2007 (11) TMI 482 - AT - Customs

Summary

Issues:
1. Import of medical equipment - classification as capital goods.
2. Interpretation of Foreign Trade Policy regarding import licensing requirements.
3. Confiscation of goods, imposition of redemption fine, and penalty under Customs Act.

Analysis:
1. The appellants imported "GE Spiral CT Scanner" and MRI system MRP-7000, which were challenged by the Department for not being classified as capital goods and requiring a license. The Commissioner held that the items needed a license for import and were liable for confiscation, imposing fines and penalties. The appellants contested this before the Tribunal.

2. The Revenue argued that the imported medical equipment did not qualify as capital goods under the Foreign Trade Policy, referencing Para 9.52 stating that services must earn foreign exchange to be considered capital goods. The Commissioner upheld this view, leading to the confiscation of goods and penalties. The appellants, through their Advocate, argued that the equipment fell under the definition of capital goods as per Para 9.12 of the Foreign Trade Policy, especially since they were used for medical services and less than 10 years old.

3. Upon careful consideration, the Tribunal analyzed the definition of capital goods under Para 9.12, which includes equipment required for rendering services, such as medical services. The Tribunal found that the medical equipment imported could be classified as capital goods under this definition and were exempt from licensing requirements. The reliance on Para 9.52 was deemed misplaced, as it did not mandate earning foreign exchange for services. Consequently, the Tribunal set aside the Commissioner's orders, ruling in favor of the appellants and allowing the appeals with consequential relief.