2016 (7) TMI 222 - AT - Customs

Import of second hand photocopier machines - restricted goods - requirement of license to import - Held that - second hand photocopiers are capital goods and no licence is required for importing the same under the EXIM Policy. - there can only be one conclusion that the confiscation ordered by the Customs under Section 111(d) of the Customs Act, 1962, is not legal and redemption fine and penalty imposed under Section 112 of the Customs Act, 1962, therefore, is hereby set aside. - Decided in favor of assessee.

Summary

Issues:
1. Validity of import of second hand photocopiers without submission of import license under Foreign Trade Policy.
2. Confiscation of goods under Section 111(d) of the Customs Act, 1962.
3. Imposition of redemption fine and penalty on the appellants.
4. Interpretation of second hand photocopiers as capital goods under the Foreign Trade Policy.
5. Applicability of transitional provisions in the Foreign Trade Policy.

Issue 1: Validity of import of second hand photocopiers without submission of import license under Foreign Trade Policy:
The Customs department objected to the import of second hand photocopiers by the appellants, citing Para 2.17 of the Foreign Trade Policy, 2004-09, which restricts the import of second hand goods without a valid import license. The Customs department ordered confiscation of the goods under Section 111(d) of the Customs Act, 1962, but allowed redemption on payment of a fine and imposed a penalty. The Commissioner (Appeals) upheld the order. However, the appellants argued that the impugned order was contrary to the provisions of the Foreign Trade Policy, as there was no restriction on the import of second hand photocopiers during the relevant period. They contended that the impugned order was illegal and that second hand photocopiers should be considered capital goods, not consumer goods, based on previous Tribunal decisions.

Issue 2: Confiscation of goods under Section 111(d) of the Customs Act, 1962:
The appellants challenged the confiscation of the imported goods under Section 111(d) of the Customs Act, 1962. They argued that previous Tribunal decisions had established that second hand photocopiers are capital goods and freely importable under the Foreign Trade Policy. The Tribunal found that the facts of the case were similar to previous decisions and held that the confiscation ordered by Customs was not legal. Consequently, the redemption fine and penalty imposed were set aside.

Issue 3: Imposition of redemption fine and penalty on the appellants:
The Customs department imposed a redemption fine and penalty on the appellants for the import of second hand photocopiers without a valid import license. The appellants contended that previous Tribunal decisions had established that no license was required for importing second hand photocopiers as they were considered capital goods. The Tribunal, considering previous decisions and the Supreme Court's decision in a similar case, concluded that the confiscation and penalties imposed were not legal and set them aside.

Issue 4: Interpretation of second hand photocopiers as capital goods under the Foreign Trade Policy:
The appellants argued that second hand photocopiers should be classified as capital goods, not consumer goods, under the Foreign Trade Policy. They cited previous Tribunal decisions supporting this classification. The Tribunal agreed with the appellants, relying on previous decisions, and held that second hand photocopiers are capital goods and freely importable under the Foreign Trade Policy.

Issue 5: Applicability of transitional provisions in the Foreign Trade Policy:
The appellants contended that the impugned order was untenable in law as it did not consider the transitional provisions in the Foreign Trade Policy. They argued that the amended Para 2.17 post 19.10.2005 was inapplicable due to the transitional provisions. The Tribunal, considering the transitional provisions and previous decisions, agreed with the appellants and allowed the appeal with consequential relief.