Custom, Excise & Service Tax Tribunal
Commissioner-Kolkata(Port) vs Skylark Office Machines on 31 March, 2023
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH : KOLKATA
REGIONAL BENCH - COURT NO.2
Customs Miscellaneous Application No.75222 of 2022 (Stay)
(On behalf of Appellant)
And
Customs Appeal No.75514 of 2022
(Arising out of Order-in-Appeal No.KOL/CUS(PORT)/AKR/2022 dated 30.03.2022
passed by Commissioner of Customs (Appeals), Kolkata.)
Commissioner of Customs (Port), Kolkata
(15/1, Strand Road, Custom House, Kolkata-700001.)
...Appellant
VERSUS
M/s. Skylark Office Machines
.....Respondent
(Shop No.4, Ground Floor, Door No.10, Aziz Mulk, 4th Street, Chennai, Tamil Nadu-
600006.)
APPEARANCE
Shri M.P.Toppo, Authorized Representative for the Appellant (s)
Shri Shovendu Banerjee, Advocate for the Respondent
CORAM: HON'BLE SHRI P.K. CHOUDHARY, MEMBER(JUDICIAL)
HON'BLE SHRI K. ANPAZHAKAN, MEMBER(TECHNICAL)
MISCELLANEOUS ORDER NO. 75197/2023
FINAL ORDER NO. 75546/2023
DATE OF HEARING : 31 March 2023
DATE OF DECISION : 31 March 2023
Per : P.K. CHOUDHARY :
By the impugned order, the Ld.Commissioner of Customs
(Appeals), Kolkata has allowed the Appeal of the Respondent herein,
particularly modifying the order of the Adjudicating authority by :
(i) Upholding confiscation of the impugned goods under section
111(d) of the Customs Act, 1962 for non-production of
authorization from DGFT,
2
Customs Appeal No.75514 of 2022
(ii) Ordered for release of the impugned goods for home
consumption on payment of redemption fine of Rs.3.6 Lakhs
and applicable customs duty,
(iii) Reducing the penalty imposed on the Appellant by the
Adjudicating authority from Rs.35,97,457/- to Rs.1.8 Lakhs.
(iv) Setting aside the order of re-export or disposal of the
impugned goods passed by the Adjudicating authority in
terms of DGFT Notification No.5/2015-2020 dated
07.05.2019.
2. At the outset the Ld.Counsel for the Respondent raised a
preliminary objection that the Stay application filed under Rule 41 of
the CESTAT (Procedure) Rules, 1982 is not maintainable and this
Tribunal does not have the power to grant stay. Rule 41 of the CESTAT
(Procedure) Rules, 1982 reads as under:-
"The Tribunal may make such orders or give such directions as may
be necessary or expedient to give effect or in relation to its orders or
to prevent abuse of its process or to secure the ends of justice."
3. It has been submitted by the Ld. Counsel for the respondent that
this Rule can only be read as empowering the Tribunal to give effect to
its own orders. It does not explicitly give the power to stay orders of
any lower authority. It is his submission that these Rules have been
framed under Section 129C of the Customs Act, 1962 which reads as
follows :
"129C. Procedure of Appellate Tribunal. -
(1) The powers and functions of the Appellate Tribunal may be
exercised and discharged by Benches constituted by the President
from amongst the members thereof.
(2) Subject to the provisions contained in 47 sub-section (4), a Bench
shall consist of one judicial member and one technical member.
[(3) x x x]
(4) The President or any other member of the Appellate Tribunal
authorised in this behalf by the President may, sitting singly, dispose
of any case which has been allotted to the Bench of which he is a
member where -
3
Customs Appeal No.75514 of 2022
(a) the value of the goods confiscated without option having been
given to the owner of the goods to pay a fine in lieu of confiscation
under section 125; or
b) in any disputed case, other than a case where the determination of
8 any question having a relation to the rate of duty of customs or to
the value of goods for purposes of assessment is in issue or is one of
the points in issue, the difference in duty involved or the duty
involved; or
(c) the amount of fine or penalty involved, does not exceed fifty lakh
rupees.
(5) If the members of a Bench differ in opinion on any point, the point
shall be decided according to the opinion of the majority, if there is a
majority; but if the members are equally divided, they shall state the
point or points on which they differ and make a reference to the
President who shall either hear the point or points himself or refer the
case for hearing on such point or points by one or more of the other
members of the Appellate Tribunal and such point or points shall be
decided according to the opinion of the majority of these members of
the Appellate Tribunal who have heard the case, including those who
first heard it.
(6) Subject to the provisions of this Act, the Appellate Tribunal shall
have power to regulate its own procedure and the procedure of the
Benches thereof in all matters arising out of the exercise of its powers
or of the discharge of its functions, including the places at which the
Benches shall hold their sittings.
(7) The Appellate Tribunal shall, for the purposes of discharging its
functions, have the same powers as are vested in a court under the
Code of Civil Procedure, 1908 (5 of 1908), when trying a suit in
respect of the following matters, namely :-
(a) discovery and inspection;
(b) enforcing the attendance of any person and examining him on
oath;
(c) compelling the production of books of account and other
documents; and
(d) issuing commissions.
4
Customs Appeal No.75514 of 2022
(8) Any proceeding before the Appellate Tribunal shall be deemed to
be a judicial proceeding within the meaning of sections 193 and 228
and for the purpose of section 196 of the Indian Penal Code (45 of
1860), and the Appellate Tribunal shall be deemed to be a Civil Court
for all the purposes of section 195 and Chapter XXVI of the Code of
Criminal Procedure, 1973 (2 of 1974)."
