Madras High Court
The Commissioner Of Customs ... vs M/S.Best Mega International on 4 March, 2021
W.A.Nos.642, 687, 688, 690, 691,
694, 696, 697 & 698 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 04.03.2021
CORAM
THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM
and
THE HONOURABLE MS.JUSTICE R.N.MANJULA
W.A.No.642, 687, 688, 690, 691,
694, 696, 697 & 698 of 2021
and
C.M.P.Nos.2867, 3835, 3839, 3842,
3850, 3854, 3855 & 3856 of 2021
W.A.No.642 of 2021
1.The Commissioner of Customs (Gr.5),
Chennai II Commissionerate,
No.60, Rajaji Salai, Customs House,
Chennai – 600 001.
2.The Additional Commissioner of Customs (Gr.5),
No.60, Rajaji Salai, Customs House,
Chennai – 600 001.
3.The Deputy Commissioner of Customs (Gr.5),
No.60, Rajaji Salai, Customs House,
Chennai – 600 001. .. Appellants
-vs-
1/44
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1.M/s.Best Mega International
GL-6, Ansal Bhawan,
K.G.Marg, New Delhi – 110 001,
Rep. by its Proprietor – Rajesh Khetterpal
2.The Director General of Foreign Trade and
Additional Secretary to the Government of India,
Department of Commerce,
Ministry of Commerce and Industry,
Government of India, New Delhi. .. Respondents
Appeal under Clause 15 of the Letters Patent Act to set aside the
order dated 25.01.2021 made in W.P.No.8574 of 2020.
For Appellants
in all appeals : Ms.Aishwaya Bhati
Additional Solicitor General
Assisted by Ms.R.Hemalatha
Senior Standing Counsel
For Respondents
R1 : Mr.Arvind Dattar
Senior Counsel
Mr.A.R.L.Sundaresan
Senior Counsel
for Mr.N.Viswanathan
in W.A.Nos.642, 687, 688, 690, 691,
694, 696 & 697 of 2021
for Mr.S.Baskaran
in W.A.No.698 of 2021
R2 : Mr.V.Chandrasekaran [For DGFT]
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COMMON JUDGMENT
T.S.SIVAGNANAM, J.
These appeals have been filed challenging the common order and
direction in W.P.No.8574 of 2020, etc batch dated 25.01.2021.
2.The petitioners had filed the writ petition for a direction upon the
appellants herein to forthwith release of 136 units of old and used
multifunction print, copying and scanning machines of A3 size vide various
bills of entry on payment of applicable total customs duty on the enhanced
value by the Chartered Engineers in line with the directions issued by the
Court in W.P.No.16126 of 2019, etc. batch dated 10.09.2019. By the
impugned order, the writ petitions were allowed and the consignments in
question were directed to be released upon remittance of the enhanced duty
as quantified based upon the valuation of a Certified Engineer. The
adjudication proceedings to be initiated/will continue to be concluded as
expeditiously as possible. The revenue being aggrieved by such order, have
filed these appeals. With the consent on either side, W.A.No.642 of 2021 is
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taken as the lead case which has been filed challenging the order in
W.P.No.8574 of 2020 filed by M/s.Best Mega International, New Delhi.
3.We have elaborately heard Ms.Aiswarya Bhati, learned Additional
Solicitor General assisted by Ms.R.Hemalatha, learned Senior Standing
Counsel for the appellant/revenue and Mr.Arvind Datar and
Mr.A.R.L.Sundaresan, learned Senior Counsels appearing for
Mr.N.Viswanathan and Mr.S.Baskaran, learned counsels appearing for the
writ petitioner and Mr.V.Chandrasekaran, learned Standing Counsel for the
Director General of Foreign Trade [DGFT] who have also filed an
independent appeal which is yet to be numbered.
4.We note the facts in W.P.No.8574 of 2020 to understand the
background under which the respondent importer had approached the Writ
Court. The respondent importer is a partnership firm engaged in the
business of import and trading of Second hand Digital Multifunction
Printing and Copying Machines, Medical Equipments, etc. and during the
course of business had imported a consignment of 136 units of old and used
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digital multifunction from the overseas supplier at Singapore. The bill of
entry was filed on 21.04.2020 with the Chennai Customs House with
request for assessment and clearance of goods in terms of the provisions of
the Customs Act, 1962 [the Act]. The petitioner would state that the
Customs Department have ordered for 100% examination under first check
appraisement and the Officers of Group-5 had arranged for examination of
the machines by an approved Chartered Engineer who had submitted a
report dated 22.05.2020. According to the petitioner, in terms of the said
report all the machines are having the features of printing, copying and
scanning and the machines cannot be considered as Hazardous Waste,
Electrical or Electronics Assemblies or e-waste equipments. The petitioner
would state that the Department of Revenue are not allowing the clearance
of the consignment though 55 days had lapsed since the bill of entry was
filed and more than 29 days since examination report was submitted on the
premise that the imported machines are covered under the category of
Printers, Plotters and therefore, registration with BIS is not mandatory as
per Circular No.1/2019 dated 02.05.2019 followed by Notification
S.O.1236(E) dated 01.04.2020.
