Capital goods treatment for imported medical equipment under the Foreign Trade Policy led to deletion of confiscation and penalty.

Imported medical equipment used for medical services was treated as capital goods under Para 9.12 of the Foreign Trade Policy because the definition covers plant, machinery and equipment required for rendering services, including the services sector. The MRI system and CT scanner therefore fell within the permitted category, and reliance on Para 9.52 was rejected as not excluding such equipment. As the goods were less than ten years old, no import licence was required, so confiscation, redemption fine and penalty under Section 112 of the Customs Act, 1962 could not be sustained.

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Issues: Whether the imported medical equipment was covered as capital goods under the Foreign Trade Policy so as to be importable without a licence, and whether the confiscation, redemption fine and penalty could be sustained.

Analysis: The definition of capital goods in Para 9.12 of the Foreign Trade Policy includes plant, machinery, equipment and accessories required for rendering services, and expressly extends to use in the services sector. The imported MRI system and CT scanner were medical equipment used for medical services and therefore fell within that definition. The reliance on Para 9.52 was held to be misplaced, as that provision did not exclude such equipment from the scope of capital goods. Since the equipment was less than ten years old, the import did not require a licence, and the basis for confiscation and the related penalty under Section 112 of the Customs Act, 1962 was not made out.

Conclusion: The imported medical equipment was held to be capital goods, the licence requirement was not attracted, and the confiscation, redemption fine and penalty were set aside in favour of the assessee.

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