IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 08.08.2011 CORAM THE HONOURABLE MR.JUSTICE K.CHANDRU W.P.Nos.18188, 18189, 18198, 18199, 18221, 18246, 18435 and 18436 of 2011 and M.P.Nos.1 to 3 (8 nos.) of 2011 M/s.Vinay Auto Copier Machine, Village & Post – Sarai, Civil Urf Khaptiha, Saidabad, Allahabad, Uttar Pradesh-221 508 rep by its Proprietor, Vinay Kumar Tiwari... Petitioner in W.P.No.18188 of 2011 M/s.Shivendra Enterprises, Dubki Kala, Handia Allahabad, Uttar Pradesh-221 503 rep by its Proprietor, Shivendra Singh .. Petitioner in W.P.No.18189 of 2011 M/s.Kiran Office Solutions, Village Bhatewara Post Sandawa, Mirzapur, Uttar Pradesh-231 001 rep by its Proprietor, Vipin Chandra Dubey .. Petitioner in w.P.No.18198 of 2011 M/s.Pragya Impex, Village & Post Barbasa, Gaharwar, Lalganj, Mirzapur Uttar Pradesh-231 211 rep by its Proprietor, Sunil Mishra .. Petitioner in W.P.No.18199 of 2011 M/s.LAV Auto Copier Machine, Block Ram Nagar Mariyahu Post- Gopalpur, Village -Bansgotan Jaunpur, Uttar Pradesh- 222 137 rep by its Proprietor, Ashok Singh. .. Petitioner in W.P.No.18221 of 2011 M/s.City Office Equipment, No.16,Aziz Mulk, 4th Street, Thousand Lights, Chennai-600 006. rep by its Proprietor, Pawan Kumar Jhunjhunwala .. Petitioner in W.P.No.18246 of 2011 https://hcservices.ecourts.gov.in/hcservices/ M/s.Anand Impex, No.507/31, Jessore Road, Kolkotta-700 074, West Bengal rep by its Proprietor Tapan Kumar Saha .. Petitioner in W.P.Nos.18435 and 18436 of 2011 Vs. 1.Union of India, represented by its Revenue Secretary, Ministry of Finance, Department of Revenue, North Block, New Delhi. 2.The Chairman, Central Board of Excise and Customs, New Delhi. 3.The Commissioner of Customs, (Seaport-Exports), Customs House, No.60,Rajaji Salai, Chennai-600 001. .. Respondents in all writ petitions These writ petitions are preferred under Article 226 of the Constitution of India praying for the issue of a writ of certiorari to call for the records connected with Standing Order No.13 of 2011 dated 14.06.2011 and the consequent instructions in Note No.4, dated 14.06.2011 issued by the third respondent herein and quash the same as illegal, arbitrary, ultra vires and unconstitutional. In all Wps and also for a direction in (Wps 18435 and 18436 of 2011)to release the goods covered under the Bill of Entry Nos.3740944 and 3740948, dated 8.6.2011 respectively. For Petitioners : Mr.Arvind P. Datar, SC for Mr.N.Viswanathan For Respondents : Mr.K.Ravi Anantha Padmanaban, for Customs and Central Excise COMMON ORDER Excepting W.P.Nos.18435 and 18436 of 2011, the other writ petitions were heard on 05.08.2011 and the matter was directed to be posted for orders on 08.08.2011. On the day when the matters were listed under the caption for orders, W.P.Nos.18435 and 18436 of 2011 came up for admission. Mr.N.Viswanathan, learned counsel agreed that these two matters were also covered by whatever the orders that are to be pronounced in the earlier writ petitions. Hence all the matters were clubbed together and a common order is passed. 2.The petitioners in all these writ petitions are importers trading in Secondhand Digital Multifunction Printing and Copying Machines and secondhand Photocopier Machines and it https://hcservices.ecourts.gov.in/hcservices/ accessories, parts and consumables. They are also having Code Numbers allotted under the Importer and Exporter Code issued by the respective offices of the Zonal Joint Director General of Foreign Trade. They had also imported from various overseas suppliers in U.S.A., Finland, Germany, Italy and Sweden. The machines were sought to be imported through Chennai Customs. It was stated that the Customs Officers with the assistance of the approved Chartered Engineer were directed to examine the goods. Though applications were submitted long back for the purpose of engaging Chartered Engineers in the prescribed format as directed by the third respondent Commissioner of Customs, (Seaport-Exports), Customs House, Chennai, no action was initiated. The officers working under the third respondent prior to the issuance of the impugned order and the consequent note instruction did not permit the clearance of the subject goods in the normal course, but invariably subjected the goods to first check causing 100% examination with the assistance of the locally approved Chartered Engineer under the pretext that the goods are being procured from the dealer and not from the manufacturer. Hence the value declared cannot be accepted. Therefore, they were getting the value enhanced and assessed duty under the specific sub heading No.8443 31 00 of the Customs Tariff Act, 1975. Such action was resorted to by omitting to respect the ratio given by the Supreme Court as well as the circular No.4/2008, dated 12.2.2008 issued by the Central Board of Excise and Customs, New Delhi. 