Custom, Excise & Service Tax Tribunal
180/2011 vs Dt. 18/10/2011 on 24 July, 2012
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench Division Bench
Court I
Date of Hearing:10/07/2012
Date of decision:10/07/2012
Appeal Nos., appellants, respondent and OIA Nos. are as under
Sl.No. Appeal No. Appellant Respondent OIA No.
1. C/3114/2011 CC, Cochin M/s. Deccan Enterprises 180/2011 dt. 18/10/2011
2. C/3135/2011 CC, Cochin M/s. Divine International 185/2011 dt. 18/10/2011
3. C/3136/2011 CC, Cochin M/s. Asian Copiers 187/2011 dt. 18/10/2011
4. C/432/2012 CC, Cochin M/s. Ace Digital Systems 190/2011 dt. 17/11/2011 Appearance Mr. Ganesh Haavanur, Addl. Commissioner(AR) for the appellant. Mr. P.A. Augustian, and Mr. N. Viswanathan, Advocates for the respondents.
For approval and signature:
Honble Mr. P.G. Chacko, Member(Judicial) Honble Mr. M. Veeraiyan, Member(Technical)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
3. Whether their Lordship wish to see the fair copy of the Order?
Seen
4. Whether Order is to be circulated to the Departmental authorities? Yes Coram:
Honble Mr. P.G. Chacko, Member(Judicial) Honble Mr. M. Veeraiyan, Member(Technical) FINAL ORDER No._______________________ [Order per: P.G. Chacko] These are appeals filed by the Commissioner of Customs against orders passed by the Commissioner of Customs(Appeals). Appealwise, the facts are summarized below:-
Appeal No.C/3114/2011
2. The respondent, M/s. Deccan Enterprises, had filed a Bill of Entry on 14/09/2010 for clearance of secondhand computers imported by them with a declared value of USD 10590. Officers of the Directorate of Revenue Intelligence(DRI) intercepted the consignment suspecting that it contains hazardous electronic waste. Subsequently, the consignment was got examined by Chartered Engineers who, upon random examination of the goods, certified them to be e-waste. On the basis of the Chartered Engineers report, a show-cause notice was issued to the respondent by the DRI and, in adjudication thereof, the original authority found the goods to be hazardous-waste and confiscated the same in terms of Section 111(d) and (m) of the Customs Act read with the Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008 (the Hazardous Wastes (MHTM) Rules, 2008, for short) and also read with Section 11 of the Foreign Trade (Development and Regulation) Act, 1992 but allowed redemption of the goods against payment of fine of Rs.1 lakh subject to further condition that the goods on redemption be re-exported under Rule 17 of the Hazardous Wastes (MHTM) Rules, 2008 to the country of origin. The adjudicating authority also imposed a penalty of Rs.50,000/- on the respondent under Sections 112(a) and 114AA of the Customs Act. Aggrieved by the Order-in-Original, the party preferred an appeal to the Commissioner(Appeals) and the latter passed the impugned order wherein (a) the goods in question were held not to be hazardous waste and hence not liable to be re-exported; (b) the confiscation of the goods was upheld with an order for its release for home consumption on payment of appropriate duty and redemption fine of Rs.1 lakh and (c) the penalty of Rs.50,000/- imposed on the respondent was sustained.
Appeal No.C/3135/2011
3. The respondent, M/s. Divine International, had filed a Bill of Entry on 31/08/2010 for clearance of secondhand computers imported by them with a declared value of USD 35962.50. Officers of the Directorate of Revenue Intelligence(DRI) intercepted the consignment suspecting that it contains hazardous electronic waste. Subsequently, the consignment was got examined by Chartered Engineers who, upon random examination of the goods, certified them to be e-waste. On the basis of the Chartered Engineers report, a show-cause notice was issued to the respondent by the DRI and, in adjudication thereof, the original authority found the goods to be hazardous-waste and confiscated the same in terms of Section 111(d) and (m) of the Customs Act read with the Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008 (the Hazardous Wastes (MHTM) Rules, 2008, for short) and also read with Section 11 of the Foreign Trade (Development and Regulation) Act, 1992 but allowed redemption of the goods against payment of fine of Rs.1 lakh subject to further condition that the goods on redemption be re-exported under Rule 17 of the Hazardous Wastes (MHTM) Rules, 2008 to the country of origin. The adjudicating authority also imposed a penalty of Rs.1 lakh on the respondent under Sections 112(a) and 114AA of the Customs Act. Aggrieved by the Order-in-Original, the party preferred an appeal to the Commissioner(Appeals) and the latter passed the impugned order wherein (a) the goods in question were held not to be hazardous waste and hence not liable to be re-exported; (b) the confiscation of the goods was upheld with an order for its release for home consumption on payment of appropriate duty and redemption fine of Rs.2 lakhs and (c) the penalty of Rs.1 lakh imposed on the respondent was sustained.
