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TMI Blog2018 (3) TMI 1560X X X X Extracts X X X X X X X X Extracts X X X X ..... l principles of international and domestic law. When even violation of the general principles of law are deemed to be illegal, it cannot be said that violation of enacted laws are not illegal. What we have to see is whether there was any illegality attracting the rigor of re-export. There were defects noticed and it was reported that there should be some repair carried out to make it functional - The damages or defects noticed would not result in completely compromising their functionality according to the approved agency. The certifying agency appointed by the Department certified that the machines could be used for more than five years. We do not find any reason to find that the import is of machines which are not functional as provided under the H&OW Rules. The imported goods are “other wastes” which have a potential of becoming an e-waste after its functionality expires till which time it can be used. Redemption of goods - Held that: - The importers do not even have a case that they had applied for one. They assert that the DGFT refuses to issue such an authorisation and in such circumstance, considering the requirement of MFD's, which is even evident from the policy of the Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d penalties with a rider that the redemption of the goods shall solely be for the purpose of re-export as specified in Rule 15(2) of the Hazardous and Other Waste (Management and Transboundary Movement) Rules, 2016 [for brevity "H&OW Rules, 2016"]. 3. The Commissioner, as against M/s. Atul Automation Pvt. Ltd., imposed a redemption fine of ₹ 1 Crore and penalty under Section 112(a) of the Customs Act, 1962 [for brevity "Customs Act"] of ₹ 50 lakhs, under Section 114AA of ₹ 10 lakhs and also penalty under the aforesaid provisions on the Director respectively of ₹ 10 lakhs and ₹ 1 lakh. With respect to M/s Parag Domestic Appliances, the redemption fine imposed was ₹ 30 lakhs, penalty under Sections 112(a) and 114AA on the importer respectively were ₹ 16 lakhs and ₹ 3 lakhs. On the Director of the said importer, the penalties imposed under Section 112(a) and 114AA were ₹ 3 lakhs and ₹ 30,000/-. The Tribunal, by the impugned order, reduced the redemption fine and penalty under Section 112(a) and deleted penalties under Section 114AA. The Tribunal having upheld the confiscation, however, directed release of the goods on paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Authorised Chartered Engineers. The third requirement was of an Extended Producer Responsibility [for brevity "EPR"]. The Tribunal found that a Technical Review Committee under the H&OW Rules, 2016 had decided to defer the implementation of EPR; to commence only from 01.05.2017. It was held, the goods which were imported in October, 2016 did not require such EPR. The Tribunal also noticed that subsequent to the order of the Commissioner the importers had obtained EPR authorisation under the H&OW Rules, 2016. The 4th requirement was that the MFD shall be for printing A3 size and above, which, as admitted by the department, is satisfied. The 5th condition was an acknowledged copy of the annual return filed with the concerned State Pollution Control Board [for brevity "SPCB"] for import in the last financial year. The Tribunal found that the annual return has to be filed at the end of the year and the same can be effected only after the importation of goods. The Tribunal found that the importation of the goods were in violation of the Import Policy and also one of the conditions of H&OW Rules, 2016, viz., the country of origin certificate. The Tribunal noticed that the imports mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally found the goods to be as defined under "other waste" of the very same Rules? (ii) Whether the Tribunal was justified in ordering release of goods on payment of redemption fees merely relying on the principles of redemption when the subject goods were prohibited from being imported without sanctions and authorizations as per the Foreign Trade Policy framed under the Foreign Trade (Development and Regulations) Act, 1992, Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 and e-Waste (Management and Handling) Rules, 2011? (iii) Whether the Tribunal acted erroneously in law in permitting the release of goods which come under the category of "other waste" as defined in Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 when an illegal traffic of such goods, under Rule 15, mandates re-export of the goods at the importer's cost or transmission to authorized treatment, storage and disposal facility? (iv) Whether the Tribunal seriously erred in not looking into the provisions of Foreign Trade Policy framed under the Foreign Trade (Development and Regulations) Act, 1992, Hazardous and Other Wastes (Management and Transbounda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the appellant, Sri. Sreelal Warriar, took us through various enactments and the Foreign Trade Policy (for brevity "FTP" only) to point out the gross illegalities committed by the importers, which, if permitted to continue and the goods released, would result in converting this country into a dumping ground for e-waste. Section 47 of the Customs Act, casts a bounden duty on the Customs authorities to satisfy themselves that the goods entered for home consumption are not prohibited goods and the importer has paid the import duty as assessed, failing which the authorities are entitled to confiscate the goods. The FTP as formulated by the Government of India, Ministry of Commerce and Industry, for the period between 01.04.2015 to 31.03.2020, has statutory force insofar as it being notified in exercise of the powers conferred by Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (for brevity "Foreign Trade