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5.The petitioner's case is that printers are covered under CTH and
ITC [HS] Code No.8443 32 10 to 8443 32 50 and 8471 60 24 and the
products are since listed in Sl.No.7 of the Schedule of the Electronics and
Information Technology Goods [Requirements for Compulsory
Registration] Order, 2019, it is mandatory for registration with BIS for the
products whereas MFDs and scanning machines were covered under CTH
8443 31 00 and this product is not specifically listed in the registration order
and therefore, it is not mandatory for registration with BIS for the machines
imported by the respondent/writ petitioner. Further, the contention of the
respondent is that the MFDs are distinctly different product and their
technical features, process, sizes, weight are different and are classified
under different and specific individual heading from that of printers and
plotters as mentioned in the schedule to the notification dated 07.02.2012
and the amendments which were made subsequently by including other
products. The petitioner's further case is that the Ministry of Electronics
and Information Technology [MeitY] classified the MFDs under the
category 'Printers and Plotters' vide circular dated 02.05.2019 and
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notification dated 01.04.2020 whereas the Ministry of Commerce and other
Ministries have classified the product under the nomenclature as imported
multifunction print and copying machines. Thus, it is the argument of the
writ petitioner that the machines which have been imported by them are
freely importable and since the Department has refused to release the goods,
the petitioner has approached this Court by way of filing the writ petitions.
6.The Customs Department had filed a counter affidavit in the writ
petition raising preliminary objections. Firstly, the Customs Department are
implementing authorities who are bound to act only in accordance with the
directions/policy decisions of the nodal authorities as constituted for the
same and the import of second hand MFDs are regulated under various
statutory provisions and has to be allowed clearance subject to fulfilment of
each and every condition stipulated independently. The conditions being
hereunder.
“i.Compliance of procedures and production of
mandatory documents specified in the provisions of
Hazardous and other Wastes (Management &
Transboundary Movement) Rules, 2016 read with E-
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Waste Management Rules, 2016.
ii.Production of authorization/import license issued
by the DGFT authorities since the subject goods are
restricted under Para 2.31 of FTP 2015-20.
iii.Registration under the provisions of
“Requirements for Compulsory Registration” with BIS as
per the Electronics and Information Technology Goods
(Requirements for Compulsory Registration) Order, 2012
(hereinafter referred to as CRO) dated 07.09.2012 and
subsequent clarifications given in letters dated
25.06.2013 and 07.11.2014 issued by Ministry of
Electronics & Information Technology (MeitY).”
7.Further, it is contended that the requirement of BIS registration for
the notified goods is mandated in the Compulsory Registration Order
[CRO], 2012 as compulsory one and failure of which requires either re-
export of the goods or deformation as scrap in order to avoid eco-damage to
the Country as well as to ensure safety of public users. Further, it was
contended that the dispute raised by the respondent in the writ petition is
relevant to the condition set forth by MeitY on the status of MFDs being
certified in CRO, 2012 and MeitY had consistently held that the MFDs are
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basically with additional features like scanning, copying, etc. and all the
three items, namely, printers, scanners and copying machines are
independently notified under CRO, 2012 and that as per established
international practice, only generic names are quoted as notified in the
CRO, 2012 as it would be impossible to notify all individual items that runs
to thousands and the MFDs falling under the generic category or family of
notified printers and therefore, BIS registration is mandatory for import.
Further objection was with regard to the maintainability of the writ petition
contending that the writ petition is premature as the adjudication mechanism
is yet to commence and the prayer requires to be rejected. Further, it was
stated that the respondent importer did not produced the mandatory
documents required to be filed for verification and none of the above
statutory provisions have been complied with which has resulted in issuance
of show cause notice as statutorily required under the Act. Further with
regard to the contention of the appellant attempting to bring the machines
under CTH 843 31 00 is in fact disputing the policy matter of MeitY which
is the nodal agency and implementing authority for CRO that mandates
requirement of BIS registration for the imported/used MFDs.
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8.The other objection raised was that these statutory authorities which
are nodal authorities which have laid down the condition have not been
impleaded in the writ petition and the writ petition was filed only again the
implementing agency and therefore, liable to be dismissed. The various
orders passed by this Court and the other High Courts on which the
respondent/writ petitioner had placed reliance have been dealt with and in
paragraph 22 of the counter affidavit, the following tabular column has been
incorporated which is quoted herein below:
Sl.No. Date Particulars Remarks
1. 06.04.2018 W.P.No.2728 of 2018 – The High Court directed release of
High Court of Andhra the goods – which was challenged by
Pradesh MeitY before the Hon'ble Apex
Court in Special Leave to Appeal (c)
No.17307/2019 and Record of
Proceedings dated 24.07.2020
evident of the same. [Kindly refer to
Page No.27 of Respondents typed
set]
2. 24.01.2019 Atul Automations case – Issues with regard to adherence to
Hon'ble Apex Court authorisation from DGFT – release
reported as 2019 (365) of goods vis-a-vis distinction
ELT 465(SC) between prohibited & restricted
goods, classification of the MFDs
under the Hazardous and other
Wastes (Management &
Transboundary Movement) Rules,
2016 and release thereof subject to
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Sl.No. Date Particulars Remarks
DGFT. Question of applicability of
CRO 2012 by MeitY not raised. It is
a case wherein the importer had
exhausted all statutory remedies after
due adjudication - 1st appeal to
Tribunal – appeal in the High Court
& further appeal to Hon'ble Apex
Court – Adjudicatory mechanism
fully availed.
