TMI Blog2017 (10) TMI 812X X X X Extracts X X X X X X X X Extracts X X X X ..... esidual life of these machines has been certified. In the face of these technical opinions and facts as recorded, the imported items cannot be considered as waste. The importation of the impugned goods is in violation of Import Policy of the relevant time and also of some of the conditions of Hazardous Waste Rules 2016. The violation of Hazardous Waste Rules is with reference to country of origin certificate. Other conditions mentioned therein have substantially been fulfilled. Penalty - whether such violations will result in refusal to release the goods on redemption in terms of Section 125 of Customs Act, 1962? - Held that: - Admittedly, the goods are restricted and there are violations of Policy - while confiscation of the imported items cannot be faulted with, we note that the appellants are entitled for release of the goods on payment of appropriate redemption fine - a redemption fine of ₹ 52 lakhs and ₹ 14 lakhs for consignments imported by M/s. Atul Automation Pvt. Ltd. and M/s. Parag Domestic Appliances, respectively can be imposed. Penalty u/s 114AA on both the importers as well as Director of one of the importer - Held that: - the provisions of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Accordingly the appellants approached the Commissioner for decision. The Commissioner served a show-cause notice which was again contested by the appellants. However, the adjudicating authority heard the appellants and decided the case resulting in the impugned orders. 3. The original authority held that the imported goods are old and used MFDs and are imported in violation of FTDR Act, Rule 15(1)(2) of Hazardous and other Waste (Management and Transboundary) Rules, 2016. He ordered the confiscation of the imported goods and allowed the redemption of the same to M/s. Atul Automation (P) Ltd. in respect of 24 consignments on payment of fine of ₹ 1 crore under Section 125 of Customs Act, 1962 for re-export only. He enhanced the assessable value also. He imposed a penalty of ₹ 50 lakhs on the importer under Section 112(a), ₹ 10 lakhs under Section 114AA and further penalty of ₹ 10 lakhs and ₹ 1 lakh on Shri Ketan Kamdar Director under Section 112(a) and Section 114AA of the Act. Penalties were also imposed on M/s. Ajay Overseas, Shri Ajith and Shri Unnikrishnan. 4. In respect of imports by M/s. Parag Domestic Appliances, he confiscated the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their consignments have been cleared on redemption fine. He submitted copies of orders issued by the jurisdictional authorities in this regard. He also relied on certain case laws to support that clearance of such MFDs on redemption fine is legally sustainable. f. Regarding enhancement of value, the appellant did not contest the issue. g. Appellants contested imposition of penalty under Section 114AA and pleaded for reduction of penalties under Section 112(a) imposed on them as they have not produced any document which is established to be false. There is no document which was falsified knowingly and any dispute about the correctness of such document as per the legal interpretation cannot attract a knowing violation as contemplated under Section 114AA. There is no malafide action with intend to evade duty. 6. The learned AR supported the findings of the original authority. He submitted the following:- a. The imported MFDs are clearly a potential e-waste as they are used items. To manage such items, Hazardous Waste Rules 2016 provides for various conditions and controls. Non-fulfillment of these conditions will necessarily attract the provisions of Customs Act fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e entitled for redemption of the goods as absolute confiscation or option to re-export only, is not legally sustainable. Penalties under Section 114AA are also contested. We also note that enhanced valuation of used items now imported, is also not contested. 8. On the first point regarding importation being in violation of Import Policy, the same being an admitted fact, does not require further elaboration. On the second point regarding violation of provisions of Hazardous Waste Rules, 2016, we have carefully examined the submissions of the appellants. First of all, we note that the original authority held against the appellants substantially on the ground that the product is waste. In this connection, we have perused the definition waste . Rule 3(1)38 of the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 defines waste as under:- 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. 9. We note that the products under import are MFDs having use as digital multifunctional devices as intended. It is not clear as to how when the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the decision of Technical Review Committee under the 2016 Rules. The decision of the meeting held on 18th and 19th October 2016 recorded that the Extended Producer s Responsibility (EPR) authorisation requirement under 2016 Rules are to be produced on application to the Pollution Control Board and a time line is prescribed for the same. After considering these time lines, the Committee decided that the implementation of EPR can start from 01/05/2017 and advised the Customs authorities to permit clearance of the imported goods without EPR authorisation till 30/04/2017. 12. Regarding Schedule III Part D of the Hazardous Waste Rules, 2016, we note that the said part deal with list of other waste for import and export without permission of Ministry of Environment. Entry No.B1110 deals with electrical and electronic assemblies destined for direct reuse and not for recycling or disposal. The condition for import of used MFDs was mentioned therein. The said condition was later amended vide Notification dt, 06/07/2016. The effect of amendment is that the trader also can import the said MFDs which are not domestically manufactured. 13. Regarding production of EPR authorisation und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same can be released on payment of redemption. The High Court was examining the provisions of FTDR Act read with Section 125(1) of Customs Act, 1962. The Hon ble Punjab Haryana High Court in Horizon Ferro Alloys Pvt. Ltd. Vs. UOI [2016(340) ELT 27 (P H)] examined the scope of Section 125 and observed as below:- 5. ..... ..... .....Section 125 of the Act leaves option to the officer to grant the benefit or not so far as goods whose import is prohibited but no such option is available in respect of goods which can be imported, but because of the method of importation adopted, become liable for confiscation. Hon ble Madras High Court in T. Elavarasan, 2011 (266) E.L.T. 167 (Mad.), was pleased to rely on the said judgment of Hon ble Andhra Pradesh High Court and held that an option has to be given to the petitioner to pay the applicable customs duty and the redemption fine and to get the gold jewellery released, as per Section 125 of the Customs Act, 1962. In the context of Section 125 if the word prohibited is construed as to apply in respect of every violation of any regulation or restriction or statutory procedural requirement, the word shall in said Section would be rend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crores and ₹ 1.37 crores respectively. These are enhanced values as per impugned order. The learned counsel for appellants pleaded that the redemption fines of 20% / 22% are harsh. Considering the detention / demurrage charges for one year, as the goods were lying in Port, and also based on past practice in such cases, he pleaded for reduction of fines. 19.1. We note that Hon ble Kerala High Court in Office Devices [2009(240) ELT 336 (Ker.)] and in Navpad Enterprises [2012(278) ELT 172 (Ker.)] held that the discretion vested under Section 125 of Customs Act should be exercised in an objective manner. In the present case, no detailed reasoning has been recorded in the impugned order for fines which are apparently on the higher side when compared to consistent practice of imposing 10% of value as fine. We also have to bear in mind the detention charges to be incurred on goods. The guiding principle for fixing the quantum of redemption fine when the goods were allowed to be cleared for home consumption is generally that the importer should not gain out of imported goods which were in violation of the applicable law. Keeping that principle in mind, the margin profit likely to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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