4. It is his submission that Section 129C itself does not empower the
Tribunal to stay the order of the lower authority. The only power of the
Tribunal was with respect to stay of the requirement of predeposit
under Section 129E of the Customs Act prior to 06.08.2014. After
06.08.2014, the amount of predeposit has been statutorily fixed and
the Tribunal has no power to modify the amount of predeposit also.
There is no other law under which the Tribunal can pass a stay order.
5. We have, at the outset, considered these submissions of the Ld.
Counsel of the respondent. We find that Rule 41 of the CESTAT
(Procedure) Rules, 1982 empowers the Tribunal to pass an order
(a) to give effect to its orders;
(b) also in relation to its orders
(c) to prevent abuse of process or
(d) to secure ends of justice.
Be that as it may, Rule 28C of CESTAT Procedure Rules which provides
for filing miscellaneous applications would apply for filing stay
applications also. Misquoting of a Rule cannot be the main ground for
denying relief.
6. Having found that stay order can be passed by this Tribunal, we,
however, find that in the present case the consignment has not been
released and the Respondent is suffering and incurring heavy
demurrage and loss and therefore it would be expedient to decide the
main Appeal itself. With the consent of both the sides, the matter was
heard on merits for final disposal.
7. The facts in brief are that the Respondent imported consignment
of 216 numbers of old and used multi function printing and copying
5
Customs Appeal No.75514 of 2022
machines (hereinafter referred as 'MFD') capable of printing A-3 size
paper through the port of Kolkata and accordingly filed Bill of Entry
No.4744014 dated 03.09.2019 for the assessment and clearance of the
subject goods for home consumption.
8. The appraising officer of assessment group raised a query asking
the respondent to provide the BIS registration certificate as per
provision of "Electronics and IT Goods (Requirement for Compulsory
Registration) Order, CRO 2012" or permission/exemption letter from
the Ministry of Electronics and Information Technology (MEITY) in terms
of Compulsory Registration Order 2012. The goods were examined on
first check basis in the presence of Govt. approved Chartered Engineer
who vide his report bearing No.ELBI/171/19-20 dated 11.09.2019
suggested the enhancement of value to USD 48930 (C & F) as against
the declared transaction value of USD 40960 (C & F). He also
suggested residual life of the goods. The goods were not released as
the Respondent failed to submit the certificate and/or permission from
MEITY. A Writ Petition was filed before the Hon'ble High Court at
Calcutta being WPA 10495 of 2020 (Rohit Jhunjhunwala v. CC(Port),
Kolkata and Ors) inter alia praying for release of the goods. The Hon'ble
High Court vide order dated 17.12.2020 directed the Adjudicating
authority to pass a reasoned order after giving an opportunity to the
Respondent importer. The Adjudicating authority observed that import
of second-hand/old and used photocopiers and old and used digital
multi function machine and copying machines are restricted and can be
imported only against a valid specific licence/authorization and the
importer has failed to do so. He also observed that goods are prohibited
unless they are registered with BIS or specific exemption letter from
the Ministry of Electronics and Information Technology (MEITY) for a
particular consignment. He relied on Circular No.01/2019 of MEITY
wherein the goods were covered under the category of 'printers and
plotters'. He also relied on provisions of DGFT Notification No.5/2015-
2020 dated 07.05.2019 regarding re-export or disposal of prohibited
6
Customs Appeal No.75514 of 2022
goods. Accordingly the Adjudicating authority vide Order-in-Original
dated 15.01.2021 ordered confiscation of impugned goods under
Section 111(d) of the Customs Act, 1962. He also rejected the declared
value of the impugned goods under Rule 12 of the Customs Valuation
(Determination of Value of Imported Goods)Rules, 2007. He re-
determined the value of impugned goods at Rs.35,95,457/- (CIF) in
terms of Board's Circular No.07/2020-CUS dated 05.02.2020 on
valuation of second-hand machinery and as per Chartered Engineer's
inspection report dated 11.09.2019. He granted an option to the
importer to redeem the impugned goods to re-export only on payment
of redemption fine of Rs.4.00 Lakh under the provisions of Section 125
of the Customs Act, 1962. He also imposed a penalty of Rs.35,95,457/-
on the importer under Section 112(a)(i) of the Customs Act, 1962. The
Adjudicating authority allowed the re-export of the impugned goods
against payment of redemption fine and penalty within six months from
the date of issuance of the Order-in-Original and also held that after
expiry of six months the Department may initiate action in terms of
DGFT Notification 5/2020 (supra) to deform the impugned goods
beyond use and dispose of the impugned goods under intimation to
MEITY. Being aggrieved and dis-satisfied with the Order-in-Original the
importer preferred Appeal before the Commissioner(Appeals). After
going through the grounds of appeal, the Commissioner(Appeals)
framed the following issues before him:-
a. Whether the impugned goods are required to meet the BIS
standard and subject to mandatory compliance as per 'Electronics &
Information Technology Goods (Requirement of Compulsory
Registration Order) 2012 (in short CRO 2012)/
b. Whether the impugned goods were prohibited and liable for
confiscation under Section 111 (d) of Customs Act, 1962? Further,
whether the impugned goods were restricted in nature as per Para 2.31
of FTP?
c. Whether the impugned goods may be allowed for home
consumption as prayed by the appellant?
7
Customs Appeal No.75514 of 2022
9. The Department being aggrieved by the impugned order-in-
Appeal has filed the present Appeal before this Tribunal.
10. Following points were asserted by the Revenue:-
(a) MEITY is specialized Department for electrical and electronic
goods.
