Actual user condition for second-hand capital goods cannot be narrowed by importing an SSI registration requirement.

Second-hand capital goods could be imported by an actual user under the Import and Export Policy, 1997-2002 without a licence, provided the policy conditions were met. The prevailing definition of "Actual User (Industrial)" covered use in the importer's own industrial unit or another unit, including a jobbing unit, and did not require an SSI registration certificate or product-specific endorsement. The earlier policy requirement for a valid licence or registration certificate could not be read into the current policy. On that basis, the import satisfied the actual user condition, and the confiscation, redemption fine and penalty were unsustainable.

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Issues: Whether the import of second-hand machinery satisfied the actual user condition under the prevailing Import and Export Policy, and consequently whether confiscation, redemption fine and penalty were sustainable.

Analysis: The machinery was second-hand capital goods with a residual life of more than five years and the procedural requirements under the Handbook were complied with. Under para 5.4 of the Import and Export Policy, 1997-2002, second-hand capital goods may be imported by actual users without licence subject to the actual user condition. Para 3.5 defines an Actual User (Industrial) as a person who utilises the imported goods for manufacturing in his own industrial unit or for own use in another unit, including a jobbing unit. The definition in the prevailing policy does not impose any requirement of an SSI registration certificate or an endorsement for the particular product. The earlier policy definition requiring a valid licence or registration certificate could not be imported into the current policy.

Conclusion: The importer satisfied the actual user condition under the prevailing policy. The confiscation was unsustainable and the redemption fine and penalty were liable to be set aside in favour of the assessee.

Ratio Decidendi: Where the current import policy defines actual user industrial without requiring a specific SSI licence or product-wise registration, that additional condition cannot be read into the policy to deny import of second-hand capital goods otherwise complying with the stated policy requirements.

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