2008 (6) TMI 36 - HC - Customs

Import of second-hand used photocopiers, copying assembly which are used for rendering service to importer s customers or in offices - CESTAT is legally right in holding that impugned goods are required to be treated as Capital Goods and therefore, import of the same does not required a License under the Exim Policy order of tribunal is based on Exim Policy which were in force at the relevant point of time

Summary

Issues:
Challenge to the correctness of the order passed by the Customs, Excise & Service Tax Appellate Tribunal regarding the treatment of second-hand photocopiers as capital goods and the requirement of a license for their import under the Exim Policy.

Analysis:
The appeal questions the decision of the Tribunal on whether second-hand photocopiers should be considered 'Capital Goods' and if their import necessitates a license under the Exim Policy. The appellants argue that as per the Exim Policy Circular dated 19-10-2005, certain second-hand goods, including photocopiers, require a license for import. They contend that the imported goods are not capital goods and thus should have been accompanied by a license. The failure to obtain the license renders the respondent liable for penalties, as decided by the Assessing Authority and affirmed by the first appellate authority. The Tribunal, however, set aside the assessment order based on a decision of the CESTAT, Northern Bench, New Delhi, which the appellants challenge by citing a conflicting decision of the Kerala High Court.

The High Court analyzed the legal contentions raised by the appellants, focusing on the Exim Policy Circulars issued by the Director General of Foreign Trade. The Court examined the correctness of the Tribunal's findings in light of the circulars to determine the validity of the legal questions raised in the appeal. By referencing the Exim Policy Circular dated 11-11-2003, the Court highlighted the regulations concerning the import of second-hand goods, including photocopiers, under the Exim Policy. The respondent argued that the imported photocopiers, although second-hand, were intended for the service sector and did not require a license for import as they were considered capital goods. The Tribunal concurred, emphasizing that the goods were meant for service purposes and thus exempt from the license requirement under the Exim Policy.

The Court acknowledged the conflicting decisions of various High Courts regarding the interpretation of the Exim Policy Circulars and the requirement of licenses for specific imported goods. While the Kerala High Court overturned the Northern Larger Bench decision, the High Court aligned with the latter's interpretation, emphasizing the correct application of the relevant circulars issued by the Director General of Foreign Trade. The Court concluded that the Tribunal's decision was based on the appropriate application of the circulars in force at the time of import, thereby dismissing the appeals at the admission stage.