Import policy clarification cannot restrict second-hand capital goods; photocopying machines became restricted only after the amending notification.

Second-hand photocopying machines imported before 19.10.2005 were freely importable as second-hand capital goods under the Foreign Trade Policy, 2004-09, because DGFT circulars could only clarify and implement the policy, not reclassify goods from free to restricted. The Foreign Trade (Development and Regulation) Act, 1992 reserves policy-making and amendment power to the Central Government, so a change in import status required a valid policy amendment. Notification No. 31 dated 19.10.2005 expressly placed second-hand photocopying machines in the restricted category, showing that the restriction operated only from that date.

---

---

Issues: Whether second-hand photocopying machines imported prior to 19.10.2005 were freely importable as second-hand capital goods under the Foreign Trade Policy, 2004-09, and whether DGFT circulars could treat them as restricted imports requiring a licence.

Analysis: The Foreign Trade (Development and Regulation) Act, 1992 vests the power to formulate and amend the foreign trade policy in the Central Government, while the DGFT is empowered to interpret and implement the policy. The policy circulars relied upon by the Revenue were clarificatory in nature and could not alter the policy classification of goods from free to restricted. Under the Foreign Trade Policy, 2004-09, second-hand capital goods were allowed free import, and the handbook did not restrict second-hand photocopying machines. The later amendment by Notification No. 31 dated 19.10.2005 expressly brought second-hand photocopying machines into the restricted category, showing that the restriction took effect only from that date and not earlier.

Conclusion: Second-hand photocopying machines imported before 19.10.2005 were not restricted imports and were freely importable as second-hand capital goods; the assessee's case succeeds.

Final Conclusion: The policy circulars could not override the policy, and the restriction on second-hand photocopying machines operated only from the amending notification dated 19.10.2005.

Ratio Decidendi: A DGFT circular cannot amend or restrict the import policy where the statute reserves amendment power to the Central Government; a change from free to restricted import status must be effected by a valid policy amendment.

---