2006 (3) TMI 436 - AT - Customs

Summary

Issues:
1. Import of second-hand Photocopiers without a license.
2. Confiscation of goods, imposition of penalty, and demand for differential duty.
3. Application for waiver of pre-deposit and stay of recovery regarding the penalty amount.

Analysis:

Issue 1: Import of second-hand Photocopiers without a license
The appellants imported second-hand Photocopiers without an import license and filed a Bill of Entry for clearance. The Commissioner of Customs confiscated the goods for lack of a license and imposed a penalty under Section 112 of the Customs Act. The appellants argued that second-hand Photocopiers were capital goods and did not require a license for import at the material time. They relied on a Tribunal's Larger Bench decision which held second-hand Photocopiers to be capital goods, not consumer goods. The High Court affirmed this finding. Additionally, an amendment to the Foreign Trade Policy clarified that second-hand Photocopier machines were recognized as capital goods. The Tribunal found that the confiscation order was not sustainable as second-hand capital goods did not require a license for import at the time of filing the Bill of Entry.

Issue 2: Confiscation of goods, penalty imposition, and demand for differential duty
The Commissioner of Customs confiscated the goods, imposed a penalty of Rs. 6 lakhs, and demanded differential duty. The appellants paid the differential duty along with a cash deposit and a bank guarantee at the time of provisional clearance of the goods. The Tribunal, after considering the legal position that second-hand Photocopiers were capital goods and did not require a license for import, concluded that the confiscation order by the Commissioner was not sustainable. Therefore, the appellants were granted a waiver of pre-deposit and a stay of recovery regarding the penalty amount.

Issue 3: Application for waiver of pre-deposit and stay of recovery
The appellants applied for a waiver of pre-deposit and a stay of recovery concerning the penalty amount imposed by the Commissioner. The Tribunal, based on the legal analysis that second-hand Photocopiers were considered capital goods and did not require a license for import at the relevant time, granted the waiver and stay of recovery in favor of the appellants. This decision was supported by the Tribunal's Larger Bench decision and the amendment to the Foreign Trade Policy recognizing second-hand Photocopiers as capital goods.

This judgment highlights the importance of legal interpretations, precedents, and amendments in determining the classification of goods for import purposes and the consequences of non-compliance with licensing requirements under the Customs Act.