(b) MEITY had cleared that MFD are basically printers withi
additional features. In such a scenario when the clarification has
been issued by the specialized department the same cannot be
rejected by Commissioner(Appeals) without giving any specific
proof in support of his claim that MFD is distinct from printers and
plotters.
(c) The Commissioner(Appeals) has failed to appreciate that
Circular No.1/2019 from MEITY was issued to clarify that MFD
which was basically printers with additional features is covered
under CRO 2012.
(d) Commissioner(Appeals) has erred in his observation that
MEITY was BIS through CRO 2021.
(e) The Directorate of Revenue Intelligence has issued an alert
circular that multi-functional copiers should be permitted to be
imported only in accordance with rules and provisions of CRO
2012. The substantial question of law with regard to requirements
of BIS registration under CRO 2012 is pending with the Hon'ble
Apex Court. The certificate of the Chartered Engineer does not
alter the requirement of mandatory statutory compliance under
CRO 2012. The impugned goods are being imported in large
quantities since they are not manufactured in India and the
intention of the Government seems to restrict in public interest
import of second hand multi-functional device without a license.
In view of the above, Revenue prayed that Orders-in-Appeal may
be set aside by the Tribunal and the Hon'ble Tribunal may pass
any order as it may be deem fit.
8
Customs Appeal No.75514 of 2022
11. Ld. Counsel for the respondents submits that the main contention
of the Revenue is that import of MFDs requires a certificate of
compulsory registration by BIS as per CRO 2012. Clause (3) of this
order reads as under :
"3. Prohibition regarding manufacture, storage, sale and distribution
etc. of Goods -
(1) No person shall by himself or through any person on his behalf
manufacture or store for sale, import, sell or distribute Goods which do
not conform to the Specified Standard and do not bear the words "Self
declaration - Conforming to IS (Relevant Indian Standard mentioned in
column (3) of the Schedule) on such Goods after obtaining
Registration from the Bureau:
2. The sub-standard or defective Goods which do not conform to the
Specified Standard mentioned in Column (3) of the Schedule shall be
deformed beyond use by the manufacturer and disposed off as scrap."
The order therefore applies to products indicated in the Schedule. The
relevant entry of the Schedule is as follows :
The order therefore applies to products indicated in the Schedule. The
relevant entry of the Schedule is as follows:
SCHEDULE
S.No. Product Indian Standard Title of Indian Standard
Number
(1) (2) (3) (4)
... .... .... ....
7. Printers, Plotters IS 13252 : 2003 Information Technology
Equipment - Safety -
General Requirements
He submits that they have neither imported 'Printers nor
'Plotters'. What they have imported is 'Multi-Functional Devices' which
are distinct products known in the market as such. These products were
also brought under control through a separate gazette publication
called "Electronics & Information Technology Goods (Requirement of
9
Customs Appeal No.75514 of 2022
compulsory Registration) Order, 2021" published vide S.O. 1248 (E)
dt.18.03.2021. Rule 2 of this order reads as under:-
"2. Compulsory use of standard mark:- Goods or articles specified in the column (2) of
the Schedule below shall conform to the corresponding Indian Standard given in the
column (3) of the said Schedule and shall bear the 'Standard' Mark under a license from
the Bureau of Indian Standards as per Scheme-lI of Schedule-II of Bureau of Indian
Standards (Conformity Assessment) Regulations, 2018, provided that nothing in the
Order shall apply in relation to goods or articles, as specified in the column (2) of the
said Schedule meant for export which conform to the specification required by the
foreign buyer and to goods or articles, for which the Central Government has issued
specific exemption letter based on reasons to be recorded in writing."
SCHEDULE
S.No. Product Indian Standard Title of Indian Standard
Number
(1) (2) (3) (4)
... .... .... ....
7. Printers/Multi- IS 13252 : 2003 Information Technology
Function Devices Part 1 : 2010 Equipment - Safety -
(MFD)/Plotters General Requirements
The CRO 2012 specifically covers only 'printers and plotters'. The case
of the Revenue rests on a circular issued by the Ministry of 10 CRO
2021 17 Information & Technology No.1/2019 dt. 02.05.2019 which
reads as under :
"8(29)/2019-IPHW
Government of India
Ministry of Electronics and Information Technology,
IPHW Division.
Dated, 2nd May 2019
CIRCULAR No.1 of 2019
Subject :- Clarification regarding coverage of Multi-Function Devices (MFDs)
The Government of India, Ministry of Electronics and Information
Technology (MeitY) has mandated Compulsory Registration for notified
product categories including "Printers, Plotters" in the Electronics and IT
Goods (Requirement of Compulsory Registration Order, 2012. (hereinafter
called the Order) notified in the Gazette of India vide S.O.No.2357 (E) dated
03.10.2012.
2. In this regard, it is clarified that the Multi-Function Devices (MFDs), which
are basically printers with additional features like photocopy, scan, Fax etc.
and are covered in the category "Printers, Plotters" notified under the Order.
3. Other provisions of the aforesaid notification dated 03.10.2012 would apply
as before."
10
Customs Appeal No.75514 of 2022
Another letter was issued by the Joint Secretary vide No.37(10)/
2016-IPHW dated 10.03.2017 of the same Ministry reads as follows :
"D.O.No.37 (6)/2016-IPHW
Dated 06.12.2016
Dear Shri Srinivasa,
Meity is executing the surveillance of registered manufacturers for goods notified under
"Electronics and IT Goods (Requirement for Compulsory Registration) Order (CRO), 2012". It has
come to our notice that second hand electronics products are being allowed to be
imported/sold in Indian market without registration.
