements.
6. Relevance of Foreign Trade Policy (FTP) restrictions.
7. Correctness of valuation and revaluation of imported goods.
8. Justification for penalties under Sections 112(a) and 117 of the Customs Act, 1962.

Detailed Analysis:

1. Maintainability of Stay Applications:
The Tribunal examined the preliminary objection regarding the maintainability of stay applications under Rule 41 of the CESTAT (Procedure) Rules, 1982. It was argued that Rule 41 does not explicitly empower the Tribunal to stay orders of lower authorities. However, the Tribunal found that Rule 41 empowers it to pass orders to give effect to its decisions, prevent abuse of process, or secure the ends of justice. Additionally, Rule 28C of the CESTAT Procedure Rules, which provides for filing miscellaneous applications, would apply for filing stay applications as well. Therefore, the Tribunal concluded that stay orders can be passed.

2. Classification and Import Conditions of MFDs:
The respondents imported used Digital Multi-Functional Printers/Devices (MFDs) and classified them under Customs Tariff Heading 84433100. The lower authority found that the values declared by the importers were liable to be rejected under the Customs Valuation Rules, 2007, and the goods needed to be revalued. The importers failed to produce information as per Hazardous Waste Rules, 2016, and did not comply with mandatory BIS standards. Additionally, the import of these goods was restricted under the FTP and required authorization from the DGFT, which the importers did not produce.

3. Decision of Commissioner (Appeals):
The Commissioner (Appeals) partly allowed the appeals by reducing the redemption fine imposed under Section 125 of the Customs Act, 1962, and allowing the respondents to redeem the goods for home consumption. The penalty under Section 112(a) was reduced, and the penalty under Section 117 was set aside. The Revenue challenged these decisions on several grounds, including the waiver of penalty under Section 117 and the unconditional release of goods.

4. Applicability of Hazardous Waste Rules:
The Tribunal found that the imported goods were not waste as per Rule 3(38) of the Hazardous Waste Rules because they had further use and were not hazardous waste. Therefore, the Hazardous Waste Rules did not apply to the imported goods, and the requirement of re-export or destruction under Rule 15 did not apply.

5. Compliance with BIS Requirements:
The Tribunal examined the Electronics & Information Technology Goods (Requirement of Compulsory Registration) Order, 2012 (CRO 2012), which covered only "printers and plotters" and not MFDs. The circulars and letters issued by the Ministry of Electronics & Information Technology (MeitY) could not take the place of law. The Tribunal concluded that the goods were not prohibited for import under CRO 2012, and the confiscation of goods under Section 111(d) on this ground was not sustainable.

6. Foreign Trade Policy Restrictions:
The Tribunal acknowledged that the import of second-hand MFDs was restricted under the FTP and required authorization, which the respondents did not have. However, the goods could be allowed for redemption under Section 125 of the Customs Act, 1962. The Commissioner (Appeals) was correct in allowing redemption for home consumption.

7. Valuation and Revaluation:
The Tribunal noted that the valuation of the imported goods was not disputed by either side, and the revaluation was done by the Chartered Engineer. Therefore, the valuation did not call for any interference, and the confiscation under Section 111(m) was valid.

8. Penalties under Sections 112(a) and 117:
The Tribunal found that the penalty under Section 117 was correctly set aside by the Commissioner (Appeals) as there was no act or omission by the importer under Section 49 that could be construed as a contravention. The reduction of penalty under Section 112(a) by the Commissioner (Appeals) was also found to be fair and reasonable.

Conclusion:
The Tribunal upheld the impugned orders and rejected the appeals filed by the Revenue. The imported goods, if not already released, must be cleared for home consumption within 10 days from the date of receipt of the order, provided the respondents pay the duty and other dues as per the impugned orders. The stay applications were also disposed of.