Act" only). Clause 2.06 of the FTP speaks of the mandatory documents required for export or import of goods from and into India in addition to the bill of lading, bill of entry and the invoice-cum-packing list. With respect to specific goods or category of goods s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te generated on manufacture and on "end of life" of their products to channel it for recycling or disposal. The responsibility to dispose of the products at the "end of life" is the "Extended Producer Responsibility" as spoken of under the Rules. Rule 4(7) refers to an authorisation from the concerned SPCB in accordance with the procedure under Rule 9. Rule 9 speaks of grant of authorisation, which mandates every producer to obtain an authorisation from SPCB and by sub-rule (8) of Rule 5 mandates maintaining of records of the e-waste handled; which records are to be made available for scrutiny by SPCB. Schedule I of the said rules includes printers including cartridges and copying equipment. Rule 3 (l) defines 'extended producer responsibility' of any producer who is made responsible for environmentally sound management of their end of life products. Hence any producer who either manufactures or sell electrical and electronic equipment would be obliged to dispose of the same after the utility of such equipment has ceased. The disposal also has to be, by environmentally sound measures which are to be scrutinized by the SPCB. The Tribunal according to the appellant, erred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted out that e-Waste Rules 2016 came into effect from 04.10.2016 and the consignments reached Kochi Port in the months of October and November, 2016. The requirement as per the H&OW Rules of 2016, specifically Rule 13(4) is the verification of of documents prior to clearing. Even now the goods have not been cleared and the importers have now received the EPR- Authorisation under the e-waste Rules of 2016.It is submitted that in accordance with the e-waste Rules, 2016, Atul Automation had applied for an EPR, which was granted by the Central Pollution Control Board as per communication No.B-29016(22A)/(EPR)/16/WM-III/Division dated 21.04.2017. The authorisation is valid for a period of 5 years and, hence, there can be no defect found on the importer having no EPR. Parag Domestic Appliances also obtained EPR Authorisation from the CPCB by communication No.B-29016(39A)/(EPR)/17/WM-IIIDivision dated 21.04.2017. The authorisations were verified by the Tribunal as seen from its order. 12. With respect to the requirements as seen from theH&OW Rules, it is argued that MFDs, do not require an authorisation from the Central Government and has been so exempted under Rule 13(2). The stipulati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can, hence, be no redemption fine imposed solely for the purpose of re-export of the goods. The learned Senior Counsel relies on Commissioner of Customs (Sea Port-Import), Chennai v. City Office Equipments [2016 (336) E.L.T. 19 (Mad.)], wherein the issue of provisional release of MFDs, imported without authorisation was considered. It was found that the Commissionerates at different Ports were taking inconsistent views and, hence, there was a direction to bring out proper guidelines, so as to avoid discrimination and arbitrariness. The goods were directed to be provisionally released by the Division Bench of the Madras High Court. 14. Before we venture into a decision on the questions of law, there are certain essential facts and circumstances which are to be borne in mind. As we see from the records and as admitted by both sides, there is no manufacturing of MFDs within the country. The Central Government has permitted import of MFDs, that too used ones and it is a restricted item; meaning that there are conditions to be complied with for such import. The fact that there are no manufacturers within the country is evident from the fact that the FTP and H&OW Rules indicate a reser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law. (2) In case of illegal import of the hazardous or otherwaste, the importer shall re-export the waste in question at his cost within a period of ninety days from the date of its arrival into India and its implementation will be ensured by the concerned Port and the Custom authority. In case of disposal of such waste by the Port and Custom authorities, they shall do so in accordance with these rules with the permission of the Pollution Control Board of the State where the Port exists. (3) In case of illegal import of hazardous or otherwaste, where the importer is not traceable then the waste either can be sold by the Customs authority to any user having authorisation under these rules from the concerned State Pollution Control Board or can be sent to authorised treatment, storage and disposal facility." 17. The learned Senior Counsel appearing for the respondents would assert that there is no illegal traffic as discernible from the definition available under Rule 15 of the H&OW Rules. We are unable to countenance such argument looking at Rule 15 which is extracted herein above. The Rule deems illegal, any export or import of hazardous or other wastes, (i) without permission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be determined only within the parameters of the provisions in that sub-clause. One sub-clause cannot be projected into another sub-clause and fiction upon fiction is not permissible. As to the interpretation of fiction, particularly in the sales tax legislation, the principle has been authoritatively laid down in Bengal Immunity Co. Ltd. v. State of Bihar (1955) 2 SCR 603, SCR at p. 647: "The operative provisions of the several parts of Article 286, namely, clause (1)(a), clause (1)(b), clause (2) and clause (3) are manifestly intended to deal with different topics and, therefore, one cannot be projected or read into another." (S.R. Das, Actg. C.J.) We can also see pp. 720 and 721 (N.P. Bhagwati, J.)