By TIOL News Service

CHENNAI, JUNE 24, 2013: THE petitioner in W.P.No.1439 of 2013 is engaged in the business of importing and trading in Secondhand Digital Multifunction Print and Copying Machines as well as Secondhand Photocopier Machines, besides trading in accessories, parts and consumables for the said machines. The petitioner imported a consignment comprising 96 units of old and used Digital Multifunction Print and Copying Machines of various models from the overseas supplier and filed a Bill of Entry bearing No.7380417 , dated 13.7.2012 with the Customs House, Chennai and sought clearance of the goods under "free importability" as secondhand capital goods in terms of Para 2.17 read with Para 9.12 of Foreign Trade Policy 2009-2014 and Para 2.33 of Hand Book of Procedures V.1 2009-2014.

After series of litigation, the matter reached the Madras High Court and from there to the Additional Commissioner who formulated the following issues for consideration:

(i) whether the secondhand Digital Multifunction (Print & Copying) Machines consigned to India after 5.6.2012 are restricted for import in terms of para 2.17 of the FTP (2009-2014); and

(ii) whether the used Digital Multifunction (Print & Copying) Machines imported into India without obtaining prior permission of the MoEF , are covered under the category of 'Hazardous Wastes' in terms of the provisions of the Hazardous Waste (Management, Handling and Trans-boundary Movement) Rules, 2008,

and held as follows:

"12. In view of my above findings, I pass the following order:

(a) I hold that the subject secondhand Digital Multifunction Print & Copying machines are restricted for import under Para 2.17 of the Foreign Trade Policy 2009-2014.

(b) I hold that the subject goods are Hazardous Waste as per Rule 3(1)(iii) of the Hazardous Waste (Management, Handling and Transboundary Movement) Rules, 2008.

(c) As the goods had been imported without a licence from DGFT and without permission from the Ministry of Environment & Forests ( MoEF ), I order confiscation of the subject goods under Section 111(d) of the Customs Act, 1962 read with Sec 3(2) and Sec 11(1) of the Foreign Trade (Development and Regulation) Act, 1992.

(d) I hold that the subject goods which had been imported without prior permission from Ministry of Environment & Forests ( MoEF ) are illegal traffic and order the same to be re-exported within 30 days at the cost of the importer in terms of Rule 17(2) of the Hazardous Waste (Management, Handling and Trans-boundary Movement) Rules, 2008.

(e) I impose a penalty of Rs.50 ,000 /- (Rupees fifty thousand only) on the importers in respect of each of the seventeen Bills of Entry, under Section 112(a) of the Customs Act, 1962."

The matter is again before the High Court.

The High Court decided the case as follows:

RESTRICTION ON IMPORT OF IMPUGNED GOODS:

A reading of the various provisions, makes it abundantly clear that the import of secondhand capital goods, except personal computers/laptops, which will also be allowed to be imported on production of a certificate from a Chartered Engineer to the effect that such spares have at least 80% residual life of original spare. The petitioners, if at all required, will have to satisfy the conditions stipulated in Para 2.33 of the Handbook of Procedures. In the present case, the Hand Book of Procedures V.1 2009-2014 permits import of secondhand capital goods freely and there is no other restriction imposed.

The restricted category of import as specified in Para 2.17 of the Foreign Trade Policy 2009-2014 with regard to second hand goods comes with conditions attached and those conditions are to be found either in the Foreign Trade Policy 2009-2014, ITC (HS), Hand Book of Procedures V.1 2009-2014, Public Notice or an Authorization issued for import of the specified secondhand item. In these cases, the respondent has not been able to show any specific bar except what is contained in Para 2.33 of Hand Book of Procedures V.1 2009-2014. If the importers in these cases are able to satisfy that the goods though restricted under Para 2.17 of the Foreign Trade Policy 2009-2014 are eligible to be imported in terms of Para 2.33 of Hand Book of Procedures V.1 2009-2014, the respondent cannot merely on the plea of restricted category goods decline to release the goods.