3. 25.04.2019 Commissioner of This Hon'ble Court held that the
Customs, Chennai II vs. compliance with the three conditions
City Office Equipment as set forth in Para 8 above is vital
by Division Bench of for the purpose of the provisional
Madras High Court – release of the consignment and
reported as 2019 (367) further there are distinguishing
ELT 920 (Mad) feature of the facts herein vis-a-vis
the facts found by the Hon'ble Apex
Court in case Atul Automations
reported as 2019 (365) ELT 465
(SC). Thus the prayer sought for in
the present writ petition was
analysed threadbare by this Hon'ble
Court and provisional release was
declined due to non-compliance of
each of the condition as set forth in
Para 8 above, instead directions for
due adjudication proceedings was
ordered.
4. 10.06.2019 Writ Appeal No.1720 of Another Division Bench of this
2019 Hon'ble Court was pleased to follow
the decision of the coodinate Bench
as indicated in the Serial No.3 abvoe
and fixed a time frame for the
completion of the adjudication
process.
5. 25.06.2019 Genuine Copier Systems This Hon'ble Court declined to grant
rendered by this Hon'ble release of the consignment and
Court reported as 2019 instead directions for the
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Sl.No. Date Particulars Remarks
(368) ELT 923 (Mad) adjudication proceedings was
granted by following the orders of
the divisional bench as indicated in
the serial No.3 above.
6. 10.09.2019 W.P.Nos.16126 of 2019 Batch of cases filed seeking to
(batch cases) DECLARE Para 2.31 of the FTP
issued by DGFT as ultravires along
with Interim prayer for provisional
release of the MFDs pending final
adjudication. The division bench
granted INTERIM DIRECTION for
the release of the MFDs upon the
payment of duty on the enhanced
value as determined by the Chartered
Engineer. The main writ petition
challenging the vires of Para 2.31 of
the FTP is still pending.
7. 27.09.2019 W.M.P.No.24857 of This Hon'ble Court took note of the
2019 in W.P.No.25286 final order passed by a coordinate
of 2019 by the Division Division Bench in Serial No.3 above
Bench of this Hon'ble and also the Interim Order granted
High Court. by another coordinate Division
Bench in Serial No.6 above but inter
alia was not inclined to grant
provisional release and instead
ordered notice in the main Writ
Petition. The Division Bench was
further pleased to grant Liberty to the
petitioner therein to submit a
representation seeking relief in terms
of the amendment to the policy dated
07.05.2019.
8. 17.12.2019 W.P.No.5372 of 2019 This Hon'ble Court was pleased to
and etc cases direct proceedings for adjudication
to be conducted on merits and in
accordance with law. The prayer for
clearance of used MFDs upon the
payment of duty was not granted.
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Sl.No. Date Particulars Remarks
9. 29.05.2020 Record of proceedings in On appeal by the Department, the
SLP(C) Diary Hon'ble Apex Court declined to
No.4012/2020 and etc interfere in the interim order dated
cases – Hon'ble Supreme 10.09.2019 passed by this Hon'ble
Court of India High Court (Serial No.6). But the
question of law was left open to be
considered in an appropriate case
which is SLP(C) 17307/2019 which
was also listed on the same day.
10. 24.07.2020 Record of proceedings in This is an appeal preferred by MeitY
SLP(C) No.17307/2019 as against the final order passed by
– Hon'ble Supreme the Hon'ble High Court of Andhra
Court of India Pradesh in W.P.No.2728 of 2018
dated 06.04.2018. Hence the issue
with regard to non-compliance of the
provisions of CRO, 2012 order is till
pending before the Hon'ble Supreme
Court.
On the above grounds, the Customs Department opposed the relief
sought for in the writ petition.
9.The Director General of Foreign Trade who was impleaded as the
4th respondent has filed the counter affidavit stating that the goods are
prohibited goods and that the printers, plotters and scanners are specifically
listed in Sl.Nos.7 and 9 in the schedule and the copying machines are
specifically listed in Sl.No.26 of the Registration Order and notifications
dated 07.09.2012 and 07.11.2014 and it is incorrect to state that MFDs are
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distinctly different. It was further stated that the respondent importer shall
re-export such prohibited goods or else the Customs Authorities shall
deform the goods beyond goods and dispose of the goods as scrap under
intimation to MeitY. Further, it is reiterated that the goods imported by the
respondent/writ petitioner are restricted to import prior to the Notification
No.5 dated 07.05.2019 and has made prohibited goods for import in terms
of paragraph 2.31 of the Foreign Trade Policy [2015-2020] under
Notification No.5 dated 07.05.2019. Further, in terms of the Registration
Order, 2012 vide Notification No.50/2015-2020 dated 08.01.2019,
registration has been made mandatory for these category of goods. Further,
with regard to the decisions relied on by the respondent/writ petitioner, it is
submitted that they are not applicable to the cases on hand as there was a
challenge when the goods were classified as restricted category and not
prohibited category and that appears to be the reason for issuing direction
for release of the goods in the earlier decision. With the above averments,
the Director General of Foreign Trade prayed for dismissal of the writ
petition.
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10.Mr.V.Chandrasekaran, learned Standing Counsel appearing for
DGFT submitted that the Department has filed a separate writ appeal but the
same is yet to be numbered and there may be a slight delay in filing the
appeal because necessary instructions had to be obtained from New Delhi.
In any event, the decision rendered in these writ appeals will equally apply
to the appeal filed by the DGFT.