2. The CRO applies universally to all notified products after the date of coming into effect of the
Order. The repaired/refurbished/second hand items, if notified, also require registration under
the provisions of the Oder. For the notified products, the importer should get the product
registered with BIS before import in India or should provide an exemption letter from MeitY.
3. The unregistered repaired/refurbished/second hand items should not be allowed to be
imported without prior permission from 18 MeitY. In such cases, the unregistered products shall
be detained at customs and the matter should be brought into notice of Meity for necessary
action.
Yours sincerely
Sd/-
(Rajiv Bansal)
Shri L Satya Srinivasa Joint Secretary (Customs)
Central Board of Excise and Customs
Department of Revenue, North Block,
New Delhi 110 001."
12. Ld. Counsel submitted that based on these two letters,
Revenue's case is that MFDs have to meet the standards under CRO
2012. But as can be seen by comparing entries in the CRO 2021 and
CRO 2012, multi-functional devices were clearly not covered under the
latter. Therefore, the confiscation of the goods itself is without any
basis. Section 111(d) of the Customs Act provides for confiscation of
goods imported contrary to any prohibition imposed by or under this
Act (Central Act) or any other law for the time being in force. Any
letter issued by an officer of MeitY cannot be termed as a law.
Imported goods cannot be confiscated on the ground that they do not
conform to the letters/circulars issued by any officer of a Ministry.
11
Customs Appeal No.75514 of 2022
13. He submitted that the second argument of the department is
based on DGFT Notification No.5/2015-2020 dt. 07.05.2019 which
reads as under :
"Notification No.5/2015-2020
New Delhi Dated 7 May, 2019
Subject : Import policy for electronics and IT Goods under Schedule -
I (Import Policy) of ITC (HS), 2017.
S.O. (E): In exercise of powers conferred by Section 3 of FT (D&R) Act, 1992 read
with paragraph 1.02 and 2.01 of the Foreign Trade Policy, 2015-2020, as amended
from time to time, the Central Government hereby amends Note No.2(c) under
the General Notes Regarding Import Policy and inserts Policy Condition No.2
under Chapter 84 and as Policy Condition No.5 under Chapter 85 of ITC (HS)
2017 as under :
Existing General Note 2(c) Amended General Note No.2(c)
(c) Import Policy for electronics and (c) Import Policy for electronics and
IT Goods: IT Goods:
The import of notified Goods under the The import of Goods new as well as
"Electronics and Information Technology second hand, whether or not refurbished,
Goods (Requirement of Compulsory repaired or reconditioned) notified under
Registration) Order, 2012, as amended the Electronics and information
from time to time, will be allowed subject Technology Goods (Requirement of
to registration with the Bureau of Indian Compulsory Registation) Order, 2012, as
Standards (BIS), or on specific unless they are registered with the
exemption letter from Ministry of Bureau of Indian Standards (BIS) and
Electronics and Information Technology comply to the 'Labeling Requirements'
(MeitY) for a particular consignment, as published by BIS, as amended from time
per provisions of Gazette Notification SO to time', or on specific exemption letter
No.3022 dated 11.09.2013. Accordingly, from Ministry of Electronics and
import of unregistered/non-complaint Information Technology (MeitY) for a
notified products as in CRO, 2012, as particular consignment, as per provisions
amended is "prohibited" of Gazette Notification SO No.3022 dated
11.09.2013.
Import consignments without valid The importer shall re-export such
registration with BIS shall be re-exported prohibited Goods reaching Customs Ports
by the importer failing which Customs else the Customs Authorities shall deform
shall deform the goods and dispose them the goods beyond use and dispose of the
as scrap under intimation to MeitY. goods as scrap under intimation to MeitY.
12
Customs Appeal No.75514 of 2022
Policy Condition: As under chapter 84 and 85 of ITC (HS) 2017:
The import of Goods new as well as second hand, whether or not
refurbished, repaired or reconditioned) notified under the Electronics and
Information Technology Goods (Requirement of Compulsory Registration)
Order, 2012, as amended from time to time, is prohibited unless they are
registered with the Bureau of Indian Standards (BIS) and comply to the
'Labeling Requirements' published by BIS, as amended from time to time',
or on specific exemption letter from Ministry of Electronics and Information
Technology (MeitY) for a particular consignment, as per provisions of
Gazette Notification SO No.3022 dated 11.09.2013.
The importer shall re-export such prohibited Goods reaching Customs
Ports else the Customs Authorities shall deform the goods beyond use
and dispose of the goods as scrap under intimation to MeitY.
Further, Para 2.31 (l) (a) of Foreign Trade Policy, 2015-20 is revised as
under :-
S.No. Categories of Second Hand Goods Import Policy Conditions, if any
Second Hand Capital Goods
(a) i. Desktop Computers Restricted Importable against
Authorization
ii. refurbished/re-conditioned
spares of re-furbished parts of
Personal
Computers/Laptops/Multifunctional
print & copying machines
iii. Air Conditioners
iv. Diesel generating sets
(b) All electronics and IT Goods Restricted Importable against
notified under the Electronics and Authorization
IT Goods (Requirement of subject to
Compulsory Registration) Order, Conditions laid down
under "Electronics
2012 as amended from time to
and Information
time. Technology Goods
(Requirement of
Compulsory
Registration) Order,
2012, as amended
from time to time.
(ii) Import of
unregistered/non-
13
Customs Appeal No.75514 of 2022
complaint notified
products as in CRO,
2012, as amended
from time to time is
"prohibited".
3. Effect of this Notification: Import Policy and Policy condition for
import of Electronics and IT Goods is laid down.
This issues with the approval of Ministry of Commerce and Industry.
