Second-hand photocopiers as capital goods are freely importable, and EPCG circulars do not govern general imports.

Second-hand photocopiers were treated as capital goods under the Foreign Trade Policy and Handbook of Procedures because they function as equipment used in the service sector and as inputs for rendering services, rather than goods directly satisfying human needs. On that basis, they were not consumer goods. The policy position on second-hand goods was applied to hold that second-hand capital goods are freely importable and do not require a licence. Circulars relied on by the department were held inapplicable because they related to EPCG imports and the actual user condition under that scheme, not to general imports.

---

---

Issues: (i) Whether second-hand photocopiers are capital goods or consumer goods within the Foreign Trade Policy and the Handbook of Procedures; (ii) Whether their import is freely permissible without a licence and whether the contrary policy circulars apply to general imports outside the EPCG scheme.

Issue (i): Whether second-hand photocopiers are capital goods or consumer goods within the Foreign Trade Policy and the Handbook of Procedures.

Analysis: The policy definitions treated capital goods as plant, machinery, equipment and accessories used directly or indirectly for manufacture, production, or rendering of services, while consumer goods were goods that directly satisfy human needs without further processing. Applying those definitions, second-hand photocopiers were held to be equipment used in the service sector and as inputs for the production of services, rather than goods meant for direct human consumption. They were treated as goods that retain their functional identity in use and are not consumed by the user.

Conclusion: Second-hand photocopiers are capital goods and not consumer goods.

Issue (ii): Whether their import is freely permissible without a licence and whether the contrary policy circulars apply to general imports outside the EPCG scheme.

Analysis: Under the policy, all second-hand goods were restricted except second-hand capital goods, and second-hand capital goods were freely importable. The circulars relied upon by the departmental authorities were issued in the context of EPCG imports and the actual user condition under that scheme. As the imports in question were not under the EPCG scheme, those circulars were held inapplicable to the present imports. The earlier contrary Tribunal decisions were held not to state the correct law.

Conclusion: Second-hand photocopiers are freely importable without a licence, and the contrary circular-based view was rejected.

Final Conclusion: The legal position was settled in favour of free importability of second-hand photocopiers as capital goods, and the contrary Tribunal decisions were overruled; the matters were sent back for disposal by the regular bench in accordance with law.

Ratio Decidendi: Goods used in the service sector as inputs for rendering services, and which do not directly satisfy human needs without further processing, fall within the category of capital goods and, if they are second-hand capital goods, are freely importable notwithstanding circulars issued for a different scheme.

---