Custom, Excise & Service Tax Tribunal
M/S. A.I.R. Overseas vs Cc, Trichy on 12 November, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH AT CHENNAI C/172/2005 (Arising out of Order-in-Appeal No. 32/2004 (Commr.) dated 20.10.2004, passed by the Commissioner of Customs, Trichy). M/s. A.I.R. Overseas : Appellant Vs. CC, Trichy : Respondent
Appearance Shri N. Viswanathan, Adv., For the applicant Shri B. Balamurugan, AC (AR) For the respondent CORAM Honble Shri R. PERIASAMI, Technical Member Honble Shri P.K. CHOUDHARY, Judicial Member FINAL ORDER No. 41794 / 2015 Date of Hearing/Decision: 12.11.2015 Per: P.K. Choudhary The appellant filed this appeal against the Order of the adjudicating authority dated 20.10.2004.
2. The appellant M/s. A.I.R. Overseas, New Delhi, holders of Import Export Code No. 0599008067, imported a consignment of 308 nos. of old and used parts of main frame assemblies of photocopier and other parts such as drum unit, functional gears, rods rollers, clutches and motors etc. The adjudicating authority has rejected the declared value of US$54550 and enhanced the value to Rs. US$ 71,500 under Rule 8 of CVR and also confiscated the goods under Section 111 (d) of Customs Act for contravention of FTP license and mis-declaration of the goods but permitted the appellants to redeem the same on payment of a fine of Rs. 4,90,000/- and imposed a penalty of Rs. 1,64,000/- under Section 112 (a) of the Customs Act.
2. The Ld. Counsel Shri N. Viswanathan, Advocate, appearing on behalf of the appellant placed the decision of the Tribunal in the case of M/s. Office Tec Industries Vs. CC (Port-Export), Chennai reported in 2015 (320) E.L.T. 150 (Tri. - Chennai), wherein the Tribunal observed that the import of second hand photocopier prior to 19-10-2005 also do not warrant licence for import. In that case, the value was enhanced by the Customs authorities and also confiscated the goods in terms of Section 111(d) of the Customs Act, 1962 read with Section 3(3) of Foreign Trade (Development & Regulation) Act for import of goods without specific licence. He further submits that the enhancement of value on the basis of Chartered Engineer is not acceptable which is duly contested by the Ld. AR Shri B. Balamurugan, AC. He submits that in the present case, there is no mis-declaration of the goods.
3.? We have carefully considered the submissions of the Ld. Advocate and perused the records. The issue relates to import of old & used photo copying machines and enhancement of value and confiscation of the goods for contravention of license policy. The appellants imported these second hand photo copiers on 17.9.2004. As regards the contravention of policy, we find during the period under import, the import of old and new photo copier machines covered under the policy as second hand capital goods. The policy was specifically amended on 19.10.2005 where the second hand photo copiers were brought under restricted category. In this regard we find that the issue has already been settled by the Apex Court in the case of M/s. Atul Commodity Pvt. Ltd and others. Based on the Apex Courts decision, this Tribunal in the case of Office Tec Industries Vs. CC Chennai (supra) set aside fine and penalty. The Tribunal set aside the impugned orders in respect of licensing part and held as under:-
In all the above cases, the common issue involved is the free importability of old and used photocopiers imported by the appellants herein (although the value declared by the importers has been rejected and value enhanced by the Customs authorities, that is not the subject matter of challenge in any of these appeals). The goods have been confiscated in terms of Section 111(d) of the Customs Act, 1962 read with Section 3(3) of the Foreign Trade (Development & Regulation) Act for import of goods without specific licence, and an option to redeem them on payment of fine has been extended. Penalty has also been imposed upon the importers under Section 112 of the Customs Act, 1962.
(2)?We have heard both sides. The contention of the importers that the goods imported by them were freely importable and their import did not require to be covered by a licence is to be accepted, in the light of Apex Courts judgement dated 24-2-2009 in Civil Appeal No. 2999/2007 etc. in the case of M/s. Atul Commodity Pvt. Ltd. and Others v. Commissioner of Customs, Cochin, holding that import of old and used photocopiers is not restricted prior to 19-10-2005 (imports in all these appeals are prior to this date) and that Notification No. 31, dated 19-10-2005 restricts imports of such goods only on and after 19-10-2005. The Apex Court has upheld the decision dated 11-5-2005 of the Larger Bench of the Tribunal in M/s. Atul Commodity Pvt. Ltd. and the Honble High Court of Andhra Pradesh also took the same view in Central Excise Appeal No. 52/05 and the Apex Court set aside the judgment dated 7-4-2006 of the Honble Kerala High Court (which was challenged before the Supreme Court) holding that import of secondhand photocopiers prior to 19-10-2005 also warranted a licence for import. The relevant extract from the Apex Courts judgment is reproduced herein below :-
20.?Policy Circular No. 20/05 appears to be in continuation of Policy Circular Nos. 16/03 and 19/03. In this connection, para 1 of Policy Circular No. 20/05 requires to be noted. As stated above, under FTP (2002-07) import of second-hand goods could be made 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). Para 1 of Policy Circular No. 20/05 recites that photocopying machines are not to be imported without a licence even if they are less than 10 years old and even if the photocopying machines are imported for service providers. Vide para 3, the Policy Circular No. 20/05 clarifies that second-hand photocopying machines are covered under the definition of second-hand goods, therefore, their import shall be governed by the provisions of para 2.17 of the Policy and shall not be permitted 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 goods shall be governed by the provisions of para 2.17 of the Policy. Para 2.17 has to be read in its entirety. That para draws a dichotomy between second-hand goods and second-hand capital goods. Para 2.33 of the Handbook (2004-09) places restriction only qua computers and not qua photocopying machines. In our view, therefore, one has to give weightage to the second part of para 2.17 which allows free import of second-hand capital goods. What is not permitted vide 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 Department. Therefore, import of old and used photocopying machines stands covered by the concept of second-hand capital goods in para 2.17 (particularly in the light of the last statement in the said para, which we have underlined hereinabove.
21.?One more aspect needs to be mentioned. Para 2.33 expressly states that import of old and used computers/second-hand computers are restricted. Para 2.33 of the Handbook do not restrict photocopying machines. Import of photocopying machines are expressly restricted only by Notification No. 31, dated 19-10-2005. This itself indicates that categorization/re-categorization cannot be done by policy circulars. Such exercise has to be undertaken by specific amendment to the Policy vide Section 5 of the 1992 Act. In this case, Notification No. 31, dated 19-10-2005 indicates that the Central Government has brought in photocopying machines into the category of second-hand goods vide amendatory Notification, therefore, import of photocopying machines stand restricted only on and after 19-10-2005. In fact, if the argument of the Department is to be accepted, then there was no need to issue Notification No. 31, dated 19-10-2005. As regards the enhancement of the value, the adjudicating authority has enhanced the value under Rule 8 of CVR.
4. In view of the above discussion, we find that the ld. Advocate strongly relied on the earlier decision of the Tribunal in the case of M/s. Office Tec Industries (supra). Therefore, we do not find any force in the submission of ld. Advocate on the enhancement of value. Respectfully following the earlier decision of the Tribunal, we hold that no licence is required for import of second hand photocopiers prior to 19-10-2005. Accordingly, we set aside the fine and penalty and otherwise the impugned order is upheld. The appeal is partly allowed on the above terms.
(Operative part of the Order pronounced in the Open Court )
(P.K. CHOUDHARY) (R. PERIASAMI)
JUDICIAL MEMBER TECHNICAL MEMBER
BB
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