." 19. As a corollary it can also be stated that the deeming fiction does not exclude the ordinary transactions which would come within the ambit of a "sale or purchase of goods". Just as each sub-clause therein acts independently, so does the sub-clauses and sub-rules in Rule 15 of the H&OW Rules. An illegality simply defined, is something done in contravention of and against law. Any import which is carried out flouting the laws is an illegality, within which ambit is also taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer the normal terminology of waste, as plainly understood. "Other wastes" are those items enumerated under Part 'B' and Part 'D' of Schedule III, which is permissible of import or export and includes all such waste generated indigenous, within the country. Hence, the definition of "other wastes" include such electronic and electrical equipment which, over a period of time, after its utility expires, becomes waste. These "other wastes", which have a utility period, if manufactured within the country or imported from outside, have to be dealt with when its utility ceases. This is why there is an EPR imposed on the manufacturer or importer or trader of such electrical and electronic equipment to ensure that the said goods supplied to the market is taken back after its utility expires and disposed of by environmentally sound measures. This would indicate that the Union Parliament and the Central Government were conscious of the potential of the electronic and electrical equipment, to be eventually converted to waste; which, if left without proper disposal, would affect and endanger the environment. This is the ultimate cause, intention and reason for the various rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and goods to be imported and categorizes them as "free" and "restricted". Photocopier Machines/Digital Printer Machines are restricted and are importable only against authorisation. The respondents have produced an authorisation issued from the Ministry of Environment, Forests and Climate Change, which is not required in the case of MFDs. But no authorisation from the DGFT is produced. The said authorisation is not required if the import is made by an actual user. The respondents herein are not the actual users and have imported used MFDs for further sale within the country. As per the amendment made to the H&OW Rules, 2016 the actual user condition has been now deleted. Clause 2.13 of the FTP speaks of clearance of goods from Customs against Authorisation, which Authorisation can be issued even subsequently to the arrival of the goods; but makes it clear that the facility will not be available to "restricted goods". Clause 2.14 makes it clear that the Authorisation cannot be claimed as a right. The absence of an Authorisation from the DGFT stands against the respondents-importers. The Foreign Trade Act by sub-section (8) of Section 11 enables confiscation of goods when there is an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department itself carried out an inspection of the individual machinery, through another approved agency, which has resulted in that agency furnishing a certificate. From the Commissioner's order it is seen that the certificate disclosed that certain machinery on attempting to be operated, was not functioning. There were defects noticed and it was reported that there should be some repair carried out to make it functional. We cannot agree with the Commissioner that this would indicate that such machinery is not functional and has been brought into the country for disposal and would result in environmentally sensitive waste being dumped within the country. If that be so, then there should have been a finding that the goods are "waste" as defined in H&OW Rules. The Department on the contrary asserts that the goods are "other wastes", the import of which is only restricted and not prohibited. We are also inclined to agree with the Tribunal that the report of the certifying agency does not indicate that the functionality is totally absent. The damages or defects noticed would not result in completely compromising their functionality according to the approved agency. The certifying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmation as per Form 6 to the Customs authorities accompanied with documents shown as (a), (b) and (c) in addition to those listed in Schedule VIII; wherever applicable. Schedule VIII lists out the documents required for "used multifunction print and copying machines (MFDs)" as below:- "(a) The country of Origin Certificate along with bill of lading and packaging; (b) The certificate issued by the inspecting agency as certified by the exporting country or the inspection and certification agency approved by Directorate General Foreign Trade (DGFT) for functionality, having residual life of not less than five years and serial number. (c) Extended Producer Responsibility - Authorisation under e-waste (Management and Handling) Rules, 2011 as amended from time to time as Producer; (d) The MFDs shall be for printing A3 size and above. (e) An acknowledged copy of the annual return filed with concerned SPCB for import in the last financial year". 