2018 (2) TMI 1067 - AT - Customs

Tribunal rules in favor of appellant in import license case, goods qualify as capital goods

The Tribunal ruled in favor of the appellant in a case concerning the import of used audio systems without the required import license under the Foreign ... Import of restricted item - audio visual equipment - whether capital goods or not? - Circular dt. 06/12/2012 - Held that: - FTP allowed import of second hand capital goods without a licence only if such goods are in the nature of capital good - The DGFT has clarified, as per their circular dt. 06/12/2012, that audio visual equipments imported by the service providers can be considered as capital goods. Such clarification was not available to the adjudicating authority which has lead to the passing of the impugned order - the imported goods will be eligible for clearance without an import licence since they are in the nature of capital goods for the importer who is providing audio visual service. Appeal allowed - decided in favor of appellant. Issues:Import of used audio systems without an import license under Foreign Trade Policy.Analysis:The appeal was filed against Order-in-Original No. 03-2012 dated 05/06/2012, concerning the import of used audio systems without the required import license. The appellant imported loud speakers, amplifiers, and accessories, which were found as declared on examination. However, as per para 2.17 of the Foreign Trade Policy, import of second-hand goods, excluding capital goods, required a license from DGFT at that time. The adjudicating authority considered the imported goods as other than capital goods, leading to the confiscation of the goods under Section 111(d) of the Customs Act, 1962, read with Section 3(3) of the Foreign Trade (Development and Regulation) Act, 1962. The goods were allowed for redemption upon payment of fine and penalty, prompting the appellant to file the present appeal.During the proceedings, the appellant's counsel argued that the DGFT had clarified through a circular dated 06/12/2012 that audio visual equipment imported for service provision qualified as capital goods. As the appellant was engaged in providing services, it was contended that the imported goods should be considered as capital goods, thereby no violation of the Foreign Trade Policy (Para 2.17) occurred. On the contrary, the learned AR supported the impugned order.Upon hearing both sides and examining the records, the Tribunal noted that the reason for confiscation was the lack of an import license as required under para 2.17 of the FTP. The DGFT's subsequent clarification, post the impugned order, stated that audio visual equipment imported by service providers could be deemed as capital goods. This clarification was not available to the adjudicating authority during the initial decision-making process, leading to the passing of the impugned order. After reviewing the clarification, the Tribunal concluded that the imported goods qualified as capital goods for the importer engaged in providing audio visual services. Consequently, the Tribunal set aside the impugned order and allowed the appeal, ruling in favor of the appellant. The order was dictated in Open Court on 08/12/2017.