2013 (3) TMI 408 - AT - Customs

Identification and valuation of the goods imported - Imported the second hand photocopier machines machines without license - Chartered Engineer for identification and valuation - Goods were liable for confiscation under Foreign Trade Policy - An option to redeem the same on payment of redemption fine and penalty Held that - To hold that digital photocopier machine was covered by the restriction on imported second hand photocopiers is not correct in as much as the digital multifunctional machines imported in this case are not digital photocopier machines. The primary contention of the respondent is that no one function of the Multi-Functional Machines, even printing, can be seen as predominant. This has clearly been shown to be incorrect on facts, and in light of the submissions by the appellants, there has been no case made out for classification of the goods under the residuary Heading 84.79.89. In view of the foregoing, the impugned orders to the extent of confiscation and consequent penalties challenged in respect of old & used digital multifunctional print and copier machines are incorrect - Decided in favor of assessee.

Issues Involved:
1. Classification of imported goods under the Customs Tariff Act.
2. Requirement of import license under para 2.17 of the Foreign Trade Policy (FTP).
3. Confiscation, redemption fine, and penalty imposed on the imported goods.

Detailed Analysis:

1. Classification of Imported Goods:
The primary issue revolves around the classification of "old & used digital multifunctional print and copier machines with accessories & attachments" under the Customs Tariff Act. The appellants argued that until 2006-07, multifunctional digital machines were classified under Chapter sub-heading No. 847160, while photocopiers were under Chapter Heading 9009. Post-2007, due to amendments, these machines fell under sub-heading No. 8443 31 00, distinct from photocopiers classified under sub-headings No. 8443 39 30/8443 39 40. The appellants contended that multifunctional machines are not photocopiers as they perform multiple functions such as printing, scanning, faxing, and emailing, which distinguishes them from mere photocopiers.

2. Requirement of Import License under Para 2.17 of FTP:
The adjudicating authority and the Commissioner (Appeals) held that the imported goods required a license under para 2.17 of the FTP, which restricts the import of second-hand photocopier machines without a valid license. The appellants argued that para 2.17 does not apply to multifunctional machines, which are a distinct category from photocopiers. They cited the Supreme Court judgment in Xerox India Ltd. v. C.C., where it was held that multifunctional machines' principal function is printing, not photocopying, thus they should not be classified as photocopiers.

3. Confiscation, Redemption Fine, and Penalty:
The lower authorities confiscated the goods and imposed redemption fines and penalties, asserting that the goods were imported without the required license. The appellants accepted the enhanced value appraised by the Chartered Engineer but contested the classification and consequent penalties. The Chartered Engineer's report concluded that the imported goods were multifunctional machines capable of performing various functions, which the appellants argued should exempt them from the restrictions applicable to photocopiers.

Tribunal's Findings:
The Tribunal examined the classification issue, noting that the explanatory notes to the Harmonized System of Nomenclature (HSN) distinctly categorize multifunctional machines separately from photocopiers. The Tribunal found that the imported goods, being capable of performing multiple functions, fall under the category of combinations of printers, copying machines, or facsimile machines, and not under photocopiers.

The Tribunal referred to the Supreme Court's ruling in Xerox India Ltd., which emphasized that multifunctional machines' principal function is printing, thus they should not be classified as photocopiers. Consequently, the Tribunal concluded that para 2.17 of the FTP, which restricts the import of photocopiers, does not apply to the imported multifunctional machines.

Conclusion:
The Tribunal set aside the orders of confiscation and penalties imposed on the imported goods, holding that the digital multifunctional print and copier machines do not fall under the restricted category of photocopiers as per para 2.17 of the FTP. The appeals were allowed to the extent of setting aside the confiscation and penalties. The Tribunal did not address other submissions made by both sides, as the decision on the merits resolved the core issues.

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