3.It was stated that apart from enhancing the value for the purpose of assessment, the authorities had insisted on the petitioners and other importers to produce licence for their imports claiming that the machine is similar to a photocopier and therefore, would be covered by the restrictions imposed under paragraph 2.17 of the Foreign Trade Policy published i terms of the Foreign Trade (Development and Regulation) Act, 1992. The action of the respondents in insisting upon the production of licence under the Foreign Trade Policy is contrary to the policy. Therefore, they had moved this court by way of writ petitions. This Court in a batch of writ petitions had directed the department to release the goods on payment of the duties of customs on the enhanced value as determined by the Chartered Engineer and upon deposit of 25% of the enhanced value with liberty to the Customs to proceed in accordance with law by following the decision of the division bench of this court. It was stated the the clearance of the subject goods were being permitted by the other ports such as Kolkata, Cochin either accepting 25% deposit or by imposing appropriate fine and penalty. Further Customs, Excise and Service Tax Appellate Tribunal (CESTAT) at Banbalore had passed a final order Nos.405 to 416 of 2011, dated 28.6.2011 holding that the action of the Customs authorities in confiscating the goods under Section 111(d) of the Customs Act for non production of licence under paragraph 2.17 of the policy is contrary to law and accordingly set aside such confiscation. 4.It was claimed that pursuant to the order passed by the CESTAT, the issues raised by the Customs Authorities have been finally settled in favour of the importers and that the customs are https://hcservices.ecourts.gov.in/hcservices/ no more justified in seeking any cash deposit towards the release of the subject goods. But, however with the wrong motive to stop the import of the subject goods through the port of Chennai, under the oral instructions of the higher authorities, the authorities during May, 2011 had insisted on the approved Chartered Engineer to show how further enhance the appraisement of the value of the goods believing that such enhancement would stand as a deterrent against the import of such goods. They also came to know that warnings were issued to such Chartered Engineers that any failure to cooperate with the department will lead to delist from the approved list, thereby rendering them jobless. It is around this time, the new Commissioner had assumed the office of the third respondent and had issued the Standing Order No.13/2011, dated 14.6.2011 relating to the valuation of the second hand goods in general followed by note instruction, dated 14.6.2011 to all concerned specifically relating to the import of the old and used photocopiers and multifunction machines alone prescribing various modalities and cumbersome procedure. If these procedures are followed, the clearance of goods out of customs will become next impossible. 5.It was stated that only the Central Board of Excise and Customs alone are competent to issue instructions with a view to maintain uniformity in assessment under Section 151-A of the Customs Act. Therefore, the Standing Ordrs and the note instructions issued by the third respondent are without jurisdiction. The direction issued by the third respondent is contrary to various instructions issued by the Ministry providing for the early clearance of goods out of the Port and that it is unreasonable and there was a strong motive. It is nothing but an harassment. The note instructions issued are unique and unparalleled and has never been made in the history of Customs in any other Ports in India. That the requirement that there should be an approved Chartered Engineer is an irrelevant consideration. The Chartered Engineer is also approved by the Ministry of Commerce and is an expert in the field. Further stipulation that examination of goods should be videographed and photographed in close quarters and the unedited DVD should be provided for the purpose of assessment, adjudication and the audit, exposes the arbitrariness and highhandedness of the third respondent. Such requirements only undermines the trustworthiness and competence of the officers of the Customs. It is their assertion that examination of goods by the Chartered Engineer has never been called into question. 6.It was stated that further direction to the Chartered Engineers to liaise with the original manufacturers of the subject goods to ascertain its value, year of manufacture and the residual life of goods before they furnish their reports would not serve any purpose. Further, if the other Ports in India are not having any restrictions in this regard, it is not clear as to why the Chennai Port must adopt a different yardstick. It was also stated that the note asserting that if the machine is not functional, it should be treated as e-waste further exposes the intimidator tactics besides exposing his ignorance. No importers will bring e-waste by paying an huge costs incurring the additional cost in packing, https://hcservices.ecourts.gov.in/hcservices/ transporting and remitting duties on the enhanced value besides incurring demurrage, detention and legal charges. Though the Joint Commissioner of Customs in a few cases held that the old used photocopiers and multifunction machines consisting of mostly electromechanical parts as e-waste, the CESTAT, Chennai Bench had vacated the orders of the Joint Commissioner and held that the secondhand old and used computers cannot be hazardous waste or e- waste. 