Case Law Details
Commissioner of Customs Vs Kutty Impex (CESTAT Chennai)
CESTAT Chennai held that when goods are held not confiscatable under Section 111(d) of the Customs Act, 1962, then it can be reasonably held that the import was not prohibited.
Facts-
Assessee filed Bill of Entry for clearance of used digital multifunctional printers/ devices (MFDs) of various makes and models with standard accessories and attachments.
The Revenue having noticed that the goods were second hand in nature, adhering to the RMS/CCR instructions mentioned in the EDI system and as per the prevailing practice, the cargo covered under the above said Bill-of-Entry was ordered for first check examination.
Adjudicating Authority found that the assessee has not complied with provisions of Domestic laws under the Bureau of Indian Standards (BIS) Act, 2016 read with the Electronics and Information Technology Goods (Requirements for Compulsory Registration) Order (CRO), 2012; failed to obtain DGFT authorization and mis-declared the value of imported goods.
Accordingly, declared value was re-determined, 502 units of goods declared as ‘Old & Used Digital Multifunction Print and Copying machines with Standard Accessories’ were confiscated u/s 111(d) and 111(m) of the Customs Act, 1962 and also imposed redemption fine and penalty.
However, the First Appellate Authority allowed the appeal. Being aggrieved, the revenue has preferred the present appeal.
Conclusion-
With regard to the goods in question being hazardous in nature within the meaning of the provisions of the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2008, the Bench has observed that the goods in question were useful goods with residual life and therefore, cannot be called as ‘hazardous waste’.
The facts being identical, as canvassed at the bar, I do not find any reasons to deviate from the findings arrived at by this Bench in the case of M/s. S.P. Associates and hence, the First Appellate Authority has correctly ordered provisional release of the impugned goods. When goods are held not confiscatable under Section 111(d) ibid., then it can be reasonably held that the import was not prohibited.
FULL TEXT OF THE CESTAT CHENNAI ORDER
This appeal is filed by the Revenue against the Order-in-Appeal Seaport C.Cus. II No. 184/2022 dated 31.03.2022 passed by the Commissioner of Customs (Appeals-II), Chennai, whereby the First Appellate Authority has allowed the appeal filed by the respondent-assessee by also ordering provisional release of the impugned goods.
2. Heard Shri S. Balakumar, Learned Assistant Commissioner for the appellant-Revenue and Shri S. Sankaranarayanan, Learned Advocate for the respondent.
3. Brief facts, as could be gathered from the impugned Order-in-Appeal and which are undisputed, inter alia, are that the respondent viz. M/s. Kutty Impex filed Bill-of-Entry No. 4584446 dated 21.08.2019 for clearance of used Digital Multifunctional Printers / Devices (MFDs) of various makes and models with standard accessories and attachments and classifying the goods under CTH 84433100; that the Revenue having noticed that the goods were second hand in nature, adhering to the RMS/CCR instructions mentioned in the EDI system and as per the prevailing practice, the cargo covered under the above said Bill-of-Entry was ordered for first check examination, to verify with respect to Chartered Engineer Report as to whether the residual life of the imported goods was 80%, to verify the nature of accessories, requirement for compliance of conditions imposed under the Hazardous and Other Wastes Management Rules, 2016, E-Waste Management Rules, 2016, authorization of DGFT under FTP, 2015-20 and applicability of BIS as required under Compulsory Registration Order, 2012, apart from compliance to the RMS instructions.
4. The Adjudicating Authority in the Order-in-Original No. 78918/2020 dated 06.01.2021 has inter alia found that the respondent:-
- Had not complied with the provisions of Domestic laws under the Bureau of Indian Standards (BIS) Act, 2016 read with the Electronics and Information Technology Goods (Requirements for Compulsory Registration) Order (CRO), 2012;
- Failed to obtain DGFT authorization as required for the import of second hand goods, as required under paragraph 2.31 of the FTP, 2015-20; and
- Mis-declared the value of the imported used MFDs in violation of Section 14 of the Customs Act, 1962, and consequently ordered as under:-
(i) Declared value of Rs.79,88,782/- (CIF) (Rupees Seventy Nine Lakhs Eighty Eight Thousand Seven Hundred and Eighty Two only) in respect of the goods imported by M/s. Kutty Impex, Chennai vide Bill-of-Entry No. 4584446 dated 21.08.2019 was rejected in terms of the provisions contained in Rule 12 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 2007 and re-determined the value as Rs.95,83,631/- (CIF) (Rupees Ninety Five lakhs Eighty Three Thousand Six Hundred and Thirty One only) under Rule 9 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.
