Per Justice R.K. Abichandani (for the Bench) :

These appeals are placed before the Larger bench because of a conflict of opinion on the question whether photocopiers are capital goods or consumer goods and whether the import of old and used (second-hand) photocopiers are allowed freely. The said question has been referred by order dated 15.4.2005 in view of divergent views of various Benches of this Tribunal.

2. The appellants of all these appeals were importing various models of used photocopiers. The goods were examined and found to be as per the declarations. Show cause notices came to be issued under Section 124 of the Customs Act on these appellants on the basis that in view of the clarification issued in the Circulars mentioned in the show cause notices, used photocopiers were not importable under paragraph 2.33 of the Hand-book of Procedure to Foreign Trade Policy and they were restricted under para 2.17. It was alleged that since the goods were so restricted for import and the importers did not produce valid import licences, they were liable to be confiscated under Section 111(d) of the said Act read with para 2.17 of the foreign Trade Policy and that the importers were liable to penalty under Section 112 of the said Act.

3. In all these appeals, the concerned Commissioners, applying the Policy circular No. 16(RE-2003)/2002-07 dated 29.9.2003 [reported in 2003 (58) RLT M70], Policy Circular No. 19(RE-2003)/2002-07 dated 11.11.2003 [reported in 2003 (59) RLT M38], and Policy Circular No. 20(RE-2003)/2002-09 dated 23.2.2005 [reported in 2005 (66) RLT M82], came to the conclusion that used photocopying machines cannot be imported without licence under para 2.33 of the Hand-book and confiscated the second-hand photocopying machines covered under various bills of entry under Section 111 (d) of the said Act, declared(sic) the assessable value after taking into consideration the contemporary import price available and gave an option to redeem the same on payment of fine and also imposed penalty under the orders impugned.

4. Before we embark upon the discussion whether the second-hand photocopiers were capital goods and not consumer goods and whether they were allowed to be imported freely, we would reproduce the relevant provisions of foreign Trade Policy and the Hand-book which will have a bearing on the present controversy.

5. Relevant provisions of Foreign Trade Policy of the relevant period i.e. 2004-2009;

2.1Exports and Imports free unless regulated

Exports and Imports shall be free, except in cases where they are regulated by the provisions of this Policy or any other law for the time being in force. The item wise export and import policy shall be, as specified in ITC (HS) published and notified by Director General of Foreign Trade, as amended from time to time.

2.7 Restricted Goods

Any goods, the export or import of which is restricted under ITC (HS) may be exported or imported only in accordance with a license/certificate/permission or a public notice issued in this behalf.

2.16 Actual User Conditions

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.

However, if such imports require a licence/certificate/permission, the actual user alone may import such goods unless the actual user condition is specifically dispensed with by the licensing authority.

2.17 Second-hand Goods

All second-hand goods, excepting second-hand capital goods, shall be restricted for imports and may be imported only in accordance with the provisions of this Policy, ITC (HS), Handbook (Vol.I), Public Notice or a license/certificate/permission issued in this behalf. (emhasis added)

9.12 "Capital Goods" means any plant, machinery, equipment or accessories required for manufacture or production, either directly or indirectly, of goods or for rendering services, including those required for replacement, modern