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The Commissioner of Customs Versus M/s. Rajeshwari Graphix

2017 (12) TMI 404 - MADRAS HIGH COURT

Import of second hand photocopiers during 2004 and 2005 - whether the Commissioner (Appeals) and Appellate Tribunal are correct in holding that the second-hand photocopiers imported and meant for service sector are "Capital goods" free importable and not "Consumer goods? - Held that: - reliance placed in the case of Atul Commodities Pvt. Ltd. & Ors. Versus Commissioner of Customs, Cochin-9 [2009 (2) TMI 18 - SUPREME COURT], where it was held that Used Photocopier Machines are capital goods, henc .....

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ai, is extracted hereunder: "These applications of the Revenue (appellant) seek stay of operation of the impugned orders. As we are inclined to dispose of the appeals finally at this stage, we reject the applications and proceed to deal with the appeals. 2. After examining the records and hearing both sides, we find that the short question arising for considering in these appeals is whether the second-hand photocopying machines imported by the assessee were capital goods or not. The lower a .....

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84) ELT 135 (Tri-LB), wherein it was held that such machines, when imported for use by the service secotr in India, should be considered as "capital goods" and not as "consumer goods". No better case law has been cited before us. Accordingly, we hold that the second-hand photocopies imported by the respondents, being capital goods, were freely importable and hence not liable to confiscation. Consequently, the importer was not liable to be penalised either. The impugned orders .....

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es (P) Ltd., vs. Commissioner 2005 (184) ELT Page 135 (Tri-LB) which has not reached finality? (iii) Whether the Commissioner (Appeals) and the Appellate Tribunal are correct in not following the clarification issued by the DGFT who is the competent Authority under the FTP governing the above imports and further in the context that as per para 2.3 of FTP, if any doubts arises in respect of the interpretation of policy, procedure etc. and the said doubt shall be referred to DGFT, whose decision s .....

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Central Government whereas the power to clarify is vested in DGFT. On 31.8.2004, the Central Government vide Notification No. 1/2004-09 notified the FTP 2004-09. The Policy was announced on 31.8.2004. The Policy came into force from 1.9.2004. That Policy came to be amended vide Notification No. 31 dated 19.10.2005 issued by the Central Government under Section 5 of the 1992 Act by which the position came to be changed and, for the first time, import of second-hand photocopying machines imported .....

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nd photocopying machines came within the "restricted" category. Such a change of category has to take place by way of Amendment by Central Government under Section 5 of the 1992 Act. On the other hand, the three administrative/policy circular Nos. 16/03, 19/03 and 20/05 only refer to clarifications issued by DGFT pursuant to representations received by him from the Trade. These circulars are clarificatory and not amendatory in nature. Therefore, under the scheme of the Statute, one fin .....

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d hereinabove, is an amendment to the Policy. It operates only from 19.10.2005. It recites that second-hand capital goods are importable freely. The Notification states that after 19.10.2005, however, import of second-hand photocopying machines will be allowed only against a licence. This amendment pre-supposes that photocopying machines are kept out of the purview of "second hand capital goods" only after 19.10.2005. Secondly, as stated above, broadly imports fall in two categories - .....

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05 Policy circular No. 20 dated 23.2.2005 was applicable. However, Policy circular No. 20/05 is in continuation of Policy circular Nos. 16/03 and 19/03. They have to be read together. In this connection, it may be noted that para 1 of Policy circular No. 16/03 recites that import of all second-hand goods stood restricted under the FTP (2002-07). That circular clarified that import of second-hand PCs/Laptops would fall in the category of "second hand goods". That circular was in the con .....

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he definition of second-hand capital goods, provided they were not more than 10 years old. It is these representations which came to be answered vide Policy circular No. 16 dated 29.9.2003 in the manner indicated above. Accordingly, by Policy circular No. 16/03, it was clarified that second-hand PCs/Laptops would not fall under "second hand capital goods" as defined under Para 2.33 of the Handbook and consequently their import could only be against a licence. In continuation of Policy .....

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17 of FTP and para 2.33 of the Handbook had undergone a change. As can be seen from para 2.17 of the FTP (2004-09) a statement is added to para 2.17 of the FTP (2002-07) that statement reads as under: "Import of second hand capital goods, including refurbished/reconditioned spares, shall be allowed freely." This statement was not there in para 2.17 of the FTP (2002-07). Similarly, as quoted hereinabove, para 2.33 of the Handbook of Procedures (2004-09) has been completely recasted. The .....

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ade only against a licence. They came in the restricted category. However, in the Handbook (2002-07) it was inter alia provided that old and used capital goods which were not more than 10 years old could be imported freely. Those goods, therefore, were treated as "new" goods. This resulted in confusion. Therefore, DGFT stepped in to clarify that second-hand photocopying machines, irrespective of the period of use, shall fall in the restricted category (see Policy circular No. 19/03). P .....

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to be imported under para 5.1 of the Policy. Reverting to para 2.17 of FTP (2004-09) read with para 2.33 of the Handbook (2004-09) one finds that import of second-hand capital goods is made "free". Para 2.17 of FTP (2004-09) is in two parts. The first part deals with the meaning of the words "second-hand goods". The second part states that import of second-hand capital goods shall be allowed freely. Para 3 of the Policy circular no. 20/05 states that import of second-hand goo .....

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de para 3 of the Policy circular no. 20/05 is importation under EPCG. As stated above, in this case, we are concerned with imports under general category and not under EPCG. We are in agreement with the view expressed by the Larger Bench of the Tribunal that photocopying machines are capital goods as defined under para 9.12. The Tribunal has held that the use of these machines for rendering services makes them capital goods. In fact, this finding on the "user" is not challenged by the .....

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