SC: Restricted goods can be redeemed on payment of redemption charges

Yesterday, on 24thJanuary 2019, in the matter of Commissioner of Customs v. M/s Atul Automations Pvt. Ltd., the Hon’ble Supreme Court pronounced that there exists a fundamental distinction between what is prohibited and what is restricted, therefore redemption of such restricted goods imported without authorisation upon payment of the market value is not in contravention of Foreign Trade (Development and Regulation) Act, 1992 and Section 125 of the Customs Act.

The Hon’ble Supreme Court observed that:

Merely because earlier on more than one occasion, similar consignments may have been cleared by the customs authorities at the other ports on payment of redemption fine cannot be a justification simpliciter to demand parity of treatment. (This inference has been drawn on the basis of Para 8)

In case of items which are not prohibited but restricted items for import, a harmonious reading of the statutory provisions of the Foreign Trade Act and Section 125 of the Customs Act will therefore not detract from the redemption of such restricted goods, imported without authorisation, upon payment of the market value. There will exist a fundamental distinction between what is prohibited and what is restricted. (This inference has been drawn on the basis of Para 9)

Second hand Multi­ Function Devices (Digital Photocopiers and Printers) a.k.a “MFDs”, if at the time of import have utility, are to be classified as “other wastes” under Rule 3(1)(23) of the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016. (This inference has been drawn on the basis of Para 10)

Form 6 of the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 not applicable to the import of second hand Multi­ Function Devices (Digital Photocopiers and Printers) a.k.a “MFDs”. (This inference has been drawn on the basis of Para 11)

Rule 15 of the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 dealing with illegal traffic, provides that import of “other wastes” shall be deemed illegal if it is without permission from the Central Government under the Rules and is required to be re­exported. Significantly the Customs Act does not provide for re­export. The Central Government under the Foreign Trade Policy has not prohibited but restricted the import subject to authorisation. Where the imported second hand MFDs have a utility period, the Extended Producer Responsibility would arise only after the utility period is over. (This inference has been drawn on the basis of Para 12)

Copy of judgement: Judgement_24-Jan-2019

-Tushar Kaushik

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