ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 01.11.2025
Understanding the Legal Landscape of Importing Second-Hand Digital Multifunction Devices in India
This Article has been written by Shri Ravi Shekhar Jha, Advocate based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.
The importation of second-hand Digital Multifunction Devices (MFDs) has been a contentious issue in India, with various legal and regulatory challenges faced by importers. β Recent judgments from the High Court of Madras and the Supreme Court of India have provided clarity on the matter, particularly regarding the provisional release of these goods under Section 110A of the Customs Act, 1962. β
The Background
MFDs, which are highly specialized equipment used for printing, copying, and scanning, have been subject to scrutiny by the Customs Department. β The primary concerns revolve around their categorization under import/export regulations, which classify items as prohibited, restricted, or freely importable. β While importers argue that MFDs are freely importable, the Customs Department and other government bodies, such as the Ministry of Electronics and Information Technology (MEITY) and the Ministry of Environment, Forest and Climate Change (MoEFCC), have raised objections, claiming that these goods are restricted or prohibited.
Key Legal Developments
Provisional Release Under Section 110A of the Customs Act β
Section 110A allows for the provisional release of seized goods during investigation or adjudication. β This provision aims to prevent financial losses and operational delays for importers while ensuring that the Customs Department can continue its investigation. β Importers are required to execute a bond or provide a bank guarantee to cover potential duties, fines, or penalties. β
Madras High Court Judgments β
In a landmark judgment dated 10th July 2025 (WP No. 29418 of 2024), the Madras High Court ruled in favor of importers, stating that MFDs qualify as Highly Specialized Equipment (HSE) under Clause 8 of the Compulsory Registration Order (CRO), 2021. The court emphasized that MFDs weighing more than 80 kg and imported in less than 100 units per model per year are exempt from the application of CRO, 2021. β The court also clarified that the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016, do not prohibit the import of MFDs, provided the required documents are submitted to the Customs Authorities.
Tanish Enterprises vs Commissioner of Customs– WP No. 29418 of 2024
The case involves importers seeking provisional release of second-hand digital multifunction devices (MFDs) detained by the Customs Department, which claimed the goods were restricted or prohibited. β The petitioners argued that MFDs are freely importable as Highly Specialized Equipment (HSE) under the Compulsory Registration Order (CRO), 2021, and Foreign Trade Policy (FTP), 2023. The court ruled in favor of the petitioners, directing the Customs Department to provisionally release the goods under Section 110A of the Customs Act, 1962, subject to conditions, while leaving the final adjudication open. β
Key Points:
- Issue: Whether second-hand MFDs are freely importable or restricted items requiring BIS certification and DGFT authorization. β
- Petitioners’ Claim: MFDs qualify as Highly Specialized Equipment (HSE) and are exempt from restrictions under CRO, 2021, and FTP, 2023. β
- Respondents’ Claim: MFDs are restricted or prohibited items requiring compliance with BIS, DGFT, and environmental regulations. β
- Court’s Ruling: Directed provisional release of MFDs under Section 110A of the Customs Act, subject to conditions, and left final adjudication open. β
- Precedents: Previous rulings by the Madras High Court, Telangana High Court, and Supreme Court upheld the free importability of MFDs. β
- Provisional Release: Allows importers to access goods while investigations continue, preventing financial losses due to detention. β
βHD Printers vs Commissioner of Customs- Writ Petition No.39010 of 2025 and W.M.P.No.43694 of 2025
The case involves M/s. HD Printers, represented by its proprietor Mr. Jagan Kumar, filing a writ petition under Article 226 of the Constitution of India. The petitioner sought a Writ of Mandamus directing the Customs Department to allow the provisional release of 120 units of second-hand digital multifunction print and copying machines. β These machines were imported and submitted for clearance with the required documentation, including a report from a DGFT-approved Chartered Engineer. β The Customs Department had initially refused to release the goods, citing restrictions under the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 (HOW Rules). β However, the court referred to a previous judgment (W.P.No.29418 of 2024) and ruled that the case was covered under the earlier order, which allowed provisional release of similar goods. β The court directed the Customs Department to release the goods provisionally, subject to conditions and final adjudication. β
Key Points:
- Petitioner: M/s. HD Printers. β
- Respondents: Commissioner, Additional Commissioner, and Deputy Commissioner of Customs, Chennai. β
- Issue: Provisional release of 120 second-hand digital multifunction print and copying machines. β
- Legal Basis: Article 226 of the Constitution of India and Section 110A of the Customs Act, 1962. β
- Customs Department’s Argument: Machines classified as “other wastes” under HOW Rules, 2016, requiring prior permission for import. β
- Court’s Decision: Directed provisional release of goods within four weeks, subject to conditions and final adjudication.
- Reference Case: W.P.No.29418 of 2024, which allowed provisional release of similar goods.
- Provisional Release Conditions: Execution of a simple bond for 100% of the enhanced value and payment of applicable GST.
- Final Adjudication: Customs Department retains the right to reverse the provisional release order during final adjudication. β
Maruti Enterprises vs Commissioner of Customs- WP No. 35987 of 2025
The case involves M/s. Maruti Enterprises, represented by its proprietor Gautam Sharma, filing a writ petition under Article 226 of the Constitution of India for the issuance of a writ of mandamus. β The petitioner seeks the provisional release of two consignments of second-hand digital multifunction print and copying machines (MFDs) imported by them. β The petitioner claims that the goods were examined by a DGFT-approved Chartered Engineer, who provided a report to the Customs Officer. β Despite this, the Customs Department proceeded to forfeit the goods. β The petitioner argues that the issue is covered by a previous order of the Madras High Court, which allowed the provisional release of similar goods under Section 110A of the Customs Act, 1962.
