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Import of second-hand goods as capital goods under Exim Policy 2002-2007. Analysis: The appeal was directed against the Commissioner of Customs, Mumbai's order regarding the import of second-hand goods, IMX analyser and AXYM analyser, for diagnosing blood testing and detecting diseases. The appellants claimed the goods were capital goods and freely importable under Para 2.33 of the Exim Policy. The Commissioner contended that the goods were not capital goods and hence restricted, leading to confiscation and a penalty under the Customs Act. The advocate argued that the imported instruments for testing should be considered capital goods, as they are used for disease detection, even if not directly related to production. The Commissioner's interpretation that capital goods must contribute to research and development was deemed erroneous. The advocate referenced a Supreme Court decision emphasizing that inclusive definitions should be broadly construed. The JDR argued that the goods were not capital goods as they were primarily used for testing and not for research and development, hence requiring a valid license for importation. However, the Tribunal disagreed with this assertion. The Tribunal found the Commissioner's reasoning flawed, stating that goods used for testing could qualify as capital goods without the necessity of being used in research and development. The restrictive interpretation of services under Para 9.46 of the Import Policy was deemed incorrect, as inclusive definitions are meant to encompass a wide range of services. Consequently, the Tribunal held that the imported goods were indeed capital goods and not subject to confiscation, allowing the appeal and setting aside the Commissioner's order.
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