Customs, Excise and Gold Tribunal - Bangalore
Jay Industrial Company vs Commissioner Of Customs, Bangalore on 25 January, 2002
Equivalent citations: 2002(80)ECC615, 2002(141)ELT437(TRI-BANG)
JUDGMENT S.S. Sekhon, Member (T)
1. The appellants imported the following goods :
1. Spray Gun
2. Cloth Cutting Machine
3. Thread Cutter
4. Pins
5. Needles
6. Foot Massager
2. They are the traders and imported these goods in the belief that they are freely imported under EXIM Policy 1992-97. They sought clearance of the same without producing any Import Licence.
3. Relying on the definition of consumer goods and on examination of the goods, and as the importer produced Licence No. 3035246/205/94 with TRA issued from Air Cargo complex, Bangalore for the import of 3500 boxes Plastic pins for tags and for the other goods i.e., 500 spray guns, 10 PCS Cloth cutting machines, 500 boxes S.S. Pins, 1500 Doz. thread cutters, 525 boxes needles and 1 foot massager they did not produce any import licence. These items were considered to require an import licence and were liable to confiscation under Section 111D of the Customs Act, as they were considered to be consumer items in terms of Para 156A of EXIM Policy 1992-97 issued under Section 5 of Foreign Trade (D & R) Act, 1962. The Commissioner (Appeals) after hearing the party found as under : -
"A perusal of the catalogues produced by importers reveals that the foods imported satisfy human needs without further processing. As they are in the nature of consumer goods, the goods can be imported under a valid import licence only. As no licence was produced, the goods are liable to confiscation as indicated above. Further, the importer is not an actual user but a trader. The importer is also liable to penal action under Section 112 of the Customs Act, 1962 as the goods are liable for confiscation under Section 111(d) of the Customs Act, 1962."
And thereafter ordered the confiscation of the offending goods under Section 111(d) of the Customs Act, 1962 read with Para 156A of the EXIM Policy 1992-97 issued under Section 5 of Foreign Trade (D & R) Act, 1962 and allowed the importer to redeem the same on a fine of Rs. 45,000/- under Section 125 of Customs Act, 1962 and imposed a penalty of Rs. 15,000/- under Section 112 of the Customs Act, 1962.
4. The Commissioner (Appeals) has after recording the items under import to be :-
1. Spray gun; used for removing dirt and stains from garments
2. Cloth cutting machine; used for uniformly cutting a big lot of fabric at a time
3. Stainless steel pins; used in fastening shirt folds, used exclusively by reputed shirt manufacturers
4. Plastic pins; used to hold the price tag by garment manufacturers
5. Thread cutter; used to trim excess threads
6. Needles; used in sewing machines
7. Foot massager; designed for foot reflexology used by doctors for foot pain treatment.
He has found after examining the meaning of consumer goods for the purposes of Import policy to mean "consumption goods which can directly satisfy the human needs without further processing; it would include consumer durables also (Imp. Exp. Policy 1988-91). He also found that the Tribunal in the case of Southern General Trading Co. v. Collector [1995 (77) E.L.T. 592 (T)] held that consumer goods mean any consumption goods which can directly satisfy human needs without further processing and includes consumer durables and accessories and components, parts and spares of such consumer durables. He also found that the Tribunal had further held that there is no force in the contention that goods capable of ingestion by human beings are those goods which can be split in SKD or CKD conditions can only be considered as consumer goods. Applying the same test to each one of the goods under import, he concluded that they undoubtedly satisfy human needs without further processing. He did not agree with the appellants contention that consumer goods would be only such goods which are used by the ultimate consumer directly. He found that the description of consumer goods was with regard to the nature of the goods and riot with regard to the user. He found that the appellants were not manufacturers engaged in the manufacture of garments but are only traders. As regards the foot massager, he found it to be not a medical equipment/instrument/apparatus and therefore it was not covered under Sl. No. 14 of Part (11) of Para 156A of the EXIM policy and agreed with the findings of the Additional Commissioner that the goods imported required a valid import licence. Since, it was not produced, they were liable for confiscation under Section lll(d). As regards fine, he held that the Additional Commissioner's imposition arrived to be correct while permitting the redemption of the goods. He found no justification to interfere with the same, finding it to be reasonable and appropriate. As regards penalty, he found that the imposition was absolutely justified as the goods were imported without a valid import licence and are liable to valid confiscation and penalty could be imposed under Section 112 and considering the value of the goods and gravity of the offence, he found it to be appropriate.
