2019 (1) TMI 333 - AT - Customs

Import of restricted item or not - used machine tools and unmachined tools - restrictions placed as per para 9.12 of the Foreign Trade Policy - Held that - It is the functionality and utility of the equipments which would qualify for inclusion as capital goods for the purpose of para 9.12 of the FTP, or otherwise. Nothing has been brought on record to prove that hand tools are not equipment and are not required for manufacture or production either directly or indirectly of goods or for rendering services. This being so, the impugned hand tools will very much come within the scope of hand tools for the purpose of para 9.12 of the policy and will then not become restricted for import in terms of para 2.17 of the FTP. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Interpretation of the definition of "capital goods" under the Foreign Trade Policy (FTP) regarding the importation of used machine tools and hand tools.

Analysis:
The case involved the importation of goods declared as used machine tools and hand tools under the Open General License (OGL). The original authority held that used hand tools are restricted for import and ordered confiscation of the goods. The Commissioner (Appeals) upheld this decision, stating that hand tools were consciously excluded from the definition of "capital goods" under the FTP. The appellants argued that hand tools should be considered capital goods based on the definition in the FTP and various judgments. The Tribunal analyzed the definition of "capital goods" under the FTP and noted that while it did not specifically mention hand tools, the definition included a wide range of equipment required for manufacture or production. The Tribunal also highlighted that in other parts of the FTP, tools were considered capital goods without restricting them to machine tools only.

The Tribunal considered the arguments presented by both sides and emphasized that the functionality and utility of the equipment determine whether they qualify as capital goods. Citing previous judgments and the definition in the FTP, the Tribunal concluded that hand tools should be considered capital goods for the purpose of the policy. The Tribunal referred to a previous order by the Commissioner (Appeals) that agreed with this interpretation, indicating that hand tools imported as used tools would fall under the definition of capital goods and not require a specific license for import.

In light of the discussions and case laws cited, the Tribunal set aside the impugned order, ruling in favor of the appellants. The appeal was allowed with consequential benefits as per the law.

This judgment highlights the importance of interpreting definitions in trade policies and considering the functionality and utility of goods to determine their classification as capital goods for import purposes. The decision provides clarity on the inclusion of hand tools within the scope of capital goods under the FTP, emphasizing a broad interpretation to facilitate trade and importation processes.