The court referred to the earlier judgment, which clarified that MFDs are not prohibited items under the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016, and are freely importable. β The court directed the Customs Department to grant provisional release of the goods within four weeks, subject to conditions as per the Customs Act, 1962. β The provisional release is subject to final adjudication, and the Customs Department retains the authority to reverse the provisional release order during the final adjudication process. β
Key Points:
- Petitioner: M/s. Maruti Enterprises. β
- Respondents: Commissioner, Additional Commissioner, and Deputy Commissioner of Customs, Chennai. β
- Issue: Provisional release of two consignments of second-hand digital multifunction print and copying machines. β
- Legal Basis: Section 110A of the Customs Act, 1962, and Article 226 of the Constitution of India. β
- Court’s Reference: Previous Madras High Court order in WP No. β 29418 of 2024, which allowed provisional release of similar goods.
- Court’s Decision: Directed the Customs Department to grant provisional release within four weeks, subject to conditions under the Customs Act, 1962. β
- Provisional Release Conditions: Subject to final adjudication, and the Customs Department may reverse the provisional release order during the final adjudication process. β
- No Costs: The court disposed of the writ petition without imposing any costs. β
Supreme Court Endorsement β
The Supreme Court upheld the decision of the Telangana High Court, which had granted provisional release of MFDs under similar circumstances. β This decision reinforced the stance that MFDs are freely importable and eligible for provisional release. β
Atul Commodities Pvt. Ltd. & Ors. vs Commissioner of Customs- Civil Appeal Nos. 5259/2007, 3226/2007 and 3977/2007
The case revolves around whether second-hand photocopying machines imported by M/s Atul Commodities Pvt. β Ltd. in January 2005 were “freely importable” as capital goods under the Foreign Trade Policy (FTP) 2004-09 or required a license for import. β The Kerala High Court had ruled that such imports required a license, relying on policy circulars issued by the Directorate General of Foreign Trade (DGFT). β However, the Supreme Court held that the DGFT circulars were clarificatory and not amendatory, and only the Central Government had the authority to amend the FTP under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992. β The Court ruled that second-hand photocopying machines were “capital goods” and were freely importable under the FTP 2004-09. β The Supreme Court allowed the appeal of M/s Atul Commodities Pvt. Ltd. and dismissed the appeals filed by the Department. β
Key Points:
- Issue: Whether second-hand photocopying machines imported in January 2005 were freely importable as “capital goods” or required a license under the FTP 2004-09. β
- High Court Decision: Kerala High Court ruled that the imports required a license, relying on DGFT circulars.
- Supreme Court Decision: The Supreme Court held that DGFT circulars were clarificatory, not amendatory, and only the Central Government could amend the FTP under Section 5 of the Foreign Trade Act, 1992. β
- Outcome: The Supreme Court ruled that second-hand photocopying machines were “capital goods” and were freely importable under FTP 2004-09. β The judgment of the Kerala High Court was set aside, and the Tribunal’s decision favoring M/s Atul Commodities Pvt. β Ltd. was restored.
- Final Verdict: M/s Atul Commodities Pvt. β Ltd. won the case, and the Department’s appeals were dismissed. β
Recent Judgments
Subsequent cases, such as WP No. β 39010 of 2025 and WP No. 35987 of 2025, have followed the precedent set by the Madras High Court and the Supreme Court. These judgments have consistently directed the Customs Department to grant provisional release of MFDs, subject to conditions such as the execution of a bond and payment of applicable GST.
Notification on Special Economic Zones (Fourth Amendment) Rules, 2024 β
The document is a notification issued by the Ministry of Commerce and Industry, Department of Commerce, dated June 20, 2024. β It announces the Special Economic Zones (Fourth Amendment) Rules, 2024, which amend the Special Economic Zones Rules, 2006. β The amendments focus on rule 18, sub-rule (4), clause (d), specifically modifying the provisions related to reconditioning, repair, and re-engineering activities within Special Economic Zones (SEZs). β
Key changes include:
- Reconditioning, repair, and re-engineering are permitted under the condition that exports must have a one-to-one correlation with imports, and all processed products must be exported. β
- Non-hazardous metal and metal-alloy wastes generated from these activities may be sold in the Domestic Tariff Area (DTA) under certain conditions:
- The waste must be in metallic, non-dispersible form without contaminants listed under Basel No. β B1010 in Part D of Schedule III of the Hazardous and Other Wastes Rules, 2016. β
- Sale in the DTA is subject to payment of applicable customs duty and treated as import. β
- Such sales are allowed only to actual users or traders authorized by the State Pollution Control Board on a one-time basis. β
- Verification of specified documents by Customs Authority is required. β
The rules come into effect upon publication in the Official Gazette. β The notification also references previous amendments to the principal rules, last updated on June 6, 2024. β
Key Takeaways for Importers
Provisional Release: Importers can seek provisional release of detained goods under Section 110A of the Customs Act, provided they fulfill the conditions set by the Customs Department. β
Exemption Criteria: MFDs that meet the criteria for HSE under Clause 8 of CRO, 2021, are exempt from the application of the order. β Importers must ensure their goods weigh more than 80 kg and are imported in less than 100 units per model per year. β
Compliance with HOW Rules: Importers must submit the required documents as per Schedule VIII of the HOW Rules to the Customs Authorities at the time of import. β
Final Adjudication: Provisional release does not guarantee the final outcome. β The Customs Department retains the authority to reverse the provisional release order during final adjudication. β
Conclusion
The legal clarity provided by the courts is a significant relief for importers of second-hand MFDs. β However, it is crucial for importers to ensure compliance with all regulatory requirements and maintain proper documentation to avoid complications during the import process. As the legal landscape continues to evolve, staying updated on relevant judgments and notifications is essential for smooth business operations.
Source: Supreme Court, Madras High Court
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