5. The appellants have produced a catalogue of the goods before us, at the time of hearing. They also produced subsequent Bill of Entries, permitting clearance of plastic pins for tags (thread trimmers), scissors, motor cycle locks, car locks, Garden Umbrella frames, needle for tag gun, spray gun to be cleared without licence vide B/Es import department Sl. Nos. 00817 and 01772 in the case of same importer. They submit, that from the usage as per the catalogues and the definitions, they are entitled for the clearance of the goods, without licence as they are not in the nature of consumer goods. As regards foot massager, they reiterated the stand that use said foot massager is also a medical equipment admissible for import without licence and submitted that the lower authorities have not given any finding as to how it is not so.
6. The ld. DR relied on the definition of consumer goods as in the policy and submitted that consumer goods would be goods which can directly satisfy human needs without further processing and includes consumer durables, accessories, components, parts and spares and the goods under import could be used without further processing and therefore they should be considered as consumer goods requiring licence. He relied upon Para 3 of the decision in the case of Kalpa Ghosh v. Collector of Customs reported in [1994 (70) E.L.T. 533].
7. We have considered the submissions made and the material placed on record and find :-
(a) The lower authorities especially the Additional Commissioner, has come to his conclusion on a perusal of the catalogue which revealed to him that the goods satisfy human needs. The Commissioner (Appeals) has based his conclusion, on the grounds that the appellants were not manufacturers, engaged in the manufacture of garments but are only traders. Further he has concluded "each one of these goods under import, undoubtedly satisfy human needs without further processing without arriving at any reason for coming to such conclusions. We agree with the appellant, who has taken a ground that the imported goods have been construed as consumer goods arbitrarily and summarily when we go through the Catalogues produced. We find, on a perusal of the catalogues we find the uses to be : -
(1) SPRAY GUN : This is a tool used by garment manufacturers. This is being used in the process of removing dirt and hand stains from the fabrics/garments. While petrol mixed with some evaporable performed detergents are fed into this gun for spraying. This helps immediate drying of garments and packing. However, this spray gun neither helps to wash the garments nor does it comply with any of the garment cleaning techniques used in the households. In short, in no way it satisfies the direct human need and consequently would fall outside the definition of 'consumable goods'. It satisfies an industrial need for preparing fabrics/garments before they are packed for marketing.
(2) CLOTH CUTTING MACHINE : The very description of this item itself would reveal its nature and function. It is stated to be having applications in as ideal for tailoring, drapery stores, scrap maker and other materials. It is no domestic use other than these industrial applications. This is being used for uniformly cutting a big lot of fabric at a time. The fabric has to be set in layers of minimum thickness of 3 mm and a maximum thickness of 12 mm to make use of this machine to cut them. This function cannot be construed as meeting the needs of human.
(3) PINS, STAINLESS STEEL : These are round headed pins and used in fastening the shirts folds. This is being used exclusively by reputed shirt manufacturers and exporters for packaging the garments. These pins are not used directly for any human need by a consumer but in the manufacturing activity by garment industry. This very use is enough to take it outside the scope of the definition of 'consumer goods'.
PINS, PLASTIC : These are used to hold the tag denoting product code, identification, size, price etc. by garment manufacturers and are not used by consumer directly. This is a commercial/marketing need and use and not a human consumption need.
(4) THREAD CUTTER AND NEEDLES : These are being used by garment manufacturers to trim the excess threads. Needles are being used in industrial sewing machines. These too would not fall under restricted item. They are not used by individuals for any purpose.
