Atul Commodities Private Limited Vs Commission of Customs (Chennai II) Import (Madras High Court)
Conclusion: The designated authority was directed to release the confiscated Digital Multifunction Equipment on condition that, assessee should pay/deposit the enhanced duty and this order would not stand in the way for Customs Department to go ahead with the further proceedings including the adjudication in the manner known to Law.
Held: Assessee-company had filed the petition seeking the release of various models of second-hand Highly Specialised Equipment- digital Multifunction Print, Copying & Scanning Machines, imported by assessee. Assessee submitted that in the batch of the writ petition in W.P.No.29673 of 2022, etc., the Court had already dealt with a similar issue and passed the order dated 23.11.2023. Therefore, assessee would submit that the said order would be squarely applicable to the present case also and hence, he requested the Court to pass a similar order. Respondent submitted that the previous batch of writ petitions were filed challenging the show cause notice. Respondents had issued no show-cause notice. Hence, he would submit that the said order would not apply to the present writ petitions. Respondent also submitted that assessee had imported used copier machines and at the point of entry, the Customs Department required assessee to produce copies of authorization for import of such items with necessary approval of DGFT as per Foreign Trade Policy Guidelines and also to produce the Compulsory Registration Certificate of BIS as indicated by the Foreign Trade Policy of Government of India. Multi-Functional Devices would fall under the category of printers and plotters only as clarified by MEITY. Further, the Foreign Manufacturers Certification Scheme had to be complied with for import. In view of multiple writ petitions filed against the Customs Department assessee was misinterpreting the single aspect of weightage and other requirements required for highly specialized equipment were trying into the classification challenge. Since the importers were not complying with the DGFT guidelines and the Compulsory Registration Orders applicable the said import would be treated as -prohibited- as compliance was not made by importers. Submitting as above, respondent prayed for the dismissal of the present writ petitions. The central issue to be decided in the present case was whether the materials imported by assessee fell under Clause 2.31 of the Foreign Trade Policy 2023 effective from 01.04.2023 under the category of second-hand goods. It was held that writ petitions were disposed of directing assessees to cause reply to the show cause notice issued to them and the respondent department was directed to consider the same and pass necessary orders within a stipulated time. As far as release of goods was concerned, the same should be released provisionally. There should be a direction to the respondents to consider the plea of assessees to release the goods by way of provisional release on condition that, assessee should pay/deposit the enhanced duty. On receipt of such enhanced duty amount paid by assessees, the goods in question should be released within a period of three (3) weeks thereafter. It was made clear that this order would not stand in the way for Customs Department to go ahead with the further proceedings including the adjudication in the manner known to Law. It was further made clear that in the earlier interim order passed in a related writ petitions by an another Division Bench of this Court, that demurrage charges till date for the goods was directed to be considered for. In this regard, if any application was filed by assessees seeking such a waiver of demurrage charges, the same should be considered and decided by the respondents objectively.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The issue involved in these writ petitions are pertaining to the release of various models of second hand Highly Specialised Equipment- digital Multifunction Print, Copying & Scanning Machines, imported by the petitioner.
2. Sai Srujan Tayi, learned Senior Standing counsel takes notice on behalf of the respondents. By consent of the parties, the main writ petition is taken up for disposal at the admission stage itself.
3. The learned counsel for the petitioner would submit that in batch of writ petition in W.P.No.29673 of 2022, , this Court had already dealt with a similar issue and passed the order dated 23.11.2023. Therefore, the learned counsel for the petitioner would submit that the said order will squarely applicable to the present case also and hence, he requested this Court to pass similar order.
4. Per contra, the learned counsel for the respondent would submit that the previous batch of writ petitions were filed challenging the show cause notice. However, in the present writ petitions, no show cause notice has been issued by the respondents. Hence, he would submit that the said order will not applicable for the present writ petitions.
5. In reply, the learned counsel for the petitioner would submit that in the previous batch of writ petitions, in W.P.No.29673 of 2023, , the relief was sought only for the release of goods and the same were not filed against the issuance of show cause notice. Further, at the paragraph 21 clause (ii) of the aforesaid order dated 23.11.2022, this Court had directed only for the release of goods. Hence, he would submit that the said order is squarely applicable to the present case.
6. Heard the learned counsel for the petitioner and the respondent and also perused the materials available on record.
7. In the present case, the petitioner had sought for the release of goods and in a batch of writ petitions, this Court had already dealt with the similar issue and passed the following order on 11.2023:
“As the issue involved in all these writ petitions are similar, they are considered and decided by this common order.
2. W. P.Nos.28817 and 30506 of 2023 have been filed challenging the show cause notices issued by the first respondent dated 22.09.2023 and 05.10.2023 respectively. The other writ petitions have been filed seeking release of goods.
