2023 (12) TMI 198 - HC - Customs

Seeking release of goods - goods imported freely or not - Second hand Multifunction Print and copying machines - materials imported by the petitioners falls under Clause 2.31 of the Foreign Trade Policy 2023 effective from 01.04.2023 under the category second hand goods or not - HELD THAT - Sl.No.(b) of Notification No.5/2015-2020, dated 07.05.2019, states that all electronics and IT goods notified under the Electronics and IT Goods (Requirement of Compulsory Registration) Order, 2012, as amended from time to time are restricted . Therefore, they are supposed to get authorization from the DGFT. When the said policy was in force, at that point of time also several imports have been made for importing second hand multi-function devices and similar issue was raised that these are all the multi function devices coming under Sl.No.(b). Therefore, unless otherwise authorization is obtained from the DGFT, the same cannot be imported. In the Notification No.5/2015-2020, dated 07.05.2019, only two clauses are available viz., (a) and (b), but, in the case of Foreign Trade Policy 2023, there are four clauses under Sl.No.I. This Court is of the considered view that as per Foreign Trade Policy, 2023, the petitioners' goods would not fall under the category I(b), but it falls under the category I(d) which indicates that other than goods mentioned in I(a), I(b), I(c), all other second-hand capital goods can be imported freely without any restriction. Therefore, if the petitioners not fall under clause I(b) automatically they fall under I(d). The Supreme Court has taken note of the said fact and stayed the confiscation of goods in a similar matter. Further, this Court, on a comparison of Notification No.5/2015-2020, dated 07.05.2019 and Foreign Trade Policy 2023, does not find any new changes brought in so that prohibited multi function devices should get authorization from DGFT. This Court is inclined to allow these writ petitions to the extent of releasing the goods provisionally - petition allowed.

Summary

Issues Involved:
1. Legality of the Show Cause Notices.
2. Requirement of Authorization and Compulsory Registration for Import.
3. Classification of Imported Goods under Foreign Trade Policy.

Summary:

Issue 1: Legality of the Show Cause Notices
W.P.Nos.28817 and 30506 of 2023 challenge the show cause notices issued by the first respondent on 22.09.2023 and 05.10.2023. The petitioners argue that these notices are based on a "complete misconception and misreading of the relevant regulations," specifically the Foreign Trade Policy 2023 and 2021 orders by MEITY. The court directed the petitioners to reply to the show cause notices, and the respondent department must consider and pass necessary orders within a stipulated time. The court allowed provisional release of the goods.

Issue 2: Requirement of Authorization and Compulsory Registration for Import
The petitioners, registered firms in the business of importing second-hand digital multifunction print and copying machines, argued that their goods are exempt from Compulsory Registration with BIS as per MEITY's Amendment Order dated 01.07.2021. The respondents contended that the petitioners must produce authorization from DGFT and Compulsory Registration Certificate of BIS as per the Foreign Trade Policy Guidelines. The court found that the petitioners' goods fall under Clause I(d) of the Foreign Trade Policy 2023, which allows free import of second-hand capital goods without restrictions, thus not requiring authorization from DGFT.

Issue 3: Classification of Imported Goods under Foreign Trade Policy
The central issue was whether the imported goods fall under Clause 2.31 of the Foreign Trade Policy 2023. The court referred to Clause 2.31, which categorizes second-hand goods and their import policies. The respondents argued that the goods fall under Clause I(b), requiring compulsory registration and authorization. However, the court concluded that the goods fall under Clause I(d), allowing free import without restrictions. This conclusion was supported by previous rulings, including an order from the Supreme Court and a Single Judge of the High Court, which allowed provisional release of similar goods.

Conclusion:
The court allowed the writ petitions for provisional release of the goods upon payment of enhanced duty. The Customs Department was directed to quantify the duty within one week, and upon payment, release the goods within three weeks. The court also noted that the Customs Department could proceed with further adjudication as per law. The court addressed the issue of demurrage charges, directing the respondents to consider any waiver applications objectively.