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2017 Supreme(Mad) 3583
IN THE HIGH COURT OF JUDICATURE AT MADRAS
S. MANIKUMAR, R. SURESH KUMAR, JJ.
The Commissioner of Customs, Tuticorin – Appellant
Versus
M/s. Rajeshwari Graphix – Respondent
C.M.A. Nos. 1298 & 1299 of 2007
Decided On : 10-11-2017
For the Appellant :T. Pramod Kumar Chopda, Advocate.
For the Respondent:P. Srija, Jaikumar, Advocates.
The central legal point established in the judgment is the interpretation of the provisions of para 2.17 and para 2.33 of the FTP (2004-09) to determine the import categorization of photocopying machines as capital goods.
Headnote:
photocopying machines - import of second-hand photocopying machines - FTP (2004-09) - para 2.17, para 2.33 - The court upheld that the second-hand photocopies imported were capital goods and not liable to confiscation or penalty under the FTP (2004-09). The court relied on the decision of the Hon'ble Supreme Court in Atul Commodities Pvt. Ltd. vs. Commissioner of Customs, Cochin and interpreted the provisions of para 2.17 and para 2.33 of the FTP (2004-09) to determine the import categorization of photocopying machines.
Fact of the Case:
The court considered the import of second-hand photocopying machines and whether they were to be classified as capital goods or consumer goods under the FTP (2004-09). The lower appellate authority had held the machines to be capital goods, refraining from confiscation and penalty, which the Revenue appealed against.
Finding of the Court:
The court found that the second-hand photocopies imported were capital goods and not liable to confiscation or penalty under the FTP (2004-09). The decision of the Hon'ble Supreme Court in Atul Commodities Pvt. Ltd. vs. Commissioner of Customs, Cochin was relied upon to support this finding.
Issues: The substantial questions of law revolved around the classification of second-hand photocopiers as capital goods or consumer goods, the finality of the decision in Atul Commodities (P) Ltd. vs. Commissioner 2005 (184) ELT Page 135 (Tri-LB), and the non-following of the clarification issued by the DGFT under the FTP governing the imports.
Ratio Decidendi: The court interpreted the provisions of para 2.17 and para 2.33 of the FTP (2004-09) and relied on the decision of the Hon'ble Supreme Court to determine the import categorization of photocopying machines as capital goods.
Final Decision: The court dismissed the civil miscellaneous appeals and answered all substantial questions of law against the Revenue, upholding the decision that the imported second-hand photocopying machines were capital goods and not liable to confiscation or penalty under the FTP (2004-09).
S. MANIKUMAR, J.
1. Final Order dated 28.09.2005 made in Final Order Nos.1335 and 1336/2015 on the file of CESTAT, South Zone, Chennai, 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 appellate authority has held the said machines to be capital goods and, accordingly, it has refrained from confiscating the goods or imposing penalty on the importer. The Revenue is aggrieved by the decision of the Commissioner (Appeals). Ld.counsel has submitted that the question whether the second-hand photocopiers could be treated as "capital goods" or "consumer goods" has already been settled by the Tribunal in the case of Atul Commodities (P) Ltd. Vs Commissioner, 2005 (184) ELT 135 (Tri-LB), wherein it was held that such machines, when imported for use by the service sector 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 are upheld and these appeals are dismissed."
2. The above said order is assailed on the following substantial questions of law:
(i) 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"?
(ii) Whether the commissioner (Appeals) and the Appellate Tribunal are correct in relying upon the decision in Atul Commodities (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 shall be final and binding?
3. Opposing the prayer sought for, learned counsel for the respondent relied on the decision of the Hon'ble Supreme Court in Atul Commodities Pvt. Ltd. vs. Commissioner of Customs, Cochin reported in 2009 (235) E.L.T. 385 (S.C.), wherein it was held as follows:
"18. We have referred to the provisions of the 1992 Act and Para 2.3 of the FTP to demonstrate the difference between amendment and clarification. The power to amend the FTP is exclusively vested in the 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 under the "general" category came under the "restricted" category of imports, which made the importer to import the said machine only against a licence issued in that behalf. Why was that Notification necessary? By the said Notification, import of photocopying machines came to be restricted. It was provided that the said import shall be against a licence. Such a restriction could be placed only by an Amendment and not by Policy Circular(s).