3. Learned counsel for petitioners submitted that the petitioners are duly registered firms and have been in the business of import and trading of secondhand highly specialized equipments ~ digital multifunction print and copying machines etc. During the course of petitioners- business, their firms have imported consignment of several units of Secondhand Multifunction Print and copying machines in the year 2023 and sought for assessment and clearance of the above As per the practice prevailing in the Chennai Customs, in respect of import of second hand capital goods, the Officers In charge, have ordered for 100% examination under first check appraisal. Accordingly, as per the orders of the Officers, examination and inspection of the said machines were carried out by the Directorate General Foreign Trade [for brevity “DGFT”] approved Chartered Engineers under the supervision of Customs Officers In charge. The Chartered Engineers have enhanced the C&F value for the consignment as against the actual transaction C&F value. Despite the goods having been examined by the DGFT approved Chartered Engineer in the presence of Customs Officers and also having submitted their Inspection Report and Valuation Certificate, the Customs Authorities have not allowed the clearance of the above consignment till date. Since the petitioners have imported a consignment of several units of secondhand highly specialized equipments ? digital multifunction print & copying machines in terms of para 8(a) to (d) vide Amendment Order dated 01.07.2021 in S.O.2844(E) issued by Ministry of Electronics and Information Technology [MEITY], they are exempted from Requirement of Compulsory Registration with BIS.
Further, the subject goods are also permissible for imports as ?Free? in terms of para 2.31 Sl.No.1(d) under the category of secondhand capital goods without any conditions as per Foreign Trade Policy ? 2023 (w.e.f. 01.04.2023). Thus, there is no basis for customs authorities not to release the goods of the petitioners thereby causing huge losses on account of blockage of investment and loosing shelf life of the machines.
4. While so, the first respondent has arbitrarily precipitated the matter by way of issuance of impugned Show Cause Notices on 22.09.2023 and 10.2023 to the petitioners in W.P.Nos.28817 and 30506 of 2023. Further, the respondent department now proposes to proceed against the petitioners for confiscation of the subject goods u/s.111(d) and 111(m) of the Customs Act, 1962 and for imposition of penalty against the petitioners u/s.112(a) of the Customs Act, 1962. These actions have been proposed to be initiated by the respondent department on a complete misconception and misreading of the relevant regulations. The presumption/conclusion inferred in the impugned show cause notice that the subject goods are prohibited goods is entirely fallacious and contrary to the actual scheme of Foreign Trade Policy 2023 and 2021 orders passed by MEITY. Hence, the petitioners in W.P.Nos.28817 and 30506 of 2023 have filed the present writ petitions challenging the show cause notices. The petitioners in other writ petitions have filed the same seeking for release of goods.
5. Learned counsel for respondents submitted that the petitioners have imported used copier machines and at the point of entry, the Customs Department required the petitioners to produce copies of authorization for import of such items with necessary approval of DGFT as per Foreign Trade Policy Guidelines and also to produce the Compulsory Registration Certificate of BIS as indicated by the Foreign Trade Policy of Government of India. Customs Authority is only a Nodal Agency to streamline and permit import and export based on policy guidelines issued to them. Multi Functional Printers are classified as printers and As regards used goods imports, there are guidelines of DGFT, which envisage compulsory registration and also approval of DGFT.
6. Learned counsel further submitted that there has been no orders of customs but only verification process is going on and citing these writ petitions, the Customs Department has been blocked and the petitioners, if face an adverse order, they can resort to filing an appeal u/s.128 of the Customs Act, thereafter exhaust a further appeal remedy and then only, they have to approach the Writ Court. The petitioners are aware that as per DGFT policy applicable Compulsory Registration of the manufacturer under present CRO guidelines is required to be done with BIS and also the necessary authorisation has to be obtained from DGFT. The valuation of goods on import is only a procedural matter and not one for open permit for import. The valuation exercise is carried out by importer and by customs to show cause the value of goods and its identity and not on classification. The Multi Functional Devices would fall under category of printers and plotters only as clarified by MEITY. Further, the Foreign Manufacturers Certification Scheme has to be complied for import. In view of multiple writ petitions filed against Customs Department as the petitioners are misinterpreting the single aspect of weightage and other requirements required for highly specialized equipments are trying into the classification challenge.
Since the importers are not complying with the DGFT guidelines and the Compulsory Registration Orders applicable the said import would be treated as -prohibited- as compliance is not made by importers. Submitting as above, learned counsel prays for dismissal of the present writ petitions.
7. Heard learned counsel appearing for petitioners, learned Senior Standing Counsel and learned Central Government Standing Counsel appearing for respondents and perused the materials available on record.
8. The central issue to be decided in the present case is whether the materials imported by the petitioners falls under Clause 2.31 of the Foreign Trade Policy 2023 effective from 04.2023 under the category second hand goods.
9. It may be apposite to extract Clause 2.31 of the Foreign Trade Policy 2023 hereunder:
Import policy for Second Hand Goods:
2.31 Second Hand Goods