28. Section 13(2) exempts any specific requirement of documents for electrical and electronic assemblies listed at serial Nos.4(e) to 4(i) of Schedule VIII. Entry 4(j) is not exempted and indicates the specific requirements in column 3. The D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... industry specified in the First schedule to the Industries (Development and Regulation) Act, 1951 [under sub-clause (a)] and those engaged in providing or rendering of services [under sub-clause (b)]. Electrical and Electronic equipment is included in the Schedule and the respondents' registration is not as a manufacturing or production enterprise. The exemption is not applicable to the respondents. The learned Senior Counsel on being queried, with the above reasoning, gave up the contention of exemption; fairly and rightly so. 30. We were then showed a Notification, No. G.S.R.670(E)dated 06.07.2016 issued by Ministry of Environment, Forest and Climate Change amending the H&OW Rules which at Para 3 reads as follows: "3. In the said rules, in Schedule III, in the Note, for the portion beginning with the words "... Import permitted in the country" and ending with the words "domestically manufactured", the following shall be substituted, namely:- "... Import permitted in the country to the actual users or trader in accordance with the documents required and verified by the Custom Authority as specified under Schedule VIII of these rules. The policy for free trade for multifunc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d sale of the same within the country, there is no disposal of e-waste as such. 33. More significantly, the e-Waste Rules of 2011 was found to be insufficient to ensure protection of environment and the e-Waste Rules, 2016 was brought in. The learned Senior Counsel would also specifically refer to the recommendations of the Committee on the issue of retrospective implementation of e-Waste Rules, 2016; the decision on which is as follows: "The need for environmentally sound management of e-waste has been recognized all over the world. In the EU this need took the form of a directive by the EU to its members way back in 2003 to collect e-waste in certain quantity from all households. In India, the 2011 rules was a response to this need in view of the environmental consequences haphazard recycling or disposal of the e-waste. The main issue in the management of the e-waste is its collection. Taking into consideration the fact that various hazardous constituents form part of the EEE supplied by the producers, the major responsibility of collection of the e-waste and its channelization to the environmentally sound recycling / disposal facilities should rest with the producers. Accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jection of the Commissioner was with respect to the absence of acknowledged copy of the annual return filed with the concerned SPCB for import during the previous financial year. The Tribunal found that the consignment was just imported and only at the end of the financial year could there be an annual return filed. As was noticed by the Committee appointed under the e-Waste Rules of 2011, which went into the implementation of the e-Waste Rules of 2016, a provision has been made for every EPR authorization holder to collect and channelize e-waste with respect to annual specified target only by e-Waste Rules of 2016. As is indicated in the EPR Authorisation obtained by the importers, under the e-waste Rules of 2016, their disposal is yet to commence. There cannot hence be any insistence for the annual returns. 36. The learned Standing Counsel for the Department has a contention that there was a requirement for a return filed before the SPCB even as per the e-Waste Rules of 2011 under Form No.3. The form indicates the name and address of the producer/collection centre/dismantler/recycler, the name of the authorized person, the total quantity of e-waste sold/purchased/sent for proces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... questions raised as Nos.(ii) to (vii) it cannot but be observed that the primary document required for import of restricted goods,viz: the Authorisation of the DGFT is not available. The importers do not even have a case that they had applied for one. They assert that the DGFT refuses to issue such an authorisation and in such circumstance, considering the requirement of MFD's, which is even evident from the policy of the Central Government, they have been importing the same and getting release of the goods on payment of redemption fine. We cannot countenance such a contention but the fact remains that even in the teeth of the violation alleged the goods can be redeemed. 39. The violation being evident only to the extent of the authorisation under the FTP, the redemption under Section 11 of the Foreign Trade Act alone can facilitate release of the goods. The contention of the importer, then is that there is a specified 'Adjudicating Authority' under the FTP and the Commissioner cannot exercise such powers of redemption available under the Foreign Trade Act. There is also no seizure of goods from the premises of the respondents as contemplated under Section 10 of the Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Devices and Navpad Enterprises, as cited herein above. Obviously the decisions were cited by the Tribunal, without looking into it, since on a reading we find that it is the same decision twice reported in two volumes of the same journal. Be that as it may, the principle of redemption fine in lieu of confiscation, as the importer in the afore-cited decision, stated correctly, is with a view "to prevent the importers from earning any profits by such import done contrary to the exemption rules". This was accepted by the Division Bench of this Court. We do not think we should interfere with the reduction of the redemption fine as made by the Tribunal. 41. Admittedly the goods were imported without an authorisation from the DGFT, which was an essential requirement as per the FTP. In the present case, the Commissioner has thought it fit to impose 20% of the value as redemption fine, obviously without looking into the Foreign Trade Act. The Tribunal reduced it to 10%. We would not interfere with that, since the appeal to the Tribunal was only by the importer. The penalty imposed under Section114AA has been deleted by the Tribunal, which, we find, to be proper. There cannot be any all ..... 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