2024 (2) TMI 264 - AT - Customs

Tribunal Rules Imported Hand Tools as 'Capital Goods' Under Foreign Trade Policy; Confiscation Order Set Aside.

The Tribunal set aside the confiscation order of imported hand tools, ruling them as 'Capital Goods' under the Foreign Trade Policy and the EPCG Scheme. ... Confiscation of the imported goods - used hand tools - 'Capital Goods' or not as per para-9.12 of Foreign Trade Policy - appellant did not have licence to import such goods - HELD THAT:- The issue has been considered by the Tribunal in the case of Asia Power Projects Ltd. [2019 (1) TMI 333 - CESTAT CHENNAI] wherein on identical set of facts the Tribunal observed that as per para 9.12 of FTP, any goods which fall under the category of equipments, apparatus etc. are freely importable irrespective of their size and nature. So also, as per the EPCG scheme, there is no difference as to whether tools are machine tools or hand tools. The order directing for confiscation of the goods and imposition of redemption fine and penalties cannot sustain. In the result, the impugned order is set aside - Appeal allowed. Issues:The issue involved is whether the order of confiscation of the imported goods, specifically used hand tools, is legal and proper.Summary:The appellant imported used and new hand tools, but the Department claimed they did not qualify as 'Capital Goods' under the Foreign Trade Policy. The original authority ordered confiscation of the goods, with an option for redemption on payment of a fine. The appellant appealed, arguing that the hand tools should be considered capital goods under the policy and the EPCG Scheme. The Tribunal referred to a previous case where it was held that hand tools fall under the category of equipment and accessories, qualifying as capital goods. The Tribunal concluded that the functionality and utility of the hand tools determine their classification as capital goods. As such, the order of confiscation was set aside, and the appeal was allowed.This judgment clarifies the interpretation of the term 'Capital Goods' under the Foreign Trade Policy and the EPCG Scheme in the context of importing hand tools. The Tribunal emphasized that the functionality and utility of the hand tools are crucial in determining their classification as capital goods. The decision in a previous case was relied upon to support the argument that hand tools should be considered equipment and accessories falling under the definition of capital goods. As a result, the order directing confiscation of the goods was deemed unsustainable and set aside, with the appeal being allowed.