11.The learned Writ Court while allowing the writ petition by the
impugned order has chronicled the relevant events in paragraph 2 of the
order. In paragraph 2(vii), the learned Writ Court has stated that the import
being the subject matter of adjudication before the revenue authorities, the
Court refrains from dealing further with this aspect of the matter [factual
aspect]. Therefore, we can safely conclude that the events which have been
mentioned in paragraphs 2(i) to 2(vi) are placing on record the events which
have taken place prior to the import, namely, various notifications which
were in vogue. Discussion starts from paragraph 3 of the impugned order,
wherein the learned Writ Court has taken note of the various directions
issued by the Hon'ble Division Bench and the Single Benches of this Court
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and the orders passed by the Hon'ble Supreme Court on appeals filed
against those orders and has observed that on the question of interim
release, the Court need not look further than the orders that are on record
and the position that equally placed petitioners [importers] have been
granted the benefit of interim release pending adjudication. It was observed
that in such circumstances, it would not be proper to take a different view
only in the case of some writ petitioners while others have obtained the
benefit of release. With regard to the question as to whether the condition
imposed by MeitY is mandatory and whether non-compliance of the same
would lead to confiscation, the Court referred to the decision of the High
Court of Telangana at Hyderabad in RR Marketing vs. The Union of India
and others [W.P.No.28391 of 2019 dated 21.01.2020] and observed that
though the SLP filed by the revenue was admitted by the Hon'ble Supreme
Court, provisional release has been permitted in the said case by order dated
18.09.2020.
12.Ms.R.Hemalatha, learned Senior Standing Counsel would clarify
that the goods were provisionally directed to be released by the High Court
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of Telangana at Hyderabad and the direction for provisional release granted
by the Hon'ble Supreme Court was in respect of other cases. This
clarification is taken on record.
13.Further, the learned Writ Court has taken note of the orders passed
by the Tribunals, wherein the orders of adjudication which were against
importers were reversed and the appeals were allowed. Thus, the learned
Writ Court concluded that the Hon'ble Supreme Court has consistently
taken a view in favour of provisional release in such cases, noticing that in
identical cases, release has been ordered and there would be no justification
to take a contra view in few cases alone. Accordingly, writ petitions were
allowed with the aforementioned directions.
14.The four broad propositions which have been framed by the
learned Additional Solicitor General are that (1) decisions granting
provisional release may not be treated as a precedent, (2) there are three
statutory requirements which are to be taken note of, namely, the CRO
2012, the Foreign Trade Policy and the Hazardous Waste Management
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Rules, (3) the writ petition is not maintainable as there is no vested right for
provisional release, there is an efficacious statutory mechanism prescribed
under Section 110A and 130 of the Act, that there has been no fact finding
by the competent authority under Section 110A, that the customs authorities
being only the implementing authority, the writ petition ought to have been
dismissed on the ground of non-impleadment of MeitY, the respondent/writ
petitioner having not challenged any of the statutory requirements,
provisional release cannot be ordered and (4) the change in the legal
position after the notification dated 07.05.2019 under the Foreign Trade
Policy and the notification dated 01.04.2020 in the CRO are very relevant
which would dis-entitle the respondent/writ petitioner to any relief.
15.Mr.Arvind Dattar, learned senior counsel would submit that there
is no necessity for the respondent/writ petitioner to challenge the
notification as the product imported by the respondent is entirely different
and is not a printer and therefore, MeitY is neither necessary nor a proper
party. Furthermore it is submitted that the respondent importer cannot be
compelled to approach the Court for each and every import when there are
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several orders passed by the Hon'ble Supreme Court, this Court and other
High Courts directing release of similar machines. Further, it is submitted
that there may be change of law in April 2020 but all the imports done by
the petitioner was prior to 01.04.2020. Further, the issue relating to non-
impleadment/non-joinder was not taken at the earliest point of time.
Further, it is submitted that unless the order and direction issued by the
learned Writ Court was perverse while exercising appellate jurisdiction, this
Court will not interfere with the order. To support such contention, the
learned senior counsel referred to the relevant paragraphs in the impugned
order. Therefore, it is submitted that the learned Writ Court rightly issued
directions for provisional release of the goods after taking note of all the
orders of the Hon'ble Supreme Court and this Court. Referring to the
schedule to the notification dated 07.09.2012, it is submitted that MFDs
which have been imported by the petitioner is not a printer and therefore,
condition in clause 3(1) of the notification will not apply and there can be
no prohibition for import of those goods. Further by referring to the Alert
issued by the Directorate of Revenue Intelligence [DRI] dated 11.07.2017, it
is submitted that the notification states that MeitY has informed the
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Department that second hand items if notified also require registration under
the provisions of the order and in the absence of any such notification, there
cannot be any prohibition for the import. The learned senior counsel
elaborately referred to the various orders passed by the other High Courts
where provisional release was granted.
16.Mr.AR.L.Sundaresan, learned senior counsel while supplementing
the arguments of Mr.Arvind Dattar, learned senior counsel submitted that
the CRO will not apply and therefore, authorization for import of MFDs is
not required as it cannot be considered as restricted item. In this regard, the
learned senior counsel painstakingly took us through various entries as well
as the amendments which were brought to the circular by adding several
items to the original list of fifteen items. Further, it is submitted that by
circular No.1/2019, the Department wanted to expand and clarify what is a
printer by stating that the MFD is also a printer, however, by way of
circular, the earlier notification cannot be superseded. By notification dated
01.04.2020 while adding certain other items to the original list, further
clarification was issued and such clarification can at best be prospective.