7.It was further stated that the CESTAT, Bangalore having decided the issue in favour of the importers, the respondents cannot start a different procedure so as to bypass the orders passed by various courts. The respondents without any orders of the court and obtaining report from the Tamil Nadu Pollution Control Board to hold the goods as hazardous waste, it is nothing but an exercise to get over the orders of this court. There was no necessity to issue such a standing order. The Standing Order was issued on their own without any source of power. Therefore, it was prayed that this Court must set aside the Standing Order No.13 of 2011, dated 14.6.2011 and the consequent instruction in Note No.4 dated 14.6.2011 issued by the third respondent. 8.Heard the arguments of Mr.Arvind P. Datar, learned Senior Counsel leading Mr.N.Viswanathan, counsel appearing for petitioners and Mr.K.Ravi Anantha Padmanaban, learned Standing Counsel for respondents Excise Department. 9.Mr.Arvind P. Datar, learned Senior Counsel once again re- emphasised the same contentions. He also referred to a departmental clarification issued by the Central Board of Excise and Customs that the department cannot pre-determine the issue which is a matter of evidence. The department must be allowed to establish the same before the adjudicating authority. Even the Central Board of Excise and Customs' circular cannot impose limitations which are not provided in the notification and it cannot whittle down the notification. For this purpose, he placed reliance upon a judgment of the Supreme Court in TATA Teleservices Ltd. Vs. Commissioner of Customs reported in 2006 (194) E.L.T. 11(SC) = (2006) 1 SCC 746 and relied upon the following passage found in paragraph 10, which is as follows: "10.We are of the view that the reasoning of the Bombay Bench of the Tribunal as well as that of the Andhra Pradesh High Court must be affirmed and the decision of the Delhi Tribunal set aside insofar as it relates to the eligibility of LSP 340 to the benefit of the exemption notification. The Andhra Pradesh High Court was correct in coming to the conclusion that the Board had, in the impugned circular, predetermined the issue of common parlance that was a matter of evidence and should have been left to the Department to establish before the adjudicating authorities. The Bombay Bench was also correct in its conclusion that the circular sought to impose a limitation on the exemption https://hcservices.ecourts.gov.in/hcservices/ notification which the exemption notification itself did not provide. It was not open to the Board to whittle down the exemption notification in such a manner. The exemption notification merely reproduced the language of Entry 8525 20 17 and since the exemption notification merely reproduced the tariff entry, the limitation sought to be imposed by the Board would tantamount also to reading the limitation into the classification itself. Since the issue would be ultimately a question of evidence, the onus was on the Department to prove by appropriate evidence that the goods were classifiable under Entry 8525 20 19 being the residuary entry. This the Department could have done by negativing the claim of the importers that the goods were classifiable under Tariff Entry 8525 20 17 and by establishing that the imported goods could not reasonably be classified under any other head. In this particular case the onus had not been discharged by the Revenue. The only evidence on record was the opinion sought for by the Ministry of Finance itself and given by the Department of Telecommunications to the effect that the model LSP 340 was in fact covered by the phrase “cellular telephone”. Since there is no dispute that the technology used in LSP 340 and the handheld mobile phone is the same, there is no warrant to limit either the tariff entry or the exemption notification to handheld cellular phones. Neither the range nor the size would make any difference." 10.The learned Senior Counsel also referred to a judgment of the Supreme Court in Union of India Vs. Inter Continental (India) reported in 2008 (226) ELT 16 (S.C.) for contending that the department by issuing the circular subsequent to the notification cannot add a new condition to the notification, thereby restricting the scope of exemption notification or whittling it down. In doing so, the Supreme Court quoted with approval the judgment of TATA Teleservices Ltd.'s case (cited supra). The following passage found in paragraph 6 of the judgment may be usefully extracted below: “6.We entirely agree with the view taken by the High Court that the department could not, by issuing a circular subsequent to the notification, add a new condition to the notification thereby restricting the scope of the exemption notification or whittle it down.” 11.The learned Senior Counsel contended that the attempt by the third respondent is a clever way of circumventing the earlier order and only in the Port of Chennai, the importers are subjected to such an illegal treatment. 