Appeal No.C/3136/2011
4. The respondent, M/s. Asian Copiers, had filed a Bill of Entry on 09/09/2010 for clearance of secondhand computers imported by them with a declared value of USD 45324. Officers of the Directorate of Revenue Intelligence(DRI) intercepted the consignment suspecting that it contains hazardous electronic waste. Subsequently, the consignment was got examined by Chartered Engineers who upon random examination of the goods, certified them to be e-waste. On the basis of the Chartered Engineers report, a show-cause notice was issued to the respondent by the DRI and, in adjudication thereof, the original authority found the goods to be hazardous-waste and confiscated the same in terms of Section 111(d) and (m) of the Customs Act read with the Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008 (the Hazardous Wastes (MHTM) Rules, 2008, for short) and also read with Section 11 of the Foreign Trade (Development and Regulation) Act, 1992 but allowed redemption of the goods against payment of fine of Rs.1 lakh subject to further condition that the goods on redemption be re-exported under Rule 17 of the Hazardous Wastes (MHTM) Rules, 2008 to the country of origin. The adjudicating authority also imposed a penalty of Rs.50,000/- on the respondent under Sections 112(a) and 114AA of the Customs Act. Aggrieved by the Order-in-Original, the party preferred an appeal to the Commissioner(Appeals) and the latter passed the impugned order wherein (a) the goods in question were held not to be hazardous waste and hence not liable to be re-exported; (b) the confiscation of the goods was upheld with an order for its release for home consumption on payment of appropriate duty and redemption fine of Rs.3 lakhs and (c) the penalty of Rs.50,000/- imposed on the respondent was sustained.
Appeal No.C/432/2012
5. The respondent, M/s. Ace Digital Systems, had filed a Bill of Entry on 31/08/2010 for clearance of secondhand photocopiers imported by them with a declared value of USD 32540 (C&F). Officers of the Directorate of Revenue Intelligence(DRI) intercepted the consignment suspecting that it contains hazardous electronic waste. Subsequently, the consignment was got examined by Chartered Engineers who, upon random examination of the goods, certified them to be e-waste. On the basis of the Chartered Engineers report, a show-cause notice was issued to the respondent by the DRI and, in adjudication thereof, the original authority found the goods to be hazardous-waste and confiscated the same in terms of Section 111(d) and (m) of the Customs Act read with the Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008 (the Hazardous Wastes (MHTM) Rules, 2008, for short) and also read with Section 11 of the Foreign Trade (Development and Regulation) Act, 1992 but allowed redemption of the goods against payment of fine of Rs.1 lakh subject to further condition that the goods on redemption be re-exported under Rule 17 of the Hazardous Wastes (MHTM) Rules, 2008 to the country of origin. The adjudicating authority also imposed a penalty of Rs.50,000/- on the respondent under Sections 112(a) and 114AA of the Customs Act. Aggrieved by the Order-in-Original, the party preferred an appeal to the Commissioner(Appeals) and the latter passed the impugned order wherein (a) without recording any categorical finding on the question whether the imported goods could be held to be hazardous waste, the lower authoritys order of confiscation with direction for reexport was set aside and (b) it was concluded thus:
8. No action has been taken by the proper officer after filing of the Bill of Entry under Section 46 for the purpose of assessment as a prelude to clearance under Section 47 of the Customs Act, 1962. The goods not having been assessed under Section 17 of the Customs Act, 1962, and no finding relating to value under Section 14 having been recorded by the proper officer, there is no scope for a dispute on that issue to be decided upon within the meaning of Section 128 of the Customs Act, 1962 in the proceedings before me. These procedures, including scrutiny for compliance with other laws of the country, are required to be completed by the proper officer in view of the above order setting aside the limited order of the original authority.
6. We have perused the records and carefully considered the submissions of both sides.
7. It is not in dispute that the subject goods being restricted items required specific import licence. The respondents admittedly did not have such licence and, therefore, all the goods were liable to be confiscated in terms of Section 111(e) of the Customs Act. In all the cases, the original authority rightly ordered confiscation of the goods with option for redemption against payment of fine. However, that authority, on the basis of its own views and without any evidentiary support, held that the imported goods were hazardous waste within the meaning of the provisions of the Hazardous Wastes (MHTM) Rules, 2008 and, on this basis, directed that the goods be redeemed and reexported. The appellate authority, in all cases barring the case of M/s. Ace Digital Systems, rightly held that there was no basis whatsoever for holding the view that e-waste should necessarily be considered to be hazardous waste. In this connection, the appellate authority eminently drew support from Final Order No.633-636/2011 dt. 03/06/2011 in the case of Shivam International & others Vs. CC, Chennai [2011-TIOL-1181-CESTAT-MAD] passed by the Tribunals Chennai Bench. The relevant portion of the Tribunals decision is reproduced below:
7. From the above, it is clear that according to the Chartered Engineer, 85% of the computers imported are directly usable and only 15% of the same are non-functional going by the random sample examination undertaken by him (it is not in dispute that he did not examine all the packages). He has also opined that if the reusable computers have to be refurbished and if the non-functional computers have to be made re-usable it will result in heavy amount of e-waste generation. As such, the report only expresses an apprehension if the imported goods are taken for refurbishing. The present importers are traders and they, according to the learned Advocate are not going to do any refurbishing, but simply sell the imported goods for which there is a market available. He states that poor people cannot afford new brands of computers and they make do with cheaper and obsolete computers imported from abroad and sold in the domestic market at a cheaper price. Such used computers are also used in computer training centres.
