Free import of second hand capital goods covers used video cameras used for rental services and revenue generation.

Imported used video cameras are treated under the Foreign Trade Policy and Handbook of Procedure as second hand capital goods if they fall within the broad definition of capital goods used directly or indirectly for manufacture, production, or rendering services. The policy framework places second hand capital goods in the free import category, subject only to specific restrictions such as those relating to personal computers and laptops. Equipment intended for rental to film and television entities and for revenue generation can therefore fall within capital goods, and no separate exclusion is drawn on those facts. The commentary states that, on this basis, confiscation of such imports would be unsustainable where no specific restriction applies.

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Issues: Whether the imported used video cameras were second hand capital goods freely importable under the Foreign Trade Policy and Handbook of Procedure, so as to invalidate confiscation.

Analysis: Para 2.17 of the Foreign Trade Policy classifies second hand goods into second hand capital goods and other second hand goods, and places all other second hand capital goods in the free category. Para 2.33 of the Handbook of Procedure also permits free import of second hand capital goods, subject only to the specific restriction relating to personal computers and laptops. Para 9.12 defines capital goods broadly to include plant, machinery, equipment and accessories used directly or indirectly for manufacture, production or rendering of services, including equipment used in the service sector. The imported cameras were intended for use in renting to film and television entities and for revenue generation, and the reasoning adopted for treating them as outside the definition of capital goods was not accepted. The earlier view on free import of second hand capital goods supported the conclusion that no distinction could be drawn to deny free import of such equipment in the facts of the case.

Conclusion: The imported cameras were held to be second hand capital goods freely importable, and the confiscation was held to be unsustainable.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: Where imported used equipment falls within the broad definition of capital goods and is not covered by a specific restriction, it is freely importable as second hand capital goods under the applicable export-import policy framework.

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