Full Judgment
2. The question for consideration in this appeal is the liability to confiscation under Clause (d) of Section 111 of the Act of 400 cordless telephones imported in August 2001 by Dawar Radios, the appellant.
3. The notice issued to the importer proposed enhancement of the value declared of these telephones and confiscation under Clause (d) of Section 111 on the ground that the goods were not imported from their authorised dealer or distributor or manufacturers and on the further ground that these telephones required permissions from the Department of Telecommunications. After considering the submissions made by the importer, the Commissioner, in the order impugned before us, has ordered enhancement of the value and ordered confiscation of the goods under Clause (d) of Section 111 of the Act, but extended an option to the importer to redeem them on payment of fine of Rs. 3,45,000/-. He has also imposed a penalty of Rs. 50,000/- on the importer. The reason advanced for this action is that the use of the telephones was in violation of the conditions of the Indian Wireless Telegraphy Act, 1933 and their import required specific permission of the Department of Telecommunications.
4. In order to consider the contention of the counsel for the appellant that there is nothing in law prohibiting import of these goods, the matter was adjourned on 18.2.2003 to enable the department to obtain the relevant provision of law which prohibits import of these goods, and further adjourned to the request of the departmental representative to 7th April, 24th April and finally to today. The notice itself did not cite any provision of law but refers to paragraph 7 of page 135 of "Swamy's Treatise on Telephone Rules." Paragraph 7 of the book reproduces a circular dated 8.8.1991 presumably of the Department of Telecommunications. This circular says that no licence will be required by the user for installing indigenously manufactured cordless telephones having type approval certificate from the Department of Telecommunications. It says that procedure prescribed in office letter dated 21.6.1985 will apply with regard to cordless telephones "whether indigenous or imported not having type approval of the Department of Telecommunications." The letter of 21.6.1985 says that it has been decided to permit the use of cordless telephones which is an attachment to the subscriber's telephone with a range not exceeding 100 metres.
5. These letters however do not speak of anything relating to import of such goods. The departmental representative has subsequently produced a copy of a letter dated 1.6.2001 of the Mahanagar Telephone Nigam Ltd. (MTNL), Mumbai, to the Customs authorities in which it has been stated that this company "allows only Telecom Engineering Centre (TEC) approved models for use with prior permissions. Interface approval certificate from TEC for each such model is required to be submitted by the customer. If such certificate is not available, such models are not permitted to use." This letter again is no evidence of prohibition of the import of the goods. This is only an indication that MTNL, in its capacity as a service provider, has placed certain restrictions with regard to the use of telephones on its customers. These cannot be considered to be prohibition of the import.
6. The ITC HS Classification 2001 edition indicates cordless telephones in two headings, one in heading 85.70 and the other is in heading 85.25. The first heading is essentially for line telephony and telegraphy apparatus for wireless telephone and telegraphy apparatus.
In each of these headings, cordless telephones are specifically indicated to be free for import. We do not find anything in the Indian Telegraph Act, 1885 or the Indian Wireless Telegraphy Act, 1933, which confers a power upon any authority to prohibit import of such goods. It has therefore to be concluded that the import of these goods was not in contravention of any provision contained in, or imposed under, any law.
Confiscation of goods under Clause (d) of Section 11 and penalty imposed cannot be sustained.