Sd/-
Alok Vardhan Chaturvedi)
Director General of Foreign Trade
& Ex Officio Addl. Secretary to the Government of India
E-mail: [email protected]
[issued from file No.01/89/180/39/AM-13/PC/2(A)/E 2261]
Note : The principal notification No.36/2015-2020, dated the 17TH January,
2017 was published in the Gazette of India, Extraordinary vide number S.O.
172E, dated the 17th January, 2017 and amended vide notification
No.50/2015-2020, dated the 8th January, 2019 was published in the Gazette of
India, Extraordinary vide number .SO.128 (E) dated the 8th January 2019."
It is his contention that even this notification of the DGFT only
prohibits import of goods which are covered by the CRO 2012. Since
their products are not covered by CRO 2012, DGFT notification does
not apply. Therefore, on merits, it may be held that their goods are
not covered under CRO 2012 and therefore they are not liable for
confiscation under Section 111 (d) of the Act as there was no provision
either under Foreign Trade Policy or under the CRO 2012 restricting
import of the multi-functional devices by the respondents. As far as
confiscation under Section 111 (m) is concerned, this was done on the
ground that value of the goods does not match and the value has been
re-determined as per the Chartered Engineer certificate and duty
calculated accordingly, which they are not disputing. The redemption
fine imposed by the lower authority has been correctly reduced by the
Commissioner (Appeals). Therefore, goods may be allowed to be
redeemed. The question of treating the goods as substandard or
defective and deforming and disposing them off as scrap under clause
14
Customs Appeal No.75514 of 2022
3 (2) of CRO 2012 does not apply to their case because the CRO 2012
itself does not apply. Therefore, the Commissioner (Appeals) has
correctly allowed them to redeem the goods for home consumption.
Correspondingly, the penalties under Section 112 have also been
reduced by Commissioner (Appeals). He therefore prays that
department's appeals may be rejected and it may be held that the
multi-functional devices imported by them were not covered under
CRO 2012 and therefore their import was not prohibited during the
relevant period.
14. Lastly, the learned counsel prays that a direction may be given
to the Revenue to release the goods immediately since they have not
been released to them despite order of Commissioner (Appeals). He
also prays that an order to waive demurrages may be given to
Commissioner.
15. We have gone through records of the case and considered
arguments on both sides. The following questions need to be
addressed :
(i) Whether the multi-functional devices imported by the
appellants were required to meet the standards as 'printers
/ plotters' as per Electronics & Information Technology
Goods (Requirements of Compulsory Registration) Order
2012 ?
(ii) Whether the goods were covered by Hazardous & Other
Wastes (Management and Transboundary Movement) Rules,
2016 ?
(iii) If they have to meet the standards, was the import of
the goods prohibited and were they liable for confiscation
under Section 111 (d) of the Customs Act, 1962 ?
(iv) Whether the import of goods in question was restricted
under para 2.31 of FTP ?
15
Customs Appeal No.75514 of 2022
(v) Was the value declared by the respondents in their Bill
of Entry incorrect and whether the revaluation has been done
by the Chartered Engineer correctly ?
(vi) Has the Ld. Commissioner (Appeals) correctly allowed
redemption of the goods under Section 125 of the Customs
Act for home consumption ?
(vii) Whether the reduction of penalty imposed under Section
112 (a) of the Customs Act, 1962, by Commissioner
(Appeals) is correct and proper ?
16. We proceed to the decide the above issues.
17. The CRO order 2012 was notified vide S.O. 8.(14)/2006 IPHW
(Vol-III) and reads as follows:
"In exercise of the powers conferred by section 10 (1) (p) of
the Bureau of Indian Standards Act, 1986 (63 of 1986) and in
pursuance of clause (fa) of rule 13 of the Bureau of Indian
Standards Rules, 1987, the Central Government, after
consulting the Bureau of Indian Standards, hereby makes the
following Order, namely :-
1. Short title and commencement
(1) .......
(2) .......
2. Definitions:
(1) .......
(2) ......
From the preamble, it is evident that this order was issued under
Section 10(1) (p) of the Bureau of Indian Standards Act, 1986 and in
pursuance of clause (fa) of rule 13 of the Bureau of Indian Standards
Rules, 1987. Section 10 of the Bureau of Indian Standards Act, 1986
reads as follows:-
16
Customs Appeal No.75514 of 2022
"10. Functions of the Bureau.--(1) The Bureau may
exercise such powers and perform such duties as may be
assigned to it by or under this Act and, in particular,
such powers include the power to--
(a) .......
(b) .....
...
(p) perform such other functions as may be prescribed."
18. It is pertinent to note that in the entire BIS Act, 1986, there is no provision for regulating imports at all including in Section 10 referred to above. Rule 13 of BIS Rules, 1987 deals with "other functions of Bureau". It reads as follows:
"13. Other Functions of the Bureau - The Bureau under clause (p) of sub-section (1) of section 10 may also -
a. formulate, implement and coordinate activities relating to quality maintenance and improvement in products and processes;
b. promote harmonious development in standardization, quality systems and certification, and matters connected therewith both within the country and at international level;
c. .....
d. ......
e. ...
f. ....17
Customs Appeal No.75514 of 2022 (fa) formulate, implement and coordinate activities relating to registration for self declaration of conformity to the relevant Indian Standard on voluntary or compulsory basis, of articles as may be considered expedient in public interest and so notified through an order by the Central Government after consulting the Bureau."
A perusal of the entire BIS Rules, 1987 also 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.
19. Be that as it may, 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. Revenue also relies upon another D.O. letter dt. 16.08.2021 issued by the Joint Secretary of the Ministry in the matter. If that argument is accepted, the entry of printers / multi-functional devices / plotters in the Schedule to the CRO 2021 at Sl.No.7 is redundant because if multi-functional devices are also printers, there is no need to include them separately in the CRO 2021. Therefore, 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.