(ii) Confiscation of 502 units of goods declared as ‘Old & Used Digital Multifunction Print and Copying Machines with Standard Accessories’ covered under Bill-of-Entry No. 4584446 dated 21.08.2019 under Sections 111(d) and 111(m) of the Customs Act, 1962 for contravention of the provisions of imports, as discussed.
(iii) Imposed redemption fine of Rs.14,38,000/- (Rupees Fourteen Lakhs Thirty Eight Thousand only) on the importer in terms of Section 125 of the Customs Act, 1962 and permitted the importer to re-export the subject goods imported vide Bill-of-Entry No. 4584446 dated 21.08.2019 within 90 days from the date of receipt of the order.
(iv) Imposed a penalty of Rs.9,58,000/- (Rupees Nine Lakhs Fifty Eight Thousand only) under Section 112(a)(i) of the Customs Act, 1962 on the importer for having rendered the goods liable for confiscation under Section 111(d) and 111(m) ibid.
(v) Imposed a penalty of Rs.1,00,000/- (Rupees One Lakh only) under Section 117 of the Customs Act, 1962 on the importer for the non-compliance of the procedures set out under Section 49 of the Customs Act, 1962.
5. Aggrieved by the above order, the appellant preferred an appeal before the First Appellate Authority and the First Appellate Authority having heard the appellant as well as the representative (Mr. R. Syam Prasad, Appraiser) for the Revenue, allowed the appeal thereby ordering provisional release of the impugned goods, against which the present appeal has been preferred by the Revenue before this forum.
6. In the impugned order, the First Appellate Authority has only followed the order of this Bench of the CESTAT in the case of Commissioner of Customs, Chennai v. M/s. S.P. Associates [Customs Appeal No. 40098 of 2021] & ors. in Final Order Nos. 41931-41971 of 2021 dated 27.08.2021 and also the decision of the Hon’ble Apex Court in the case of M/s. Delhi Photocopiers v. The Commissioner of Customs, Chennai-II in Special Leave Petition No. 7565 of 2021 & ors. dated 11.08.2021 to order for provisional release of the goods.
7. I have considered the rival contentions and have gone through the decision of the Hon’ble Apex Court in the case of M/s. Delhi Photocopiers (supra) as well as the order of this Bench of the Tribunal in the case of M/s. S.P. Associates (supra).
8.1 The Hon’ble Apex Court in the above case, while staying confiscation of the goods in view of the fact that the Notification dated 01.04.2020 was the subject matter of controversy before the Apex Court, had allowed the provisional release of the goods involved. This Bench in M/s. S.P. Associates (supra) while considering an almost identical issue, has analysed in the following manner:-
“24. 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 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 transhipment, with the declaration for transhipment 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 non-observance of the condition was sanctioned by the proper officer;”
8.2 This Bench has thereafter concluded in the following words:-
“(4) 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.”
(Emphasis added by me for clarity)
8.3 Further, this Bench has also held that the valuation which was not disputed by either of the parties did not call for any interference. With regard to the goods in question being hazardous in nature within the meaning of the provisions of the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2008, the Bench has observed that the goods in question were useful goods with residual life and therefore, cannot be called as ‘hazardous waste’. The Bench has inter alia observed that:
“35. 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 :-
(1) Electronics & Information Technology Goods (Requirement for Compulsory Registration) Order 2012 has gone beyond the Act and Rules in imposing a restriction from imports…
… …
(2) 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.
(3) Valuation of the goods by Customs is not disputed… … ...
.
.
.
(5) 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.
….”
and consequently, upheld the order of the Commissioner (Appeals), thereby rejecting the Revenue’s appeals.
9. The facts being identical, as canvassed at the bar, I do not find any reasons to deviate from the findings arrived at by this Bench in the case of M/s. S.P. Associates (supra) and hence, the First Appellate Authority has correctly ordered provisional release of the impugned goods. When goods are held not confiscatable under Section 111(d) ibid., then it can be reasonably held that the import was not prohibited.
10. In view of the above, the appeal filed by the Revenue, being devoid of merits, is dismissed.
(Order pronounced in the open court on 23.09.2022)
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