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These three limbs of arguments made by the learned senior counsel are
without prejudice to each other. Elaborate reference was made to the entries
in the Customs Tariff Act, HSN classification, etc. which we had pointed
out is beyond the realm of writ proceedings and it was never pressed into
service when the writ petitions were heard. In any event, these
classification issues cannot be dealt with by us. Once we have expressed
our opinion on this issue, the learned senior counsel proceeded to canvass
other points. With regard to the decisions which were pressed into service
by the learned Additional Solicitor General, it is submitted that those are
distinguishable on facts.
17.The learned Additional Solicitor General, in reply, would submit
that it is incorrect to state that the revenue has not been able to show any
perversity in the order passed in the writ petitions and the four propositions
which were advocated by her would clearly show that the order calls for
interference. Furthermore, the bills of entry were filed in April 2021 and
before even the Department could act, the writ petitions have been filed.
Therefore, the revenue was right in contending that the writ petitions were
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not only premature but not maintainable on account of non-joinder of proper
and necessary parties.
18.The first issue we need to take note of is as to the various orders of
provisional release passed by this Court, the other High Courts and the
Hon'ble Supreme Court. To understand the scope of the directions issued in
those orders, we have extracted the tabulated statement as found in the
counter affidavit of the Customs Department.
19.In our considered view, there are two reasons as to why this Court
should independently consider the cases on hand. Firstly, the orders passed
by the various Courts in the above referred cases are all orders granting
provisional release. The question would be whether such an order of
provisional release can be cited to be a precedent. Identical issue was
considered in the case of Union of India vs. Manju Goel [2015 (321) ELT
19 (SC)], wherein it was held that an order of provisional release is, at all
times, an interlocutory exercise and does not finally adjudicate on any
liability. In Mala Petrochemicals & Polymers vs. The Additional Director
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General, Directorate of Revenue Intelligence and another [2017 (353)
ELT 446], it was held that the power under Section 110 of the Act involves
exercise of discretion, the scope of judicial review is to examine if the
discretion has been rightly exercised and that it is not based on irrelevant
materials and is fair and reasonable in circumstances and undoubtedly it is
not an appellate power. Further, it was held that drawing of a distinction
between seizure of imported goods as a result of undervaluation and seizure
of imported goods upon misdeclaration cannot per se be said to be
irrational, on the contrary failure to draw such a distinction and treat all
types of wrongful imports on an equal footing might result in miscarriage of
justice and that is perhaps, why Section 110A has been worded in the way it
has, leaving some margin to the Customs in the exercise of their discretion
subject, of course, to the recognized legal limits. The above decisions were
relied on in the case of Additional Director General [Adjudication] vs. Its
my Name Private Limited [MANU/DE/1823/2020].
20.In the case of Malabar Diamond Gallery Pvt. Ltd. vs. The
Additional Director General, Directorate of Revenue Intelligence and
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others [2016 (241) ELT 65 (Madras)], the Division Bench of this Court
pointed out that one of the important aspects to be taken note by the
authorities while exercising their powers under Section 110A of the Act is
whether, import of goods is prohibited, within the meaning of Section 2(33)
of the Customs Act and where, in the Customs Act or any other law for the
time being in force, such prohibition is mentioned. Therefore, we need to
examine as to whether such goods are restricted or prohibited items.
21.The Ministry of Communication and Information Technology by
notification S.O.2357(E) dated 07.09.2012 in exercise of its powers
conferred under Section 10(1)(p) of the Bureau of Indian Standards Rules,
1987 issued the Electronics and Information Technology Goods
(Requirements for Compulsory Registration) Order, 2012. Clause 3 of the
Order deals with prohibition regarding manufacture, storage, sale and
distribution, etc. of goods, which reads as follows:
“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,
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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:
Provided that nothing in this Order shall apply in
relation to manufacture of Goods meant for export.
(2) The substandard 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.”
22.Schedule to the Order lists out the various products and the Indian
Standard Number and the Title of Indian Standard. For the purpose of these
cases, the following two entries would be relevant:
Sl.No. Product Indian Standard Title of Indian Standard
(1) (2) Number (4)
7. Printers, Plotters IS 13252:2003 Information Technology
Equipment – Safety –
General Requirements
8. Scanners IS 13252:2010 Information Technology
Equipment – Safety –
General Requirements
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23.In terms of clause 3 above, no person shall import goods which do
not conform to the Specified Standard and do not bear the words “Self
declaration – Conforming to IS”on such goods after obtaining registration
from the Bureau. However, such restriction will not apply in relation to
manufacture of goods meant for export which is not the case before us. The
schedule lists out the Printers and Plotters as Information Technology
Equipments and General requirements to be complied with and similar is the
case in respect of Scanners.
