Second-hand photocopiers treated as restricted imports, with DGFT clarification binding and no free import as capital goods.

Second-hand photocopiers imported before the amendment were treated as second-hand goods, not freely importable capital goods. The Kerala HC read the Foreign Trade Policy with the DGFT circulars and held that such machines fall within the second-hand goods category under paragraph 2.17, do not satisfy the definition of capital goods under paragraph 9.10, and are not freely importable under paragraph 2.33. It further held that the DGFT clarification was binding under paragraph 2.3 and was not confined to the EPCG Scheme. The later amendment requiring import against licence did not change the position for the imports in question, so the importer failed.

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Issues: Whether second-hand photocopiers imported prior to the amendment were capital goods freely importable under the Foreign Trade Policy, or were second-hand goods whose import was restricted and required a licence, and whether the DGFT policy circulars governed such imports.

Analysis: The applicable policy provisions were read together with the DGFT circulars. The Court held that the circulars clarified that second-hand personal computers, laptops and photocopier machines fall within the category of second-hand goods and are governed by paragraph 2.17 of the Foreign Trade Policy, while they do not answer to the definition of capital goods under paragraph 9.10 and are not freely importable under paragraph 2.33. The Court further held that the circulars were not confined only to the EPCG Scheme in the manner suggested by the importer, and that the DGFT's clarification under paragraph 2.3 of the policy was binding. The later amendment permitting import only against licence did not alter the position for the imports in question.

Conclusion: The issue was answered against the importer and in favour of Revenue. Second-hand photocopiers were held to be restricted imports governed by the DGFT circulars and not freely importable capital goods.

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