12.Per contra, Mr.K.Ravi Anantha Padmanaban, learned counsel for the respondents submitted that the Central Board of Excise and Customs had issued a circular, dated 4.7.2011 regarding https://hcservices.ecourts.gov.in/hcservices/ import of hazardous waste if allowed to dump into this Country in a big way, will be a serious threat to environment. Therefore, there is a need to adhere to the Hazardous Waste (Management, Handling and Transboundary) Rules, 2008. He referred to the following paragraphs found in the said circular which is as follows: "2.As the field formations are aware, the import and export of hazardous wastes is regulated by the Hazardous Waste (Management, Handling and Transboundary) Rules, 2008. Chapter IV of these Rules deals with import and export of hazardous wastes and Rule 13 thereof states that import of such wastes shall be allowed only for recycling, or recovery or reuse and not for disposal. Further, Rule 14 thereof provides that import and export of hazardous wastes specified in Schedule III shall be regulated in accordance with the conditions specified therein. A perusal of the said Schedule III shows that entries at A1180 and B1110 are relevant for electrical and electronic assemblies. 3.In this regard, the administrative Ministry viz. Ministry of Environment and Forests has been consulted and they have confirmed that items at A1180 of the said Schedule III relating to waste electrical and electronic assemblies or scrap containing components such as accumulators and other batteries etc. require Prior informed Consent. It is also confirmed that items at B1110 of the said Schedule III can be imported with permission from Ministry of Environment and Forests. This entry includes electrical and electronic assemblies (including printed circuit board electronic components and wires) destined for direct re-use and not for recycling or final disposal. The Ministry of Environment and Forest has also confirmed that imports of second hand computers would require the permission of that Ministry. 4.In view of the above, the Board desires that the field formations should carefully and strictly implement the provisions of Hazardous Waste (Management, Handling and Transboundary) Rules, 2008. In particular, it should be noted that all imported goods falling within the purview of entry B 1110 of Part B of Schedule III of the said Rules, indicating second hand computers, would require the permission of the Ministry of Environment and Forests for import into India. It merits mention that the field formations should also refer to Rule 17 of the said Rules that treats contravening imports as illegal traffic requiring the importer to re-export the wastes at his cost within 90 days from the date of arrival. We must ensure that India does not become a https://hcservices.ecourts.gov.in/hcservices/ destination for dumping junk electronic products. 5.These instructions may be brought the notice of all concerned by way of issuance of a suitable Public Notice/Standing Order. 6.Difficulties, if any, in implementation of these instructions may be immediately brought to the notice of the Board." 13.He also submitted that an order dated 27.7.2011 was issued by the third respondent in respect of quality of inspection conducted by the Chartered Engineers M/s.SGS India Pvt. Ltd. in Order in Original No.16901/2011. Pursuant to the enquiry it was found that M/s.SGS India Pvt. Ltd. have committed violations of provisions of public notice dated 1.9.2008 and they are not fit to continue as Chartered Engineers within the jurisdiction of Chennai Customs Zone. It was found that the company was hiring freelance Chartered Engineers and that those freelancers were not qualified for conducing inspections on secondhand machineries (Capital Goods imported through Chennai Port). In fact, they were not even aware whether the machines are e-waste or not ? These Chartered Engineers were delisted from the list of the approved Chartered Engineers. Therefore, he submitted that it is not as if the third respondent lack in power in streamlining the procedure for enlisting the Chartered Engineers and also making inspections most scientific and having documentation done in a manner which cannot be questioned in future. Hence it was submitted that there is no case for interfering with the impugned Standing Order and the consequent note instructions. 14.In the light of the rival contentions, it has to be seen whether the impugned orders call for any interference? 