2017 (12) TMI 404 - HC - Customs

Import of second hand photocopiers during 2004 and 2005 - whether the Commissioner (Appeals) and Appellate Tribunal are correct in holding that the second-hand photocopiers imported and meant for service sector are Capital goods free importable and not Consumer goods? - Held that - reliance placed in the case of Atul Commodities Pvt. Ltd. & Ors. Versus Commissioner of Customs, Cochin-9 2009 (2) TMI 18 - SUPREME COURT , where it was held that Used Photocopier Machines are capital goods, hence, import of old & used photocopying machines stands covered by the concept of second-hand capital goods - appeal dismissed - decided against Revenue.

Issues:
1. Classification of second-hand photocopying machines as capital goods or consumer goods.
2. Interpretation of relevant legal provisions and circulars governing the import of second-hand goods.
3. Applicability of the decision in Atul Commodities Pvt. Ltd. vs. Commissioner of Customs.
4. Authority of DGFT in issuing clarifications under the Foreign Trade Policy.

Issue 1: Classification of second-hand photocopying machines
The judgment revolves around the classification of second-hand photocopying machines as either capital goods or consumer goods. The lower appellate authority had classified the machines as capital goods, leading to the decision that they were freely importable and not subject to confiscation or penalties. The Tribunal relied on the case of Atul Commodities Pvt. Ltd. vs. Commissioner, where it was held that such machines, when imported for use by the service sector in India, should be considered as capital goods. The judgment upheld the decision, dismissing the appeals and affirming the classification of the imported photocopying machines as capital goods.

Issue 2: Interpretation of relevant legal provisions and circulars
The judgment delves into the interpretation of legal provisions and circulars governing the import of second-hand goods. It discusses the distinction between amendments and clarifications under the Foreign Trade Policy (FTP) and the authority vested in the Central Government and DGFT for making changes. The judgment highlights the importance of specific amendments by the Central Government for categorization changes, emphasizing that policy circulars cannot alter import categories. The analysis of Policy Circular No. 20/05 in conjunction with FTP provisions elucidates the restrictions on importing second-hand goods, emphasizing the distinction between second-hand goods and second-hand capital goods.

Issue 3: Applicability of the decision in Atul Commodities Pvt. Ltd. vs. Commissioner of Customs
The judgment juxtaposes the decision in Atul Commodities Pvt. Ltd. vs. Commissioner of Customs with the case at hand to determine its relevance and applicability. It underscores the significance of the decision in interpreting the classification of imported second-hand photocopying machines as capital goods. The judgment aligns with the principles established in the Atul Commodities case, reinforcing the classification of the machines as capital goods based on their use in the service sector.

Issue 4: Authority of DGFT in issuing clarifications under the Foreign Trade Policy
The judgment scrutinizes the authority of the Directorate General of Foreign Trade (DGFT) in issuing clarifications under the Foreign Trade Policy (FTP). It contrasts the powers of amendment vested in the Central Government with the clarificatory role of DGFT. The judgment emphasizes the need for specific amendments by the Central Government for altering import categories, highlighting the limitations of DGFT in effecting categorization changes. The analysis underscores the importance of legal clarity and proper procedures in interpreting and implementing trade policies.

In conclusion, the judgment provides a detailed analysis of the classification of second-hand photocopying machines, the interpretation of relevant legal provisions and circulars, the applicability of precedent cases, and the authority of DGFT in issuing clarifications under the Foreign Trade Policy. It elucidates the legal intricacies surrounding the import of goods and underscores the importance of adherence to established legal principles and procedures in trade matters.

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