In a significant ruling, the Bombay High Court has directed the Customs Department to refund Rs. 5 lakhs, upon application, to an importer, who was penalised for alleged mis-declaration of assessable value rather than for the import of prohibited goods. The case revolves around the petitioner, engaged in importing, manufacturing, and supplying medical equipment, including used hemolysis machines, since 2008.
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The petitioner had supplied these used hemolysis machines to the dialysis center at the hospital managed by the Delhi Sikh Gurudwara Management Committee. As per the Bill of Entry, the Customs Department was required to certify through a Chartered Engineer that these machines were not hazardous waste or e-waste.
Earlier, another consignment of identical hemolysis machines, imported via Bill of Entry No. 2536133 dated January 28, 2021, had been cleared by customs and installed at the hospital. Both consignments were certified by Chartered Engineers as non-hazardous. The petitioner paid a duty of Rs. 6,03,736 on February 10, 2021.
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However, the Customs Department later raised objections, alleging violations of the Hazardous and Other Wastes (Management, Handling, and Trans-Boundary Movement) Rules, 2016, and issued a show cause notice under Section 124 of the Customs Act, 1962. The department claimed that the import of “used critical care medical equipment” was prohibited under the said rules, and accused the petitioner of violating these policy conditions.
The petitioner responded with detailed explanations and representations, asserting that the used hemolysis machines did not qualify as hazardous waste or other waste under the rules. They submitted various supporting certificates and sought clearance of the goods.
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The Customs Department contended that the petitioner should have pursued an alternative remedy by appealing to the Commissioner (Appeals) under Section 128. They argued that the importation of used critical care medical equipment for reuse was considered hazardous waste under Rule 12(6) and Schedule VI of the rules. Additionally, the department claimed the petitioner had mis-declared the value of the goods.
The court, however, noted that the show cause notice did not specifically address mis-declaration of assessable value. Instead, it focused on the alleged prohibition of the imported goods.
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The Division Bench emphasized that once a query is raised during assessment and the assessee responds, it is deemed to have been considered and accepted by the assessing officer if not expressly addressed.
Justice K.R. Shriram and Justice Jitendra Jain observed that the Customs Department did not provide a discussion or finding on the issue of hazardous waste in their order, effectively accepting the petitioner’s explanation.
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The Bombay High Court thus set aside the order and directed the petitioner to apply for a refund of the Rs. 5 lakhs deposited as a redemption fine.
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