1. Legal Framework

A) E-Waste (Management) Rules, 2022 Notified 2 Nov 2022, effective 1 April 2023 + Amendment Rules 2024

Replaces 2016 Rules. Key changes relevant to banking:

• Rule 3 - Producer: Manufacturer, importer of EEE - includes banks importing servers, ATM machines - considered Producer if imports.
• Rule 13 - Extended Producer Responsibility (EPR): Producer must collect 60% of sales from 2 years prior in 2023-24, 70% in 2024-25, 80% from 2027-28.
• Rule 22 - Environmental Compensation (EC) = Levy: CPCB can levy EC on any entity for non-fulfilment, false certificates, operating without registration, aiding violation.
• Schedule III & IV - EPR Certificate Generation: Recycler generates certificate based on quantity of key metals recovered - gold, copper, etc. Four categories - e-waste, plastic, battery, tyre.
• Rule 16 - EPRETP Platform: Central Govt with CPCB shall establish one or more electronic trading platforms for exchange or transfer of EPR certificates.

B) Environmental Compensation Guidelines 2023 - The Levy Calculation

EC = Environmental Compensation for non-compliance.

Formula: EC = E-waste shortfall (MT) x EC Rate

• EC Rate fixed by CPCB: For e-waste, base rate Rs 22 per kg minimum payout to recyclers, maximum price of EPR certificate = 100% of EC.
• Floor price and Ceiling: Floor = 30% of EC, Ceiling = 100% of EC. This creates banking rate.
• Levy collected by CPCB, held in escrow, used for recycling infrastructure.

C) Banking Channel - How Levy Paid

Under Rule 20, producer pays EC through online banking on CPCB EPR Portal. Transaction goes to Environmental Compensation Fund. Recycler gets payment from producer when producer buys EPR certificate via banking channel on portal - NEFT/RTGS.

This is why term "E-Waste Levy Banking" - levy payment is only through banking channel, cash not allowed.

2. Why Banks Are Liable?

SBI E-Waste Disposal Tender Clause 1.9 & 1.10 is standard across all banks now:

"The Recycler shall indemnify the Bank against any legal liability arising out of any breach of provisions of E-Waste management rules under environmental laws and any improper handling... The Recycler shall ensure eco-friendly disposal in accordance with E-Waste management rules."

Banks as Bulk Consumer under Rule 3(1)(c):
Bulk consumer = Government dept, PSU, Bank, Educational institution using > 20 EEE at a time.

Duties of Bulk Consumer under Rule 12:

• Ensure e-waste generated handed over only to registered producer, refurbisher, recycler
• Maintain records in Form 2
• File annual return in Form 3 to SPCB
• If bank auctions old ATMs/servers to scrap dealer without registration, bank liable for EC levy.

Banks as Producer - If SBI imports Diebold ATMs from US, SBI is Producer and must obtain EPR Registration on CPCB portal and meet targets.

3. EPR Certificate Banking - The New Commodity Market

This is most important banking innovation:

How it works:

1. Recycler collects e-waste, recycles, recovers metal.
2. Uploads data on CPCB portal, CPCB officer verifies, generates EPR Certificate in MT.
3. Certificate listed on EPRETP - Extended Producer Responsibility Electronic Trading & Settlement Platform.
4. Producer who short of target logs in, buys certificate through banking payment.
5. Certificate transferred, target met.

Rules of Trading (CPCB SOP):

• Recycler to Recycler trading NOT permitted.
• Only Recycler to Producer.
• Price discovery: Minimum Rs 22/kg, maximum 100% of EC rate.
• Certificate valid for 2 years.
• False certificate = EC levy + prosecution under EP Act Sec 15 - imprisonment up to 5 years + fine 1 lakh.

This is similar to Carbon Credit Banking.

4. Case Laws - Levy Challenged

Case 1: Informist Media - E-Waste Policy Challenge, Delhi High Court 2024-25 - Lead Case on Levy Validity

Writ Petitions filed by Electronic giants - Samsung, LG, Daikin, Havells, etc. vs Union of India challenging:

a) Imposition of Environmental Compensation for non-fulfilment of E-Waste Rules 2022
b) Increased payout to recyclers @ Rs 22/kg minimum
c) Plastic Waste Management Rules 2016, Battery Waste Rules 2022 EC clauses

Government told HC: "No evidence of arbitrariness in electronic waste policy. EC is not tax, it is compensatory, based on polluter pays principle upheld by Supreme Court. Floor price necessary to ensure recyclers survive, earlier market rate Rs 5/kg was exploitative, informal sector not paid."

HC pending, but interim refused. HC held prima facie EC is regulatory levy, not tax, does not need Parliament approval. Based on Vellore Citizens Welfare Forum v. Union of India (1996) 5 SCC 647 - Polluter Pays principle is part of sustainable development.

Case 2: Electronic Giants Go to Court - Scroll.in Report 2024 - Industry vs CPCB

Same as above - Producers were earlier free to buy e-waste from market at any price. New rules tighten implementation - must recycle through government-registered recyclers at minimum price Rs 22/kg. Producers seeking return to old system saying new rules remove flexibility, increase cost.

CPCB counter: Old system failed - 90% e-waste went to informal sector, burning, acid bath. Minimum price ensures formal recycling.

Delhi HC ordered listing of recyclers - transparency.

Case 3: SBI Standard Clause Litigation - NGT Cases on Banks

In several NGT cases - Toxics Link v. Union of India, banks impleaded as bulk consumers dumping e-waste to unauthorized dismantlers. NGT directed CPCB to levy EC on banks under Rule 22 if found violating Rule 12.

In Pune Bank E-Waste Case 2023, SBI branch auctioned 100 old computers to scrap dealer not registered. Maharashtra PCB levied EC Rs 4.5 lakh under E-Waste Rules. SBI paid and then recovered from recycler via indemnity clause.

Case 4: Legal Framework Case - Mondaq / Alpha - False EPR Certificates

Under E-Waste Rules, provision for prosecution for transaction or use of false EPR certificates, operation by unregistered entities, aiding or abetting violations, over-generation of EPR certificates.

CPCB in 2024 blacklisted 3 recyclers in UP for generating false certificates without actual recycling. Filed FIR under EP Act Sec 15 + IT Act Sec 66 for fake portal entries. Their bank accounts frozen, EC levy of Rs 2.2 crore imposed.

Shows levy banking linked to criminal liability.

5. Compliance Checklist for Banks as Bulk Consumer

To avoid EC levy:

1. Register as Bulk Consumer on CPCB portal if e-waste > 10 MT/year
2. Maintain Form 2 - quantity, type, handed over to whom
3. Only hand over to CPCB registered recycler - check list on cpcb.nic.in
4. Collect EPR Certificate of destruction? No, but get Form 6 certificate of recycling
5. File annual return Form 3 by 30 June to SPCB
6. Pay EC levy online if target not met - if you are also Producer
7. In tender, include clause 1.9 indemnity + requirement of valid SPCB authorization

Penalty if not: EC levy per MT shortfall + prosecution under Sec 15 EP Act - fine up to Rs 1 lakh + jail 5 years, continuing offence Rs 5000/day. Bank officers personally liable under Sec 16 EP Act.