2007 (5) TMI 421 - AT - Customs

Summary

Issues:
1. Whether the imported goods are considered second-hand capital goods under the Import Policy.
2. Whether the enhancement of the value of the imported goods indicated in the corrigendum is justified.

Analysis:

Issue 1:
The appeal was filed against an Order-in-Original passed by the Commissioner of Customs, Bangalore, regarding the import of networking equipment declared as used capital goods. The Commissioner held that the goods were not freely importable as capital goods and required a license, leading to confiscation under Section 111(d) of the Customs Act 1962. The appellants contended that the goods were indeed capital goods under the Import Policy. The goods imported included networking and teleconferencing equipment to be used in a Wide Area Network (WAN) for providing technical support and consultancy services. The Tribunal analyzed the definition of capital goods under the Foreign Trade Policy 2004-2009, which includes equipment required for rendering services. After reviewing the technical literature provided, the Tribunal concluded that the networking and teleconferencing equipment imported should be considered as capital goods used in the service industry of the appellant. The Tribunal disagreed with the Commissioner's comparison of this equipment to second-hand computers like PCs and laptops. Therefore, the impugned goods were deemed freely importable as capital goods, and the confiscation and fine were set aside.

Issue 2:
Regarding the enhancement of the value of the imported goods through a corrigendum, the Tribunal found the procedure irregular. The Adjudicating Authority did not follow the proper valuation process, as no Show Cause Notice was issued regarding the declared value. The Tribunal emphasized that unless specific circumstances listed in the Customs Valuation Rules exist, the transaction value cannot be rejected. Consequently, the Tribunal set aside the enhancement of the goods' value. In conclusion, the impugned order and corrigendum were overturned, and the appeal was allowed with consequential relief.

This comprehensive analysis highlights the key aspects of the judgment, addressing the issues raised in the appeal and providing a detailed examination of the legal reasoning behind the Tribunal's decision.