Capital goods definition under import policy controlled exemption; second-hand engines were held outside the scope and confiscation stood.

Imported second-hand engines were examined against the Foreign Trade Policy 2004-2009 definition of capital goods for exemption under Notification No. 21/2002-Customs. The policy definition was treated as controlling, and broader meanings of "plant" or "machine" from income-tax or other statutes were rejected as irrelevant. On that basis, the engines were found not to be plant, machinery, equipment or accessories required for manufacture, production or rendering of services, and earlier Tribunal rulings on diesel engines were followed. The claimed exemption was therefore unavailable, and the confiscation and penalty order was sustained.

---

---

Issues: Whether the imported second-hand engines were capital goods within the meaning of the Foreign Trade Policy 2004-2009 and therefore eligible for exemption from import restriction under Serial No. 218 of Notification No. 21/2002-Customs.

Analysis: The definition of capital goods in the Foreign Trade Policy was treated as controlling, and it was held unnecessary to import broader meanings of "plant" or "machine" from decisions under the Income-tax Act or other statutes. The policy definition required the goods to be plant, machinery, equipment or accessories required for manufacture, production or rendering of services. The engines, by themselves, were found not to satisfy that definition, and the earlier Tribunal decisions treating diesel engines as not being capital goods were applied.

Conclusion: The imported engines were not capital goods under the Foreign Trade Policy and were not eligible for the claimed exemption. The finding was against the assessee.

Final Conclusion: The appeal failed on merits, and the confiscation and penalty order was sustained.

Ratio Decidendi: Where the governing import policy expressly defines capital goods, that definition must be applied as written, and broader meanings borrowed from other statutes cannot be used to enlarge the scope of the exemption.

---