20. For better appreciation of facts, it would be profitable to consider the CRO 2021 dt.18.03.2021 which reads as follows:-
18Customs Appeal No.75514 of 2022 ''S.O. 1248(E).--ln exercise of the powers conferred by sub-section (1) and (2) of section 16 read with sub section (3) of section 25 of the Bureau of Indian Standards Act, 2016,(11 of 2016), the Central Government, after consulting the Bureau of Indian Standards, is of the opinion that it is necessary or expedient so to do in the public interest, hereby makes the following Order, namely:-
1. Short Title and commencement: - (1) This Order may be called the ―Electronics and Informa on Technology Goods (Requirement of Compulsory Registration) Order, 2021".
2. Compulsory use of standard mark:- Goods or articles specified in the column(2) of the Schedule below shall conform to the corresponding Indian Standard given in the column (3) of the said Schedule and shall bear the 'Standard' Mark under a license from the Bureau of Indian Standards as per Scheme-lI of Schedule-II of Bureau of Indian Standards (Conformity Assessment) Regulations, 2018, provided that nothing in the Order shall apply in relation to goods or articles, as specified in the column (2) of the said Schedule meant for export which conform to the specification required by the foreign buyer and to goods or articles, for which the Central Government has issued specific exemption letter based on reasons to be recorded in writing.
.... ...... ...... ....... ......
SCHEDULE
S.No. Goods or articles Indian Standard Title of Indian
Standard
(1) (2) (3) (4)
... .... .... ....
7. Printers/Multi- IS 13252 : Information
Function Devices Part 1 : Technology
(MFD) Plotters/ 2010 Equipment
Safety-General
Requirements
This order was passed under the BIS Act, 2016 which replaced BIS Act, 1986. BIS Act, 2016 specifically provided for regulating imports Section 16 & 17 of the Act read as follows :
''16. (1) If the Central Government is of the opinion that it is necessary or expedient so to do in the public interest or 19 Customs Appeal No.75514 of 2022 for the protection of human, animal or plant health, safety of the environment, or prevention of unfair trade practices, or national security, it may, after consulting the Bureau, by an order published in the Official Gazette, notify--
(a) goods or article of any scheduled industry, process, system or service; or
(b)essential requirements to which such goods, article, process, system or service, which shall conform to a standard and direct the use of the Standard Mark under a licence or certificate of conformity as compulsory on such goods, article, process, system or service.
Explanation.--For the purpose of this sub-section,--
(i) the expression "scheduled industry" shall have the meaning assigned to it in the Industries (Development and Regulation) Act, 1951;
(ii) it is hereby clarified that essential requirements are requirements, expressed in terms of the parameters to be achieved or requirements of standard in technical terms that effectively ensure that any goods, article, process, system or service meet the objective of health, safety and environment.
(2) The Central Government may, by an order authorize Bureau or any other agency having necessary accreditation or recognition and valid approval to certify and enforce conformity to the relevant standard or prescribed essential requirements under sub-section (1).
17. (1) No person shall manufacture, import, distribute, sell, hire, lease, store or exhibit for sale any such goods, article, process, system or service under sub-section (1) of section 16--
(a) without a Standard Mark, except under a valid license; or
(b) notwithstanding that he has been granted a license, apply a Standard Mark, unless such goods, article, process, 20 Customs Appeal No.75514 of 2022 system or service conforms to the relevant standard or prescribed essential requirements.
(2) No person shall make a public claim, through advertisements, sales promotion leaflets, price lists or the like, that his goods, article, process, system or service conforms to an Indian standard or make such a declaration on the goods or article, without having a valid certificate of conformity or licence from the Bureau or any other authority approved by the Central Government under sub-section (2) of section 16.
(3) No person shall use or apply or purport to use or apply in any manner, in the manufacture, distribution, sale, hire, lease or exhibit or offer for sale of any goods, article, process, system or service, or in the title of any patent or in any trade mark or design, a Standard Mark or any colorable imitation thereof, except under a valid license from the Bureau.'' As may be seen, the BIS Act, 2016 is an advancement of the BIS Act, 1986 and has provided for regulation of imports also. Consequently, the CRO 2021 issued under BIS Act,2016 also covers imports.
21. The present case however pertains to CRO 2012 with respect to which the following can be concluded:
(1) CRO 2012 was issued under the BIS Act,1986 and BIS Rules 1987 neither of which had any provision to regulate imports. Clause (3) of CRO 2012 therefore went beyond the scope of the Act and Rules and imposed controls over imports as well.
(2) CRO 2012 covers only to 'printers and plotters' and not to "MFDs".
The circular and the letters issued by the MeitY went beyond the scope of CRO 2012 and sought to apply them to MFDs also on the ground that they are also in the form of printers.
(3) Customs Act, 1962 is both a fiscal statute and also a penal statute. Import of goods contrary to any prohibitions not only render such goods liable to confiscation under Section 111 of the Act, it amounts to smuggling [as per Section 2 (39) of the Act] and the persons involved will be liable to arrest [Section 104] and conviction [Section 135]. It is a well settled Rule of Interpretation that fiscal and 21 Customs Appeal No.75514 of 2022 penal statues must be strictly interpreted. Therefore, a prohibition / restriction cannot be imposed and goods confiscated based on letters / circulars of MeitY. If there is no explicit prohibition / restriction, nothing can be read into the entry in CRO 2012 so as to enlarge the scope of prohibition. Sections 111(d), (l) and (m) under which the goods were confiscated by the lower authorities are reproduced below:
''SECTION 111. Confiscation of improperly imported goods, etc. -
The following goods brought from a place outside India shall be liable to confiscation: -
(a) ... ...
