Case Note & Summary
The civil appeal was directed against a judgment of the Kerala High Court which allowed the Department's appeal and set aside the Tribunal's decision favoring the appellant regarding the import of photocopying machines. The core issue was whether these machines were freely importable or required a licence under the Foreign Trade Policy (FTP) for the period 2004-09. The appellant imported photocopying machines in January 2005, asserting they were capital goods and thus exempt from licensing requirements. The Department issued a show cause notice alleging the machines were restricted items under the FTP. The adjudicating authority ruled in favor of the Department, leading to an appeal to the Tribunal, which sided with the appellant based on a prior Larger Bench decision. The High Court, however, reversed this, stating that the machines required a licence based on earlier circulars. The Supreme Court analyzed the relevant provisions of the FTP and the Customs Act, emphasizing that the categorization of goods could only be amended by the Central Government, not through circulars by the DGFT. The court concluded that the amendments made post-19.10.2005 did not retroactively apply to the appellant's imports, thus allowing the appeal and confirming the Tribunal's decision (Paras 1-29).
Headnote
A) Foreign Trade - Import Policy - Classification of Goods - Foreign Trade (Development and Regulation) Act, 1992, Section 5 - The court examined whether second-hand photocopying machines were classified as capital goods or restricted items requiring a licence. It held that the amendments to the policy post-19.10.2005 did not apply to imports made prior to that date, thus allowing the import of photocopying machines without a licence (Paras 10-19).
Issue of Consideration
Whether photocopying machines were freely importable or required a licence for import during the specified period.
Final Decision
The Supreme Court allowed the appeal, reinstating the Tribunal's decision that the import of photocopying machines did not require a licence as they were classified as capital goods prior to the amendments made on 19.10.2005.
Law Points
- Foreign Trade Policy
- Customs Act
- import restrictions
- capital goods definition
- licensing requirements