(5) FOOT MASSAGER : As regards the foot massager, the catalogue certifies to be for use in foot reflexology and is submitted by the appellant to be used by the Doctors for foot pain treatment When examined in the light of above, we cannot find any reason to come to a conclusion that the items are "consumer goods" and such items should be considered merely as consumer goods because they can be used without any further processing as is being relied by the JDR. The goods have a primarily design application for repairing garments/fabrics making them fit for packaging/marketing. The use of these goods, satisfies the marketing needs of a particular industry. They do not necessarily directly satisfy any human need, until a marketing need is considered to be a human need. Basic 'Human needs' are requirements of an individual's consumption requirements for food, shelter and amusement. We cannot expand the words 'human needs' as used in the definition of 'consumer goods' to mean and include the industrial needs or commercial/marketing needs of an industry. The words 'human needs' are to be interpreted in their ordinary meaning as understood in the Import Export Milieu, as understood by the people in that commercial milieu. No such evidence of the items being understood as 'consumer goods' by people importing/purchasing them is brought on record. These words cannot be expanded to include industrial needs/commercial needs as is being attempted herein by the lower authorities.
(b) With regard to the appellant Paras 22 and 23 of the EXIM Policy provides as under :-
"22. Capital goods, raw materials, intermediates, components, consumables, spares, parts, accessories, instruments and other goods may be imported without any restriction except to the extent such imports are regulated by the Negative List of Imports or any other provision of this Policy or any other law for the lime being in force.
23. Capital goods, raw materials, intermediates, components, consumables, spares, parts, accessories, instruments and other goods, which are importable without any restriction, may be imported by any person whether he is an Actual User or not. However, if such imports require a licence, the Actual User alone may import such goods unless the Actual User condition is specifically dispensed with by the licensing authority.
In the case of consumer durables, their components, parts, spares and accessories, except those specifically listed in the Negative List of Imports, may be imported without a licence subject to Actual User condition."
Therefore, the imports have to be interpreted along with this provision of policy. These paras do not restrict or place any Actual User condition. In fact, Para 23 stipulates that if the imports could be made without any restrictions by any person, whether an Actual User or not. Therefore, we cannot agree with the Commissioner (Appeals) finding, relying upon the fact that the appellant is not a garment manufacturer but a trader and therefore, the benefit of free imports was not available to him as per the policy.
(c) We find that the Tribunal in the case of Dujodwala Resins & Terpenes Ltd. [1999 (108) E.L.T. 309] has come to a conclusion "..... when the material is used for the purpose of industrial as well as capable for use as other purpose viz as consumer goods, it does not come within the category of consumer goods." They were in this case deciding whether Camphor could be imported under OGL imported the usual packing is in 25 Kgs. cartons and not in consumer packs of 100 and 200 grams and found that Tribunal in an earlier case had held that when an item is used as a raw material for manufacture of certain goods same cannot be considered as consumer goods. Therefore, in the present case, we find the imported goods are in the nature of capital goods (i.e. scissors) and accessories/tools (needles) and raw material for packaging textiles/garments (stain remover guns/ tags etc.) used exclusively for preparing the fabrics/garments packages and making them ready for marketing/export, the goods under import other than foot massager, would be covered as 'other than consumer goods' even if they arc not further processed as held in Kalpa Ghosh case [1994 (70) E.L.T-. 533] relied on by the ld. DR. The items in question other than the foot massager are held by us to be goods not covered by the definition of 'consumer goods' as given in EXIM Policy of 1992-97. Therefore, they are allowed to be imported without a licence.
(d) As regards the foot massager, evidence has been produced of it being used by Doctors in foot reflexology treatments and it would be covered as medical instrument, under the EXIM Policy.
8. When we find that the lower authorities have come to an arbitrary decision about the nature of the goods to be consumer goods and on examination of the same, we find them not to be consumer goods and not requiring a licence. We find no reason to uphold the confiscation of the said goods. Once goods are held not liable for confiscation, the question of imposition of penalty under Section 112 is not called for.
9. Accordingly, this appeal is allowed after setting aside the orders of the lower authorities.