2002 (1) TMI 568 - AT - Customs

Summary

Issues Involved:
1. Classification of imported goods as consumer goods.
2. Requirement of an import license for the imported goods.
3. Confiscation of goods under Section 111(d) of the Customs Act, 1962.
4. Imposition of penalty under Section 112 of the Customs Act, 1962.
5. Interpretation of EXIM Policy 1992-97.

Detailed Analysis:

1. Classification of Imported Goods as Consumer Goods:
The appellants imported items including Spray Gun, Cloth Cutting Machine, Thread Cutter, Pins, Needles, and Foot Massager. The authorities initially classified these items as consumer goods based on their ability to "satisfy human needs without further processing." The Commissioner (Appeals) supported this classification, stating that the goods were in the nature of consumer goods and thus required a valid import license. However, upon review, it was determined that items like the Spray Gun, Cloth Cutting Machine, Pins, Thread Cutter, and Needles are used in industrial processes and do not directly satisfy human needs. Consequently, these items were reclassified as not being consumer goods.

2. Requirement of an Import License for the Imported Goods:
The initial ruling required an import license for the goods under Para 156A of the EXIM Policy 1992-97. The Commissioner (Appeals) upheld this requirement, noting that the appellants, being traders and not manufacturers, could not import these goods without a license. However, the appellate tribunal found that the EXIM Policy (Paras 22 and 23) allows the import of capital goods, raw materials, and other items without restriction, unless specified otherwise. Thus, the tribunal concluded that the goods in question did not require an import license.

3. Confiscation of Goods under Section 111(d) of the Customs Act, 1962:
The lower authorities ordered the confiscation of the goods under Section 111(d) of the Customs Act, 1962, due to the absence of an import license. However, the appellate tribunal found that the goods were incorrectly classified as consumer goods and did not require a license. Therefore, the confiscation order was deemed unjustified and was set aside.

4. Imposition of Penalty under Section 112 of the Customs Act, 1962:
A penalty of Rs. 15,000 was imposed under Section 112 of the Customs Act, 1962, due to the alleged illegal import of goods without a valid license. The appellate tribunal, however, found that since the goods were not liable for confiscation, the imposition of the penalty was also unwarranted and thus set aside the penalty.

5. Interpretation of EXIM Policy 1992-97:
The tribunal interpreted the EXIM Policy to determine whether the imported goods fell under the category of consumer goods. It was concluded that the goods, except for the Foot Massager, were industrial tools and accessories, not consumer goods. The Foot Massager was considered a medical instrument used in foot reflexology treatments, thus not requiring a license. The tribunal emphasized that "human needs" should be interpreted in their ordinary meaning, excluding industrial or commercial needs.

Conclusion:
The appeal was allowed, and the orders of the lower authorities were set aside. The tribunal found that the imported goods were not consumer goods and did not require an import license. Consequently, the confiscation and penalty imposed were overturned.