24.By notification S.O.2905(E) dated 07.11.2014, the Government
included another fifteen products in addition to the fifteen products which
were mentioned in the notification dated 07.09.2012. The MeitY issued
office memorandum dated 10.03.2017. The necessity for such office
memorandum was on account of investigation into large scale import of
used MFD in violation of Environment Protection Act and Rules and
Foreign Trade Policy. The memorandum mentions about how traders from
various parts of India especially Delhi and Kolkata are regularly importing
large quantifies of MFDs through Cochin Port and none of the importers
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produce any documents to Customs Department to prove compliance of the
Registration Order, 2012. Further, it was mentioned that printers are
covered under Electronics and IT Goods (Requirements for Compulsory
Registration) Order, 2012 mandating Indian safety standards for the notified
goods and must be registered with BIS before sale in India. It is further
stated that since second hand Multifunction printers are registered with BIS
nor they have sought permission from MeitY for their import, such imports
would be in violation of Compulsory Registration Order, 2012.
25.The Directorate of Revenue Intelligence also issued Alert Circular
No.07/2017 dated 11.07.2017 reiterating the stand taken by the Ministry.
Another circular was issued by the MeitY in Circular No.1 of 2019 dated
02.05.2019 clarifying that MFDs which are basically printers with
additional features like photo copy, scan, fax, etc. are covered in the
category “Printers, Plotters”notified under the Order dated 03.10.2012.
26.The argument of the respondent importer is that the earlier
notification which had only listed out the printers and plotters cannot now
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be expanded to cover MFDs by virtue of a Circular and therefore, the same
is without jurisdiction. We will deal with this contention a little later.
27.The MeitY by notification in S.O.1236(E) dated 01.04.2020 added
another twelve products to the schedule to the Registration Order, 2012. In
paragraph 2 of the notification, it has been stated as follows:
“2.Since the Multifunction Devices [MFDs] are
basically printers with additional capabilities like Fax,
Scan, Photocopy, etc., thus, it is clarified that they are
covered under the category of Printers/Plotters notified
vide Gazette Notification dated 3rd October 2012. The
other provisions of the aforesaid Gazette notification
dated 3rd October 2012 would apply as before.”
28.In terms of the above condition, the Ministry has stated that MFDs
are basically printers with additional capabilities and they are covered under
the category of Printers/Plotters notified vide gazette notification dated
03.10.2012.
29.The first limb of the argument of the respondent/writ petitioner is
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that the equipment imported by them is not a printer/plotter. The second
limb, with prejudice to the first argument, is that even if the Ministry wants
to classify the MFDs as printers, it could not have been done by virtue of
the circular as the schedule to the order was by a statutory notification. The
third submission is that inclusion of MFDs under the category of printers
and plotters can at best be prospective, i.e. post April 2020.
30.In our considered submission, all the three arguments have to
necessarily fail. Firstly, the notification including printers in the schedule
requiring certification of authorization has not been questioned. The stand
of the Department is that the MFDs are also printers with additional
features. The office memorandum which was issued dated 10.03.2017 made
this position clear. The argument of the respondent is that the schedule in
the control order cannot be modified by way of office
memorandum/circular. The MeitY had issued circular dated 02.05.2019. A
reading of the said circular shows that it is a clarification issued with regard
to MFDs. A clarification is to be understood as a clarification of an existing
position and not a new inclusion. This being the settled interpretation, the
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respondent/writ petitioner cannot contend that MFDs cannot be included
under the category of Printers by way of a clarification. The position
appears to be that the Department has always classified MFDs under the
category of Printers and the position stood clarified thereafter and the need
for such clarification arose on account of unethical imports which was taken
note of by MeitY while issuing office memorandum dated 10.03.2017. It
has clearly stated that the traders of various parts of India, especially Delhi
and Kolkata, are regularly importing large quantities of used MFDs through
Cochin Port and none of them have produced any documents before the
Customs Department to prove compliance of the Registration Order, 2012.
Therefore, on account of unscrupulous person resorting to such imports, the
necessity arose for the MeitY to issue clarification/circular. Therefore, it
has to be necessarily taken that for all purposes, the Department has been
consistent in their stand that MFDs are covered within the scope of Printers.
This was made doubly clear by issuing of the notification dated 01.04.2020.
31.We find that in none of the above referred decisions which were
referred to by the respondent, the above contentions have been dealt with.
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In any event, with utmost respect we would humbly observe that any
direction issued for provisional release being interlocutory in nature cannot
be cited as a precedent. It was lamented before us by the respondent/writ
petitioner that how may times the respondent can approach the Court for
relief when several consignments of the same item has been released.
Unfortunately the respondent/writ petitioners are before a Constitutional
Court exercising power under Article 226 of the Constitution of India and
not before the Customs Authorities or before the Special Valuation Branch
of the Customs Department. Thus, we are constrained to observe that the
change in the legal position, especially after the notification dated
07.05.2019 and the notification dated 01.04.2020, is of utmost significance
which cannot be brushed aside.
32.The non-compliance of the CRO may lead to serious
consequences. However, we do not wish to express anything in this regard
because the learned Single Bench was not inclined to touch upon the merits
of the matter but proceeded to grant release based on various orders passed
by the High Courts and Hon'ble Supreme Court. As mentioned above in our
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most respectful view, those being orders of provisional release cannot be
pressed into service by the respondent/writ petitioner, more particularly,
after the issuance of the notification dated 01.04.2020 and this is of utmost
relevance because the bills of entry in almost all the cases have been filed
post 01.04.2020. Even if certain bills of entry have been filed prior to
notification, the law prevailing on the date of examination for considering
the release of goods would have to be made applicable and if so, the
notification S.O.1236(E) dated 01.04.2020 needs to be applied. In the light
of the above reasoning, we are of the considered view that the stand taken
by the Department was fully justified.