It is trite law that Foreign Trade Policy 2009-2014 and Hand Book of Procedures V.1 2009-2014 have to be read together to give a purposive interpretation. In the present case, there is no conflict between the Foreign Trade Policy 2009-2014 and Hand Book of Procedures V.1 2009-2014. This is evident from the fact that only in the case of spares certain conditions have been imposed for import, though falling under the restricted category under the Foreign Trade Policy 2009-2014. However, insofar as the Digital Multifunction Print and Copying Machines are concerned, no such condition has been imposed in the Hand Book of Procedures V.1 2009-2014. A conjoint reading of Para 2.33 of Hand Book of Procedures V.1 2009-2014 and Para 2.17 of Foreign Trade Policy 2009-2014, which says that imports should be in accordance with the procedure prescribed, would only mean that the Hand Book of Procedures V.1 2009-2014, which prescribes the manner of import of secondhand capital goods has to be followed and if the procedure contemplated therein is followed, then the benefit of free import should be granted to the present crop of goods, as they are freely importable.

Therefore, para 12(a) of the order holding that secondhand Digital Multifunction Print and Copying Machines are restricted for import under Para 2.17 of the Foreign Trade Policy 2009-2014 is contrary to law and accordingly, is liable to be set aside.

IMPORTED GOODS - WHETHER HAZARDOUS WASTE:

The next issue that was considered by the respondent is whether the provisions of the Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008 will be attracted to the imports in question. While answering the issue in the affirmative, the respondent held that the subject goods are hazardous wastes as per Rule 3(l)(iii) of Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008.

The above said finding of the respondent is per se incorrect and misconceived, as what is contemplated in Basel No.B1110 of Part B of Schedule III is waste electrical and electronic assemblies. In the present case, what has been imported is not assemblies, but complete machines. It is not a part of a machine. What has been imported is not a waste or disposed of assemblies, but a complete machine, which is in working condition and that has been verified by the Chartered Engineer at the behest of the Customs Department. The Chartered Engineer certified that the machines are in working condition with residual life. This fact is not disputed by the respondent . Therefore, on misconceived interpretation, by placing reliance on Part B of Schedule III, the respondent is trying to bring a complete machine under the category of electrical and electronic assembly and treating it as a waste, for which reliance has been placed on the definition of the words "waste" and "disposal" in terms of Basel Convention. The Customs Department has not given any specific finding based on verification of the machines that what is imported is waste, which by reason 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. In the absence of such a finding, merely on the basis of various definitions, the goods imported cannot be said to be waste. On a overall reading of the order, it is clear that the authority has tried to give an interpretation in such a manner that the goods imported will fall under the category of hazardous waste, without satisfying himself as to whether the goods imported are hazardous waste per se.

This Court, therefore, has no hesitation to hold that the respondent has not made out a case that the goods imported would fall under the provisions of the Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008 or that it is a hazardous waste as per Rule 3(l)(iii) of the Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008. As a consequence, paragraphs 12(c) and 12(d) of the order cannot be justified. The order of confiscation of the goods under Section 111(d) of the Customs Act, 1962 read with Sections 3(2) and 11(1) of the Foreign Trade (Development and Regulation) Act, 1992 is bad. The finding with regard to prior permission from Ministry of Environment and Forest also does not apply in view of the finding that there is no material to substantiate the plea that the goods imported are hazardous waste.

CONFISCATION OF GOODS, IMPOSITION OF PENALTY& THE PROVISIONS OF THE CUSTOMS ACT:

The impugned order ordering confiscation of the goods with a direction to re-export, coupled with imposition of penalty, also suffers from the vice of arbitrariness and capriciousness in the proceedings under the Customs Act, 1962.

Admittedly, no show cause notice has been issued for confiscation or for imposition of penalty and therefore there is a statutory violation in the order confiscating the goods and imposing penalty. The department is bound to issue show cause notice before adjudicating the matter for confiscation of goods and levy of penalty. Hence, the procedure prescribed under Section 124 of the Customs Act, 1962 has not been followed and on that ground also the impugned order is liable to be set aside.

Though the said plea has not been specifically raised by the petitioners showing the shallowness in the preparation of the cases , the Court will not turn a blind eye to such a glaring irregularity in the proceedings.

CONCLUSION:

These writ petitions are allowed and the common impugned order under challenge is set aside. The respondent is directed to release the goods imported forthwith.

(See 2013-TIOL-495-HC-MAD-CUS)