Free import of second-hand capital goods and provisional release pending adjudication under the Foreign Trade Policy dispute

Imported second-hand multifunction print and copying machines were treated as falling within the Foreign Trade Policy's residuary category for other second-hand capital goods, because they were not shown to fall within the specifically restricted categories requiring compulsory registration or authorisation. On that basis, the goods were regarded as freely importable rather than prohibited by the department's claimed restriction. The Court also noted that comparable matters had already allowed provisional release and that adjudication remained pending, so it directed provisional release of the goods while preserving the customs authorities' power to continue proceedings on the show cause notices in accordance with law.

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Issues: (i) Whether the imported second-hand multifunction print and copying machines fell within clause 2.31 of the Foreign Trade Policy, 2023 as freely importable second-hand capital goods; (ii) whether the petitioners were entitled to provisional release of the goods pending adjudication of the show cause notices.

Issue (i): Whether the imported second-hand multifunction print and copying machines fell within clause 2.31 of the Foreign Trade Policy, 2023 as freely importable second-hand capital goods.

Analysis: The classification dispute turned on whether the goods were to be treated as electronics and IT goods requiring compulsory registration and authorisation, or as other second-hand capital goods falling outside the restricted categories. The relevant policy was read as distinguishing between the specifically restricted items in clauses I(a), I(b) and I(c), and the residuary category in clause I(d) covering all other second-hand capital goods. The earlier policy position and the comparable controversy already considered in other proceedings were treated as supporting the view that the present goods were not shown to fall within the restricted category.

Conclusion: The goods were held to fall under the freely importable residuary category and not to be treated as prohibited merely for want of the restriction claimed by the department.

Issue (ii): Whether the petitioners were entitled to provisional release of the goods pending adjudication of the show cause notices.

Analysis: The Court noted that the controversy had already been the subject of comparable orders where provisional release had been permitted, and that the department had not concluded the matter within a reasonable time. Since the goods had been held up without a final decision and the adjudicatory process was still open, the Court found no impediment to directing provisional release, while preserving the department's power to continue adjudication in accordance with law.

Conclusion: Provisional release of the goods was allowed, and the show cause notice matters were left to be decided by the department after the petitioners filed replies.

Final Conclusion: The writ petitions were disposed of by granting provisional release of the goods in the permitted matters and by directing adjudication to proceed on the show cause notices in the remaining matters, with the customs authorities retaining liberty to continue proceedings according to law.

Ratio Decidendi: Where imported second-hand capital goods are not shown to fall within the specifically restricted categories of the foreign trade policy, the residuary free-entry category applies and provisional release can be ordered pending adjudication.

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