Import of defective shafts not restricted under foreign trade policy; confiscation, redemption fine and penalties were unjustified.

Defective shafts imported as second hand capital goods were not shown to be restricted goods under para 2.17 of the Foreign Trade Policy Handbook, which allows second hand capital goods freely while restricting other second hand goods. Even on the alternative view that the shafts had been cut into smaller pieces, they would fall within scrap for which no import licence was required. The import was therefore not prohibited or restricted under the policy, and confiscation, redemption fine and penalties were not justified.

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Issues: Whether defective shafts imported as second hand capital goods or scrap were restricted or prohibited under para 2.17 of the Handbook of Procedures under the Foreign Trade Policy, and whether confiscation, redemption fine and penalties were justified.

Analysis: Para 2.17 restricts all second hand goods except second hand capital goods, which are allowed freely. The imported goods were treated as defective shafts and were not shown to be restricted capital goods; even on the alternative view that the shafts had been cut into smaller pieces, they would fall within scrap for which no licence was required. On that basis, the import could not be treated as prohibited or restricted under the policy.

Conclusion: The goods were not prohibited or restricted, and the confiscation, redemption fine and penalties were not justified.

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