2016 (6) TMI 908 - AT - Customs

Restriction on Import of second hand goods - import of second hand video cameras - confiscation - Foreign Trade Policy - FTP para 2.17 that it deals generally with second hand goods. Para 2.17 has two parts viz. second hand capital goods group and all other second hand goods. In the free category the second sub-clause deals with all other second hand capital goods - According to the appellant the imported goods would fall within the definition of capital goods. Para 2.33 of the HBP Vol.I lays down that import of second hand capital goods including refurbished / reconditioned spares except those of personal computers / laptops shall be allowed freely. Held that - The appellants vide their letter dt. 29/08/2012 has submitted to the original authority that the video cameras were imported for the purpose of renting them out to those companies which make movies television serials and documentary. That the equipment imported by them is their basic infrastructure and machinery for revenue generation. The authorities below have reached the conclusion that the activities proposed to be carried out by the appellant with these goods (cameras) are not covered within the scope of the definition of services as mentioned in para 9.52 of FTP. That therefore they would not fall into the category of capital goods. It is to be noted that the second para of the definition of capital goods say that it includes goods used for service sector. The description of goods as per Bill of Entry is digital still image video cameras transmission apparatus for radio broadcasting or television (used equipment) . The authorities below have assumed without any basis that the activities proposed to be carried out using the imported goods cannot earn any foreign exchange. The goods fall into the category of second hand capital goods. - the confiscation of the goods is not legal and proper - Decided in favor of appellant.

Summary

Issues:
1. Import of second hand digital cameras.
2. Confiscation of goods by the Department.
3. Interpretation of import policy on second hand goods.
4. Definition of capital goods under Foreign Trade Policy.
5. Applicability of para 2.33 of the Handbook of Procedure.
6. Arguments regarding the categorization of imported goods.
7. Compliance with the definition of services under FTP.
8. Comparison with previous judgments on similar cases.
9. Decision on whether the goods qualify as second hand capital goods.
10. Legality of the confiscation and appeal outcome.

Issue 1: Import of Second Hand Digital Cameras
The appellant imported two digital cameras labeled as Red-one 7529 Mysterium and Red-one 5596, which were considered used/second hand equipment by the Department.

Issue 2: Confiscation of Goods
The Department confiscated the cameras and imposed a redemption fine and penalty under the Customs Act, 1962, leading to the appeal challenging the confiscation.

Issue 3: Interpretation of Import Policy on Second Hand Goods
The appellant argued that the imported goods fell under the category of all other second hand capital goods, which are freely importable as per the Foreign Trade Policy (FTP) and Handbook of Procedure (HBP).

Issue 4: Definition of Capital Goods under FTP
The definition of capital goods under para 9.12 of the FTP includes machinery, equipment, and accessories required for production or services, with specific mention of various types of equipment.

Issue 5: Applicability of Para 2.33 of HBP
Para 2.33 of the HBP allows free import of second hand capital goods except for personal computers/laptops, without any restriction on other second hand capital goods.

Issue 6: Categorization of Imported Goods
The appellant contended that the imported cameras qualified as second hand capital goods based on the provisions of FTP and HBP, emphasizing the distinction between second hand goods and second hand capital goods.

Issue 7: Compliance with Definition of Services under FTP
The Department argued that the activities proposed by the appellant did not align with the definition of services under FTP, questioning the categorization of the imported goods as capital goods.

Issue 8: Comparison with Previous Judgments
Reference was made to a judgment by the High Court of Madras regarding the import of second hand photocopiers, highlighting the interpretation of the import policy on second hand capital goods.

Issue 9: Decision on Categorization of Goods
The Tribunal analyzed the arguments presented and concluded that the imported cameras fell under the category of second hand capital goods, contrary to the Department's assessment.

Issue 10: Legality of Confiscation and Appeal Outcome
The Tribunal set aside the impugned order, allowing the appeal and providing consequential reliefs, if any, based on the finding that the confiscation of the goods was not legally justified.

This detailed analysis of the judgment highlights the key issues, arguments, and the Tribunal's decision regarding the import of second hand digital cameras and the interpretation of relevant provisions under the Foreign Trade Policy and Handbook of Procedure.