Assessment Order Need Not Contain Reference Disclosing Satisfaction On Each And Every Query: Bombay High Court

The Bombay High Court has held that it is not mandatory for assessment orders to contain reference and/or discussion to disclose its satisfaction in respect of each and every query raised.The bench of Justice K.R. Shriram and Justice Jitendra Jain has observed that since there is no discussion or finding on the issue of hazardous waste in the order, the respondent department should be taken as having accepted the petitioner's explanation.The petitioner/assessee is engaged in the import, manufacture, and supply of medical equipment. In the course of business, the petitioner also imports used hemolysis machines into India since 2008.The assessee importer used hemolysis machines for supply to the dialysis center at the hospital of respondent no. 5, i.e., Delhi Sikh Gurudwara Management Committee. The Bill of Entry contained an examination order that states, inter alia, that the Customs Department shall get concerned goods certified by a Chartered Engineer that the imported goods were not hazardous waste or e-waste. The petitioner had also imported another consignment of identical hemolysis machines via Bill of Entry No. 2536133 dated January 28, 2021. These have been cleared by the customs authorities and installed at the hospital of the respondent department. Both consignments were examined by the empaneled Chartered Engineers at the Customs, who certified that “used hemolysis machines” were not hazardous waste or e-waste. Petitioner paid duty of Rs. 6,03,736 on or about 10th February 2021.The respondent-department raised an objection via a query disallowing clearance of the said goods, alleging violation of the Hazardous and Other Wastes (Management, Handling, and Trans-Boundary Movement) Rules, 2016. The petitioner replied and explained that the rules did not prohibit the clearance of the goods. It was followed by a virtual hearing granted by the Deputy Commissioner of Customs. On or about 8th March 2021, the petitioner submitted a detailed representation to the Commissioner, Additional Commissioner of Customs, and Deputy Commissioner of Customs, reiterating that “used hemolysis machines” did not contain any hazardous or other waste as defined under the said Rules. Petitioner requested that the goods be allowed to be cleared. Petitioner submitted various certificates in support of its case.The department issued a show cause notice (SCN) under Section 124 of the Customs Act, 1962. In the show cause notice, the stand taken by the department was that the import of “used critical care medical equipment” has been prohibited under the policy condition and the provisions laid down for the import of “old and used medical equipment” under Rule 12(6) and Basel No. B-1110 of Schedule VI of the Rules. The department observed that the petitioner has therefore violated the policy condition laid down under Schedule VI of the Rules by importing the “used medical equipment." Petitioner was therefore called upon to show cause as to why the goods having declared assessable value of Rs. 50,14,653/- and applicable duty of Rs. 6,01,758/- should not be confiscated under Section 111(d) of the Customs Act, 1962, and penalty under Section 112(a)(i) should not be imposed.The petitioner submitted the detailed reply stating that “used hemolysis machines” imported are not hazardous waste or other waste and the interpretation sought to be undertaken by the respondent of the Rules was erroneous. Respondent issued the order, and the petition came to be filed.The assessee contended that the respondent has erroneously and arbitrarily interpreted and applied the Rules. The Rules only prohibit hazardous and other waste, but the goods were not waste at all but finished products. To fall under the Rules, the goods should fall under the definition of “hazardous waste” or "waste." Under Rule 3(17), “hazardous waste” means 'any waste which, by reason of characteristics such as physical, chemical, biological, reactive, toxic, flammable, explosive, or corrosive, causes danger or is likely to cause danger to health or the environment, whether alone or in contact with other waste or substances...'. Rule 3(38) defines “waste” to mean 'materials that are not products or by-products for which the generator has no further use for the purposes of production, transformation, or consumption'. Rule 3(23) defines “other wastes” to mean 'wastes specified in Part B and Part D of Schedule III for import or export and includes all such waste generated indigenously within the country'. For an imported product to be prohibited, the product first has to be "waste."Since what is imported is “used hemolysis machines," it cannot, by any stretch of imagination, be classified as “hazardous waste” or even "waste.”.The department contended that the petitioner has the alternative remedy of filing an appeal before the Commissioner (Appeals) under Section 128 and has to be exhausted. Rule 12(6) s prohibits importation of “used critical care medical equipment” for re-use, and...

Assessment Order Need Not Contain Reference Disclosing Satisfaction On Each And Every Query: Bombay High Court

Mariya Paliwala

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