......
......
(d) any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force;
... ...
(l) any dutiable or prohibited goods which are not included or are in excess of those included in the entry made under this Act, or in the case of baggage in the declaration made under section 77;
(m) any goods which do not correspond in respect of value or in any other particular with the entry made under this Act or in the case of baggage with the declaration made under section 77 in respect thereof, or in the case of goods under transshipment, with the declaration for transshipment referred to in the proviso to sub-section (1) of section 54.
....
(o) any goods exempted, subject to any condition, from duty or any prohibition in respect of the import thereof under this Act or any other law for the time being in force, in respect of which the condition is not observed unless the 22 Customs Appeal No.75514 of 2022 non-observance of the condition was sanctioned by the proper officer;'' The case of the Revenue is that the goods are liable for confiscation under Section 111 (d) of the Customs Act, 1962 because of import of the goods was prohibited under the BIS Act, 1986 read with BIS Rules 1987 read with CRO 2012 read with circular and letters issued by MeitY. In our considered view, the MFDs were clearly not covered even in the CRO 2012 whose restriction of imports itself was beyond the scope of BIS Act, 1986 and BIS Rules, 1987. Therefore, confiscation of the goods under Section 111 (d) on this ground is not sustainable and needs to be set aside which we do so.
22. 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. After enhancement of the value, neither side is disputing the valuation now. Therefore, the valuation of the imported goods does not call for any interference. Hence, confiscation of the goods is not warranted under Section 111(m) of the Customs Act, 1962.
23. The assertion of the Revenue is that Ld.Commissioner (Appeals) allowed redemption of the goods under Section 125 for home consumption and that the goods should have been ordered to be either re-exported, or destroyed as being sub-standard and defective goods under CRO clause 3(2). It is also the assertion of the Revenue that the goods fall under 'hazardous waste' and are regulated by Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2008. We have considered these submissions. We have already 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 23 Customs Appeal No.75514 of 2022 place of law. We have also observed that the CRO 2012 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.
24. In so far as Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2008 is concerned, these define hazardous waste, other waste and waste, under Rule 3 (1) (l) as follows :
"3. Definitions: - (1) In these Rules, unless the context otherwise requires, -
... ... ....
.... ... ....
(17) "hazardous waste" means any waste which by reason of any of its physical, chemical, reactive, toxic, flammable, explosive or corrosive characteristics causes danger or is likely to cause danger to health or environment, whether alone or when in contact with other wastes or substances, and shall include -
(i) waste specified under column (3) of Schedule-I,
(ii) wastes having constituents specified in Schedule-II, if their concentration is equal to or more than the limit indicated in the said Schedule, and
(iii) wastes specified in Part A or Part B of the Schedule-
III in respect of import or export of such wastes in accordance with rules 12, 13 and 14 or the wastes other than those specified in Part A or Part B if they possess any of the hazardous characteristics specified in Part C of that Schedule 24 Customs Appeal No.75514 of 2022 .........
(23) "other wastes" means wastes specified in Part B and Part D of Schedule III for import or export and includes all such waste generated indigenously within the country;
.........
(38) "waste" means materials that are not products or by-products, for which the generator has no further use for the purposes of production, transformation or consumption.
Explanation.- for the purposes of this clause,
(i) waste includes the materials that may be generated during, the extraction of raw materials, the processing of raw materials into intermediates and final products, the consumption of final products, and through other human activities and excludes residuals recycled or reused at the place of generation; and
(ii) by-product means a material that is not intended to be produced but gets produced in the production process of intended product and is used as such;''
25. In this case, the goods in question were examined by the Chartered Engineer in the presence of the importers and the Customs officers and it was found that they have residual life and they are not waste as per Rule 3 (38) of the Hazardous Waste Rules because the goods in question have further use. It is true that as per Rule 2 (23) of these Rules "other wastes" means wastes specified in Part B and Part D of Schedule III for import or export". Schedule III, Part „D‟ does include at entry B1110 "Used multifunction print and copying machines ***.
(MFDs) The footnote "***" states "Import permitted in the country only to the actual users from Original Equipment Manufacturers (OEM) and subject to verification of documents specified in Schedule VIII of these Rules by the Customs Authority.
25Customs Appeal No.75514 of 2022
26. Even if used MFDs are listed as "other wastes" they must be "wastes" in the first place as per the very Rules. The impugned goods in these cases are not. They have further use and therefore cannot be called "waste". In fact, their value was enhanced by the Customs authorities. Revenue has placed emphasis on Rule 15 of the Hazardous Waste Rules which reads as under:
"15. Illegal traffic.- (1) The export and import of hazardous or other wastes from and into India, respectively shall be deemed illegal, if,-
(i) it is without permission of the Central Government in accordance with these rules; or
(ii) the permission has been obtained through falsification, mis-
representation or fraud; or
(iii) it does not conform to the shipping details provided in the movement documents; or
(iv) it results in deliberate disposal (i.e., dumping) of hazardous or other waste in contravention of the Basel Convention and of general principles of international or domestic law.
(2) In case of illegal import of the hazardous or other waste, 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 other waste, where the importer is not traceable then the waste either can be sold by the Customs authority to any user having authorization under these rules from the concerned State Pollution Control Board or can be sent to authorized treatment, storage and disposal facility."
