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2005 (5) TMI 349 - AT - CustomsEXIM - Import - Capital goods or consumer goods - Whether photocopiers are capital goods or consumer goods and whether the import of old and used (second-hand) photocopiers are allowed freely - HELD THAT - Keeping in view the concepts of capital goods and consumer goods in the context of their definitions respectively of the FTP there is no manner of doubt that the second-hand photocopiers which are imported though not for the use for the importers themselves are clearly meant for the service sector. Even the activity of importing such goods for providing them to the service sector is itself a service generated by the trading activity. The photocopiers having regard to the nature of their potential use are clearly meant to be supplied to the people who by their use would render service to their customers or in offices. These photocopiers would therefore be used for production of services though not for production of goods. They have great significance in the tertiary sector where they would produce services without losing their functional characteristics. These photocopiers are clearly an input for production of services and they would not get consumed themselves by their users. We are therefore clearly of the view that the second hand photocopiers are capital goods and freely importable and are not consumer goods . The present imports are admittedly not under the EPCG Scheme and none of those Circulars on which reliance is placed for holding that second-hand photocopiers are consumer goods and require licence would be applicable to these imports. In the Circular dated 29-9-2003 which refers to import of second-hand personal computers and lap-tops a clarification was issued that these are covered under the definition of second-hand goods and that their import was governed by 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 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 Paragraph 5.1 it was provided that the scheme allowed the import of capital goods for pre-production production and post production (including CKD and SKD) as well as computer software systems at 5% Customs duty subject to export obligation equivalent to 8 times of duty saved on capital goods imported under EPCG scheme to be fulfilled over a period of 8 years reckoned from the date of issuance of the licence. In Paragraph 5.3 it was laid down that the import of capital goods shall be subject to actual user condition till the export obligation is completed. These three circulars which were issued in the context of imports made under EPCG scheme were concerned with the actual user condition which was attached to the import of capital goods under the said scheme and they could have no application to the general imports of the nature made by the appellants. The Commissioners therefore grossly erred in relying upon these circulars holding that the second-hand photocopiers imported by the appellants were covered under the said Circulars and required a licence. The decisions of the Tribunal which hold that such second-hand photocopiers are not capital goods but are consumer goods therefore do not lay down the correct legal position and to the extent they are inconsistent with what we have held hereinabove stand overruled. All these appeals shall now be placed before the regular bench for disposal in accordance with law.
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