33.It was argued by the learned senior counsels for the respondents
that invariably the Department does not take a decision on the request for
provisional release and to demonstrate the same, the details of certain other
writ petitions which were filed even earlier by other importers was placed
before this Court for consideration. One startling feature which struck our
eye on perusal of the details is that there has been import of substantial
quantity/number of these type of machines and invariably in all cases writ
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petitions have been filed before this Court without exhausting the remedy of
provisional release under the Act or without undergoing the process of
adjudication. By way of illustration, if we take up the case of the
respondent, M/s.Best Mega International, the petitioner in W.P.No.8574 of
2020, we find that the application for provisional release was filed on
09.06.2020 and the writ petition was filed on 18.06.2020. Thus, it is clear
that no reasonable time was granted to the Department to examine the
application. On perusal of the application filed by the respondent/writ
petitioner dated 09.06.2020, we find that the application is not a simple
application for provisional release but in fact it covers most of the grounds
which have been raised in the writ petition. It is rather surprising that an
application for provisional release would contain such details without even
the Department calling upon the respondent importer to furnish details or to
give explanation.
34.In the light of the above, we hold that the contention advanced by
the learned Additional Solicitor General merits acceptance. The orders of
provisional release passed pursuant to the directions issued by the Writ
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Court being interlocutory in nature cannot be considered as a precedent.
Merely by stating that identical imports were allowed to be provisionally
cleared can be no reason to permit the respondent to clear the goods by way
of issuance of a writ of Mandamus. This is more so in the instant case,
because the matter is being considered after the notification in CRO dated
01.04.2020 which has made the items as prohibited items. Admittedly, none
of the statutory notifications or amendments are put to challenge before this
Court and we do not accede to the argument that the respondent need not
challenge the provisions of the statutory notification as according to them,
MFDs are not printers. The High Courts even under the normal course
when matters travel by way of an appeal to this Court, are precluded from
ruling on classification issues. Thus, these are all matters well beyond the
purview of the writ jurisdiction and it is at best left to the decision of the
Department who are bound to strictly implement the directions and the
notification issued by the Government from time to time bearing in mind
environmental protection and public interest.
35.Furthermore, we note that the earlier interim orders granted for
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provisional release were during the regime when the goods were treated as
restricted goods requiring license for importation or certification but there is
drastic change in the legal position as of 1st April 2020 as the goods have
become prohibited. This subtle yet very relevant distinction has to be taken
note of to treat the present set of cases on a different yardstick. The
decision of the High Court of Telangana which was pressed into service by
the learned senior counsel for the respondent is an interim order and not a
final order. In fact some other grounds which were canvassed before us, if
needs to be adjudicated, then we may have to do the role of an Officer of
Customs or an Officer who deals with classification of the products for the
purpose of levying and collecting customs duty which we are not required
or expected to do. As mentioned above, the circulars being clarifications
would date back to the date of notification originally issued and the
argument that it will be prospective, i.e. post 01.04.2020 is rejected.
36.The learned Additional Solicitor General is also right in her
submissions in contending that MeitY is proper and necessary party to the
writ petition as the Customs Department is only an implementing authority
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who obviously cannot supersede or over reach the notification issued by the
MeitY exercising power under the provisions of the Bureau of Indian
Standards Rules and the CRO.
37.The learned Writ Court in paragraph 7 of the impugned order has
pointed out that there are conflicting decisions of the two Division Benches.
As already mentioned, there can be no two similar orders in respect of
directions for provisional release unless and until the Department concedes
that the goods are identical and the same relief needs to be granted and two
of the Division benches have directed the importers to approach the
Department seeking release of the goods and we fully subscribe to the said
view because in a writ petition, the Court cannot give a declaration as
regards the classification of the goods.
38.The learned Additional Solicitor General rightly referred to the
observations made by the High Court of Kerala in the case of
Commissioner of Customs vs. Shri Amman Dhall Mill [Cus.Appeal No.14
of 2020 dated 22.01.2021], wherein it has been observed that exercise of
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power and discretion under Section 125 of the Customs Act are specific and
generally governed by the applicable policy, notification, etc. In the said
case, the imported goods was green peas and the Court observed that the
primary authority has noted that by keeping in view the stand taken by the
Union of India before the Hon'ble Supreme Court in Agricas LLP case, the
available stock position of green peas is treated as surplus and declined
release and ordered confiscation. Though in the said case, the Court
examined the correctness of the order passed by the Tribunal in an appeal
filed under Section 130 of the Act, it observed that the Tribunal fell in clear
error of law by holding that release of goods is the only option to the
Customs Commissioner due to the language of Section 125 of the Customs
Act. Further the Court faulted the Tribunal and observed that if the
reasoning is adopted both by the primary authority and the appellate
Tribunal, then Exim Policy, notifications are defeated and opens floodgates
for the import of green peas and such contingencies are commented by the
Hon'ble Supreme Court in Agricas Case. Further, it faulted the Tribunal for
having ignored the relevant notifications, the mandate of FTDR Act and the
Customs Act, 1962. For all the above reasons, we hold that an order of
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provisional release could not have been ordered by the learned Writ Court
in these cases before us and it should have been best left to the Department
to take a decision in the matter.
