TaxTMI 
TaxTMI 
2005 (5) TMI 349
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....ustoms Act on these appellants on the basis that in view of the clarifications issued in the Circulars mentioned in the show cause notices, used photocopiers were not importable under Paragraph 2.33 of the Handbook of Procedures to Foreign Trade Policy and they were restricted under Para 2.17. It was alleged that since the goods were so restricted for import and the importers did not produce valid import licences, they were liable to be confiscated under Section 111(d) of the said Act read with Para 2.17 of the Foreign Trade Policy and that the importers were liable to penalty under Section 112 of the said Act. 3. In all these appeals, the concerned Commissioners, applying the Policy Circular No. 16 (RE-2003)/2002-07, dated 29-9-2003, Policy Circular No. 19 (RE-2003)/2002-07, dated 11-11-2003, and Policy Circular No. 20 (2004-2009), dated 23-2-2005, came to the conclusion that used photocopying machines cannot be imported without licence under Para 2.33 of the Handbook and confiscated the second-hand photocopying machines covered under various Bills of Entry under Section 111(d) of the said Act, declared the assessable value after taking into consideration the contemporary impor....
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....s for initial charge, equipment and instruments for testing, research and development, quality and pollution control. Capital goods may be for use in manufacturing, mining, agriculture, aquaculture, animal husbandry, floriculture, horticulture, piscicullture, poultry, sericulture and viticulture as well as for use in the service sector. 9.16 "Consumer Goods" means any consumption goods, which can directly satisfy human needs without further processing and includes consumer durables and accessories thereof." 5.1 Relevant provisions of the Handbook of Procedures issued under Section 5 of the Foreign Trade and Development by the Central Government : 2.33 Import of Second-hand Capital Goods. Import of second-hand capital goods including refurbished/reconditioned spares, shall be allowed freely, subject to conditions for the following categories : The import of second-hand computers including personal computers and laptops are restricted for imports. The import of refurbished/reconditioned spares will be allowed production of a Chartered Engineer certificate that such spares have a residual life not less than 80% of the life of the origina....
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....ava Sheva reported in 2005 (180) E.L.T. 84 (Tri. - Mum.), the Tribunal relying upon the earlier decision in 2004 (171) E.L.T. 460 wherein it was held that photocopying machines were not consumer goods, gave benefit of doubt to the importer. (d) In Competent Business Machines v. Commissioner of Customs, Trichirapalli reported in 2005 (182) E.L.T. 426, the Tribunal laid down that the photocopying machines were capital goods and not consumer goods and since there was no prohibition against the import of these goods, there could be no confiscation. (e) In an unreported decision in M/s. S.S. International, New Delhi v. Commissioner of Central Excise, Hyderabad, in Final Order No. 266/2005 dated 22-2-2005 rendered by the Bangalore Bench of the Tribunal, it was held that the findings of the authorities that the photocopiers required licence was not correct. The Tribunal followed the earlier decisions in which it was held that the photocopying machine were capital goods and permitted to e imported under the EXIM Policy. (f) In M/s. Kangra Overseas v. Commissioner of Central Excise, Mumbai reported in 2005 (182) E.L.T. 190 (Tri. - Del.), the Tribunal held that sec....
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.... goods excepting second-hand capital goods were restricted for import as provided in Paragraph 2.17 of the FTP, which emphasised that, the import of second-hand capital goods including refurbished/reconditioned spares shall be allowed freely. Therefore, if the photo-copiers are considered to be second-hand capital goods, their import was free. However, there is a strong disagreement on the question whether the photocopiers are capital goods or consumer goods. On one hand, it is sought to be contended that the photocopiers are used by the service sector and their import is not for any direct consumption while on the other, it is argued that since they directly serve the human needs without any further process, they are consumer goods even if they are consumer durables. 8. The learned Senior Advocate for the appellant referred to the past EXIM Policies to point out that whenever restricted items of consumer goods were enumerated, photocopiers did not find place in the list and that they occasionally appeared as capital goods. Since the EXIM Policy for each relevant period stands on its own, it would not be open to straight away rely upon the past treatment given to such items. Whe....
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....ption. Consumed goods have to be "finished" goods in the sense that they are ready for use without undergoing any further production process. If any such process is still required then they are not classified as consumer goods, but as intermediate goods. Though both consumer goods and capital goods are "finished" goods the latter are an input into the production of services while the former are not. 13. Economists divide the products of all economic activity into two broad categories, goods and services. Industries that produce goods i.e. tangible objects, include agriculture, mining, manufacturing and construction. Service industries include everything else - banking, communications, wholesale and retail trade, all professional services such as engineering and medical, all consumer services, and all Government services. 14. The service sector i.e. tertiary sector of industry or service industry is one of the three main industrial categories of a developed economy, the others being the secondary industry (manufacturing and primary goods production such as agriculture) and primary industry (extraction such as mining and fishing). The tertiary sector of industry involves the pr....
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.... "second-hand goods" and that their import was governed by Paragraph 2.17 of the EXIM Policy and not covered under the definition of "capital goods". It was stated that in view of this, the second-hand personal computers/lap-tops can also not be permitted for import under the EPCG Scheme under the provisions of Para 5.1 of the EXIM Policy "even for service providers". The Circular dated 11-11-2003 which was issued in the context of second-hand photocopiers, air-conditioners, etc. by way of clarification, also refers to the EPCG scheme in respect of which the clarification was given, that the import of new personal computers/lap-tops, photocopiers etc. may be permitted under the EPCG scheme provided these were required for the manufacture of goods or rendering the services. Even the Circular dated 23-2-2005 clearly mentioned in Para 3 that second-hand photocopiers, air conditioners etc., were covered under the definition of second-hand goods and their import was governed by Paragraph 2.17 of the Policy and that they shall not be permitted to be imported under Paragraph 5.1 of the Policy. Chapter 5 of the Policy relates to Export Promotion of Capital Goods Scheme (EPCGS). In Paragrap....