8. Apart from the fact that the Chartered Engineer is not competent to certify what is or is not hazardous waste', he has not even so certified the consignments to be hazardous waste'. Hazardous waste is a term defined under the Rules made under the Environment (Protection) Act, 1986 but the term e-waste is not so defined. According to the learned Advocate, a draft notification has since been circulated to bring into the ambit of hazardous waste what is proposed to be covered under the term e-waste'. But admittedly, the draft E-waste (Management and Handling) Rules, 2010 notified on 14.5.2010 inviting objections and suggestions had no legal force at the time of import. According to the learned Advocate, these Rules after finalization will come into force sometime in 2012.
9. Only what can be categorized as hazardous waste' and so certified by a competent authority is required to be dealt in terms of the Environment (Protection) Act, 1986 read with the Rules made thereunder and import of such hazardous waste is required to be prevented. The authorities below have laboured hard to use the Chartered Engineer's certificate and the apprehension expressed thereunder to treat the consignments as hazardous waste under the relevant Rules but such an exercise done by them cannot be approved as no competent authority has examined and held the consignment to be falling in the category of hazardous waste.
10. The impugned computer systems imported are lying in the customs area for nearly a year and has not caused any hazard or danger to anyone so far. The same also cannot be considered as waste electrical and electronic assembly etc. described in Basel B1110 category under Part B of Schedule - III to the Hazardous Waste (Management, Handling and Transfer Movement) Rules, 2008 as in the form imported, the impugned goods are only used computer systems. Further, it is nobody's case that these goods imported from Australia, US and Korea are being sent to India deliberately for dumping the same as hazardous waste when the appellant-importers have paid nearly Rs. 41 lakhs through banking channels for the same and they are also prepared to pay the applicable duty and other charges as leviable. The payments made through banking channels have not been called into question nor the DRI investigation shows any intention on the part of the exporters or importers in this case to transfer hazardous waste for the purpose of disposal in a third world country. More likely, the appellants being traders have imported the used computer systems for the purpose of trading at a profit since these were available at cheaper rates abroad having become obsolete there but still have use in a developing country market. The learned Advocate also brought on record details of similar imports earlier made by the appellants as well as others and such imports have been regularly allowed without treating such used computer systems as hazardous waste.
11. The learned Advocate fairly concedes that secondhand personal computers / laptops cannot be freely imported under para 2.17 of the Foreign Trade Policy and hence the appellants are willing to pay reasonable amounts of fine and penalty for such imports as has been done in the past.
12. In view of the foregoing, I am of the view that the impugned goods cannot be considered as hazardous waste. Accordingly, the impugned orders are set aside and all the four appeals are remanded to the original authority for the limited purpose of re-adjudicating the cases for violation of para 2.17 of the Foreign Trade Policy and for allowing clearance on payment of applicable duty and reasonable amounts of fine and penalty to be determined by him.
8. As rightly submitted before us by the learned counsel for the respondents, the above decision of the Tribunal is squarely applicable to the facts of these cases. Therefore, there is no valid reason to interfere with the view taken by the appellate Commissioner in the cases of M/s. Divine International Ltd., M/s. Deccan Enterprises and M/s. Asian Copiers. As rightly held by the appellate Commissioner in those cases, any re-export is not warranted in these cases and, therefore, the respondents (M/s. Divine International Ltd., M/s. Deccan Enterprises and M/s. Asian Copiers) can redeem the goods on payment of appropriate duty of customs and the fine determined by the lower appellate authority. Needless to say that they should also pay the penalty imposed on them. In the result, the first three appeals get dismissed.
9. Appeal No.C/432/2012 is directed against an Order-in-Appeal which has a complexion different from that of the Orders-in-Appeal which we have upheld. Both sides agree that the facts of this case are similar to those of the other three cases and, therefore, the view taken in the other three appeals can as well be taken in appeal No.C/432/2012. Accordingly, we set aside the Order-in-Appeal No.190/2011 dt. 17/11/2011 and dispose of appeal No.C/432/2012 in the following terms:
a) the confiscation ordered by the original authority with option for redemption of the goods against payment of fine of Rs.1 lakh is sustained;
b) the goods, on redemption against payment of the above fine along with appropriate duty, shall be allowed to be cleared for home consumption, and
c) the penalty of Rs.1 lakh imposed on the respondent by the original authority is sustained.
(Operative portion of this order pronounced in open court on conclusion of the hearing) (M. VEERAIYAN) MEMBER (TECHNICAL) ( P.G. CHACKO ) MEMBER (JUDICIAL) Nr 12