Capital goods under the Foreign Trade Policy can include office furniture and equipment used with a manufacturing plant, making import permissible.

Second-hand office furniture and equipment imported as part of a complete used stainless steel tube manufacturing plant fell within the inclusive scope of "capital goods" under the Foreign Trade Policy because they formed part of the plant and had an admitted direct or indirect nexus with manufacture. On that basis, the import was treated as permissible and freely importable, rather than restricted second-hand goods. Since the import was in accordance with the policy, confiscation under the Customs Act was not justified, and the redemption fine and penalty could not survive once confiscation failed.

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Issues: Whether second-hand office furniture and equipment imported as part of a complete used stainless steel tube manufacturing plant qualified as capital goods under the Foreign Trade Policy and were freely importable, and whether their confiscation, redemption fine and penalty could be sustained.

Analysis: The goods were part of the complete plant under the purchase agreement and chartered engineer's certificate, and there was no dispute regarding their use in relation to manufacturing. The definition of capital goods under the Foreign Trade Policy is wide and inclusive, covering plant, machinery, equipment or accessories required for manufacture or production, either directly or indirectly. Office furniture and equipment used in relation to the manufacturing plant satisfied this requirement and met the user test. Since the import was in accordance with the policy, confiscation under the Customs Act was not justified, and once confiscation failed, redemption fine and penalty also could not survive.

Conclusion: The goods were held to be capital goods, the import was held to be permissible, and the confiscation, redemption fine and penalty were unsustainable.

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

Ratio Decidendi: Goods forming part of a complete manufacturing plant and having an admitted direct or indirect nexus with manufacture or production fall within the inclusive scope of capital goods under the Foreign Trade Policy and cannot be treated as restricted second-hand goods merely because they are office furniture or equipment.

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