2005 (2) TMI 620 - AT - Customs

Summary

Issues:
1. Challenge to the refusal of clearance of imported goods as capital goods under OIA No. 148/2004-Cus.(B).
2. Challenge to the confiscation order under Section 111(d) of the Customs Act.
3. Challenge to the enhancement of valuation based on Internet prices.

Issue 1: The appellants contested the denial of clearance for Polycom Viewstation FX PAL camera as capital goods, arguing that it should be treated similarly to office equipment like photocopying machines and computers. They relied on DGFT Policy Circular No. 16 (RE-2002)/2002-2007 to support their claim that second-hand capital goods for the service industry are permissible for import. Citing the definition of 'Capital Goods' from the Handbook of Import Export Procedure, they emphasized that the item was meant for rendering services, akin to the Tribunal's ruling on photocopier machines. They also referenced previous cases where video conferencing equipment was considered capital goods. The Tribunal agreed with the appellants, holding that the item should be treated as capital goods for service industry use and is freely importable.

Issue 2: The challenge to the confiscation order under Section 111(d) of the Customs Act was based on the argument that the import was not covered by a valid license or permission. The appellants contended that second-hand machinery for the service industry falls under the Policy, citing relevant provisions from the Handbook of Import Export Procedure. They referenced a previous case where photocopier machines were accepted as capital goods for services, not consumer goods. The Tribunal agreed with the appellants, ruling that the imported item should be considered akin to photocopying machines and eligible for unrestricted import.

Issue 3: The appellants challenged the enhancement of valuation based on Internet prices, citing previous cases where similar valuation practices were rejected. The Tribunal noted that the authorities had solely relied on Internet prices to enhance the value, contrary to the requirement to accept transaction value in the absence of contemporaneous evidence of higher prices. Citing a Supreme Court judgment, the Tribunal rejected the adoption of a higher value without evidence of similar items imported at higher prices. Consequently, the appeal was allowed, and any consequential relief was granted.