39.Further, we had an occasion to consider though not a similar case
but a case where the Department took a view that the items imported which
are MFDs are restricted items in terms of para 2.17 of the Foreign Trade
Policy. The importer in the said case went through the process of
adjudication and ultimately being unsuccessful was before this Court by
way of an appeal under Section 130 of the Customs Act in C.M.A.No.4719
of 2018 in the case of M/s.Unitech Enterprises vs. CESTAT by judgment
dated 17.02.2021, we dismissed the appeal with the following reasoning:
“18.The appellant had imported 36 units of
Old/Used Analogue Photocopiers without obtaining a
license. Having accepted the stand taken by the
Department, the appellant requested that his case may be
adjudicated. Therefore, the dispute was only with regard
to 201 units of Old/Used Digital Multi functional (Print
and Copying) Machines. The import was effected by
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filing of Bill of Entry dated 13.08.2009. The Department
was of the prima facie view that the item imported is a
restricted item in terms of para 2.17 of the FTP which
allows import of second hand capital goods including
refurbished/reconditioned spares without obtaining a
license. There are two limbs to para 2.17 of the FTP and
for easy reference, we quote the same hereunder:
Para 2.17 of the Foreign Trade Policy
“All second hand goods, except second hand
capital goods, shall be restricted for imports and may be
imported only in accordance with provisions of FTP,
ITC(HS), HBP vl. Public Notice or an Authorisation issue
in this regard.
Import of second hand capital goods, including
refurbished/re-conditioned spares shall be allowed freely.
However, second hand personal computers/laptops,
photocopier machines, air conditioners, diesel generating
sets will only be allowed against a license.
Import of re-manufactured goods shall be allowed
against a license.”
19.In terms of the above, all second hand goods
except second hand capital goods are restricted for
import. It is not in dispute that 201 machines which were
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imported by the appellant were second hand goods. Thus,
going by the first limb of para 2.17, license is required. In
the second para, the Policy allows import of second hand
capital goods including refurbished/reconditioned spares
without obtaining any license. There is a restriction for
import of second hand Photocopier machines and other
items mentioned therein. The appellant did not produce a
Chartered Engineer's certificate when the goods were
imported. Therefore, the goods were subjected to
examination by Docks Officer in the presence of a
Chartered Engineer and certified that the goods are 4 to
10 years old, they are used and not reconditioned and the
value of the second hand goods was appraised as USD
69395 [C&F]. The appellant's argument before the
adjudicating authority is that the imported item is totally
different and it can neither be considered as a photocopier
machine nor part of computer and therefore, freely
importable. The adjudicating authority took note of the
unamended FTP and also the position after the
amendment by notification dated 19.10.2005 and on facts,
found that the digital multifunction machine imported by
the appellant performs the function of photocopying as
well as printing. It further held that the function is same
as of the photocopying machine with additional facility of
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printing when connected to a computer. The correctness
of this finding was re-examined by the Tribunal and in
our considered view very elaborately. It analysed various
uses of the machine and drew a comparative chart which
is as follows:
Analog Photocopier Machine Digital Photocopier Machine
1. The original document is scanned 1. The original document is scanned
to create an optical image to create an optical image
2. The image is directly projected on 2. The optical image is converted to
to the photoreceptor digital data which is sent to the
printer engine to create the printed
image on to the photoreceptor
3. The image is developed on the 3. The image is developed on the
photoreceptor and copied on the photoreceptor and copied on the
paper. paper.
20.From the above, it is seen that except for
additional feature in column No.2, there is no other
distinction between a digital photocopier and a analog
photocopier. This factual position is not being seriously
contested by the appellant but the appellant would seek to
bring their goods under the category 'freely importable'
because they are capital goods. This contention was
rejected by the Tribunal after taking note of the
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functionality of the machine which was imported and after
taking note of the various Customs Tariff Headings and
pointed out that photocopying machines are classified
under various Tariff Headings such as 8443 3920, 8443
3930, 8443 3940, 8443 3950. Thus, it was pointed out that
photocopying machines do not have any single entry in
Tariff and copying machines whether or not combined with
printers and facsimile machines are classified elsewhere as
also machines which perform two or more functions of
printing, copying or facsimile transmission as in the case of
the imported goods. Further the Tribunal noted that DGFT
notification No.31/2005 dated 19.10.2005 uses the
expression “photocopier machines” and therefore, there is
no warrant to read the expression appearing in the DGFT
notification as conforming to any one particular expression
used in the Tariff as these expressions are not identical and
no Tariff item is mentioned in the DGFT notification.”
40.In the result, the writ appeals are allowed and the order passed in
the writ petitions are set aside. The appellant, Customs Department is
directed to consider the applications filed by the respondent/writ petitioners
for provisional release and pass orders on merits and in accordance with law
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within a period of four weeks from the date of receipt of a copy of this
judgment. No costs. Consequently, connected miscellaneous petitions are
closed.
(T.S.S., J.) (R.N.M., J.)
04.03.2021
Index: Yes
Speaking Order : Yes
cse
To
The Director General of Foreign Trade and
Additional Secretary to the Government of India,
Department of Commerce,
Ministry of Commerce and Industry,
Government of India, New Delhi.
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T.S.Sivagnanam, J.
and
R.N.Manjula, J.
cse
W.A.No.642, 687, 688, 690, 691,
694, 696, 697 & 698 of 2021
04.03.2021
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