15.It must be noted that the Standing Order No.13/2011 only regulates the procedure for engaging the assistance of the Chartered Engineer and the duties to be performed by the said Chartered Engineer. Note No.4, dated 14.6.2011 gives guidelines for the Chartered Engineer to assess the goods which are to be imported. In paragraph No.2 of Note No.4 it was stated as follows: "2(ii)The importers are claiming that old and second hand photocopier/multifunction machines are in good working condition with sufficient residual value to meet the Policy requirements. In order to ensure that their claims are correct, the Chartered Engineer has to compulsorily test each and every machine and each and every function whenever a multifunction machine is imported. So, firstly the CE has to list out all the functions of each multifunction machine and test each of these machines and certify that each of these functions are working. In case of non-functioning of these machines, the same should also be certified by the Chartered Engineer as these machines may have to https://hcservices.ecourts.gov.in/hcservices/ be categorized as e-waste and have to be handled as per the Hazardous Waste Rules as they have to be treated as hazardous waste. The residual life of each of these machines have to be certified by the Chartered Engineer. This depends on the year of manufacture, usage, wear & tear and the general condition of the machine. It also depends on the fact that each machine at the time of manufacture is rated for certain period of healthy functioning by the original manufacturer. Therefore, the proper officer has to ensure that the Chartered Engineer shall take down all the details available with each machine and contact the original manufacturer and in consultation with them give the residual life in a scientific way." 16.The impugned Standing Orders are not public documents and they are issued with a view to the subordinate officers to utilize the assistance of the Chartered Engineers. The communication was never addressed to the petitioners who are third parties to the impugned order The impugned orders need not be orders issued in terms of Section 151-A of the Customs Act. Section 151-A of the Customs Act reads as follows: 151-A. Instructions to officers of customs.—The Board may, if it considers it necessary or expedient so to do for the purpose of uniformity in the classification of goods or with respect to the levy of duty thereon, issue such orders, instructions and directions to officers of customs as it may deem fit and such officers of customs and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the Board: Provided that no such order, instructions or directions shall be issued— (a) so as to require any such officer of customs to make a particular assessment or to dispose of a particular case in a particular manner; or (b) so as to interfere with the discretion of the Commissioner of Customs (Appeals) in the exercise of his appellate functions.] 17.It is not any ones case that the Standing Orders take cover from Section 151-A. Notwithstanding the provisions of the Act , Rules and statutory notification, in order to have the office to function on day today basis, they must be guided by appropriate guidelines. The third respondent being the authority in his Zone is entitled to lay down certain guidelines so that none of his subordinate act arbitrarily. In fact, they will be benefited by the issuance of such guidelines as it removes any arbitrariness in their obligation. Therefore, the petitioners have no locus standi to question the inter-office communication over which they have no https://hcservices.ecourts.gov.in/hcservices/ control nor they have locus standi to challenge the same. Unless and until an order is passed by the statutory authority by which they were legally injured, they cannot challenge these circulars. 18.Since the petitioners heavily relied upon the recent order of the CESTAT, Bangalore, it is necessary to look into the order to see whether any observations made in Final Order Nos.405 to 416 of 2011 would in any way impeach upon the present Standing Order. On the contrary, the following passage found in the said order will go against the petitioners company. In paragraph No.6.3, it was stated as follows: "6.3.The lower authorities have directed the appellants to get the goods examined by the Chartered Engineer which was done by appointing M/s.SGS India Pvt. Ltd. for doing the job...." 19.In paragraphs 6.6 and 6.7 of the order, it was stated as follows: "6.6.It is also seen from the factual matrix, that the Chartered Engineer who were appointed, have also clearly indicated that the imported goods in question are digital multifunctional print and copier machines as per the inspection report reproduced in para 6.3. of this order; if that be so we find that the sdaid machines cannot be called as photocopier machines as photocopier machines per se, have been specifically identifiable as photocopier machines in the explanatory notes to HSN, which we have referred as there were no other corresponding notes in Customs Tariff to come to a conclusion..... 6.7....It