It is emphasized that as per Rule 15(2), the impugned goods, having been imported without the requisite permissions, should be re- exported. Therefore, Commissioner(Appeals) was wrong in allowing clearance after redemption for home consumption. We find that this 26 Customs Appeal No.75514 of 2022 Rule requires the Customs officer to ensure re-export within 90 days from arrival. In these cases, even the order of the original authorities was passed well beyond the 90 days. If this Rule 15(2) is applicable to this case, it is the Customs officers who are in violation of the Rule because the Rule places an obligation on the Customs and not the importer. The question is whether the goods in question are "other waste" and hence covered by the mischief of this Rule. While used MFDs are listed in the Schedule as "Other Waste" and hence covered by the mischief of these Rules for them to be classified as "other waste", they must be "waste" in the first place. Goods with further use are not "waste" as per Rules.
27. Analogy can be drawn from the Central Excise Act which levies duty on "excisable goods‟‟ which are manufactured or produced in India. "Excisable goods‟‟ are defined as those listed in the Central Excise Tariff‟‟. Through a series of judicial pronouncements, it is well settled that it is not sufficient for something to be listed in the Tariff to be excisable goods but they should be "goods‟‟ in the first place, i.e., they must be capable of being bought and sold in the market. Similarly, in this case while "other wastes‟‟ listed in the Schedule includes used MFDs, they must be "waste‟‟ and the impugned goods do not qualify as "waste‟‟ as per Rule 3 (38). Therefore, 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.
28. So far as the Foreign Trade Policy is concerned, it is true that imports of Second Hand MFDs were restricted and required an authorization which the respondents did not have. Therefore, the confiscation of the goods under Section 111 (d) is valid. Having 27 Customs Appeal No.75514 of 2022 confiscated, the goods can be allowed for redemption under Section 125 of the Customs Act, 1962 which reads as follows:
"SECTION 125.Option to pay fine in lieu of confiscation. --
(1) Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods [or, where such owner is not known, the person from whose possession or custody such goods have been seized,] an option to pay in lieu of confiscation such fine as the said officer thinks fit :
Provided that, without prejudice to the provisions of the proviso to sub-section (2) of section 115, such fine shall not exceed the market price of the goods confiscated, less in the case of imported goods the duty chargeable thereon.
[(2) Where any fine in lieu of confiscation of goods is imposed under sub-section (1), the owner of such goods or the person referred to in sub-section (1), shall, in addition, be liable to any duty and charges payable in respect of such goods.] A perusal of this section shows that the adjudicating authority may allow redemption of prohibited goods and shall allow redemption of other goods. There is no bar on allowing redemption in any case. There is no power under this Section to allow redemption imposing same conditions for redemption [Commissioner of Customs Vs. HBL Power Systems Ltd. [2019 (367) ELT 154 (A.P.)].
29. In view of the above, we find that the Ld.Commissioner (Appeals) is correct in allowing redemption of the goods under Section 125 for home consumption. Hon'ble High Court of Telangana & A.P. has released identical goods for home consumption in W.P. No.2728 of 2018 observing as follows:-28
Customs Appeal No.75514 of 2022 "As regards the applicability of the Electronics and IT Goods (Requirement for Compulsory Registration) Order (CRO) 2012, the communication dated 06.12.2016 makes it clear that only repaired/refurbished/second hand items, if notified, would require registration. The learned Assistant Solicitor General could not produce before us any notification issued thereunder relating to the MFD (Multi Function Devices) printers and photocopiers, whereby such registration would be a condition precedent prior to their import. In the absence of such a notification, it is not open to the Customs Authorities to blindly apply the directive of the Department of Electronics and Information Technology, Ministry of Communications and Information Technology, under the letter dated 06.12.2016, to the petitioner firm's goods."
30. There is no dispute regarding reduction of penalty under Section 112(a) by the Commissioner (Appeals) which we also find is fair and reasonable.
31. We have already discussed above that goods in question were not waste in the first place but are useful articles with residual life whose value has been enhanced by Customs authorities and therefore the provisions of Hazardous Waste Rules do not apply. In view of the above, we hold as under:-
(i) Electronics & Information Technology Goods (Requirement for Compulsory Registration) Order 2012 has gone beyond the Act and Rules in imposing a restriction from imports. Even these restrictions were confined only to printers and plotters. Multi-Functional Devices were not covered under this order. The letters and circulars of the MeitY cannot take the place of law and therefore the goods were not prohibited for import.
(ii) The impugned goods are useful second hand goods with residual life and are not hazardous waste and hence are correctly allowed redemption for home consumption.
(iii) Valuation of the goods by Customs is not disputed and duty has to be paid accordingly which is not interfered. So ordered.29
Customs Appeal No.75514 of 2022
(iv) Confiscation of the goods under Section 111(m) is not warranted.
(v) Redemption fine imposed under Section 125 in the impugned orders and allowing of clearance for home consumption are correct and proper and need no interference.
(vi) Reduction of penalty under Section 112(a) by Commissioner(Appeals) is proper and valid.
(vii) As far as the request of the Ld.Counsel for the respondents to waive demurrages is concerned, we find that there is no appeal against the impugned order by the respondents and therefore no relief can be considered or granted.
32. In view of the above, the impugned order is upheld and the Appeal filed by the Revenue is rejected with consequential relief to the Respondent. The impugned goods, if not released already by the Customs, must be cleared for home consumption within 10(ten) days from the date of receipt of the copy of this order, if the respondents pay the duty and other dues as per the impugned orders. The Miscellaneous Application for Stay also gets disposed of.
(Operative part of the order was pronounced in the open Court.) Sd/ (P.K. CHOUDHARY) MEMBER (JUDICIAL) Sd/ (K. ANPAZHAKAN) MEMBER (TECHNICAL) sm