Importability of used hand tools under trade policy upheld where functionality, not nomenclature, governed classification.

Imported used hand tools were treated as capital goods under the Foreign Trade Policy because the definition turns on functionality and utility, not on whether the tools are machine operated or hand operated. The Export Promotion Capital Goods Scheme was read as covering all tools without distinguishing between hand tools and machine tools, and the policy context did not justify restricting such imports. On that basis, the confiscation was not sustainable, and the redemption fine and penalties also failed.

---

---

Issues: Whether the confiscation of the imported used hand tools, along with the redemption fine and penalties imposed, was legally sustainable under the Foreign Trade Policy and the Export Promotion Capital Goods Scheme.

Analysis: The imported goods were used hand tools, and the decisive question was whether such tools fell within the ambit of capital goods under paragraph 9.12 of the Foreign Trade Policy. The Tribunal relied on the earlier view that the definition of capital goods is broad and turns on functionality and utility, not on the size or nomenclature of the tools. It was also noted that paragraph 5.2 of the Export Promotion Capital Goods Scheme includes all tools without distinguishing between machine tools and hand tools, and that the policy context did not support treating hand tools as restricted merely because they are hand operated. On the facts, no basis was shown to exclude the goods from the scope of freely importable equipment.

Conclusion: The confiscation could not be sustained, and the redemption fine and penalties also failed.

---