By TIOL News Service

CHENNAI, MAY 07, 2013: IN a batch of Writ Appeals, the department was challenging the order of single judge, wherein the Writ Petitions filed by various importers of second-hand digital multifunction print and copying machines were allowed by holding that the said goods were not restricted goods. The goods were allowed to be cleared freely on payment of applicable duties. The single judge relied on para 2.33 of the HBP to arrive at the above finding.

It is the contention of revenue that the Digital Multifunction and Copying Machine, as per Para 2.17 of the Foreign Trade Policy, is a restricted item and it is not freely importable. As the Handbook of Procedures (Vol-1) is framed in consonance with the Foreign Trade Policy to carry out the objects and purpose of the Policy, the interpretation of Clause 2.33 of the Handbook of Procedures (Vol-1) has to be in consonance with the Foreign Trade Policy. It was submitted that as held by the Bombay High Court in the decision 2003-TIOL-68-HC-MUM-EXIM ( Narendra Udeshiv Vs. Union of India) , in the event of any conflict between the Foreign Trade Policy and Hand Book of Procedures, the Foreign Trade Policy will prevail. Since as per Para 2.7 of the Foreign Trade Policy, restricted goods could be imported only subject to the conditions prescribed therein, the subject goods being one of second hand restricted goods, the import has to observe the provisions under Para 2.7 read with Para 2.17 of the Foreign Trade Policy.

The respondent importers submitted that there is no error in the reasoning given by the single Judge and submitted that when the terms of the Foreign Trade Policy and the hand book are clear, there could be no interpretative process on Para 2.17 of the policy and Clause 2.33 of the Hand Book of Procedures (Vol.1), the writ appeals be dismissed.

After hearing both sides, the High Court held:

Chapter 2 of the Hand Book of Procedures (Vol.1) lays down the general provisions regarding the exports and imports. Under this, we have Clause 2.33 relating to import of second hand capital goods, which reads as follows:

"2.33 Import of Second Hand Capital Goods - (a) Import of second hand capital goods including refurbished / reconditioned spares, except those of personal computers / laptops, shall be allowed freely, subject to conditions for following categories:

(b) Import of second hand computers including personal computers / laptops and refurbished / reconditioned spares thereof is restricted.

(c) Import of refurbished / reconditioned spares of capital goods, other than those of personal computers / laptops will be allowed on production of a Chartered Engineer certificate that such spares have atleast 80% residual life of original spare."

Thus the procedure on import of second hand capital goods is governed by Clause 2.33 of the Hand Book of Procedures (Vol.1). As may be seen from the heading, the reference is about second hand capital goods in general alone and is not a separate para to deal exclusively with second hand capital goods falling under restricted category. Thus, dealing with the procedure on the import of second hand capital goods, it specifically refers to some of those restricted items of second hand capital goods, namely, personal computers/ laptops, which could be imported only subject to the conditions specified in the para . Thus, while Clause 2.33 allows free import of second hand capital goods, including refurbished/reconditioned spares as per sub clause (a) of Clause 2.33, one can say from the clear terms of the provision that there is no distinction made between second hand capital goods and second hand refurbished/reconditioned capital goods for purposes of free import. Except for those specifically mentioned restricted category of second hand capital goods which are not allowed free import, all other second hand capital goods including other enumerated restricted category of second hand capital goods are permitted free import. Thus, with no distinction maintained between other restricted category of second hand capital goods and second hand capital free goods, we do not find any good ground to read in Clause 2.33, a restriction on the free import of second hand digital multifunction print and copier machines. Thus reading sub clause (a) to Clause 2.33, if there is a restriction to be read on free import, it is only with reference to personal computers/laptops from among the restricted category of second hand capital goods group, which means, other restricted category under second hand capital goods group, specified in Para 2.17, namely, photocopier machine/digital multifunctional printing and copying machines, air conditioners, diesel generating sets, like other goods falling under free category, are permitted to be imported freely. Under sub clause (b) of Clause 2.33, there is a specific reference to the import of second hand computers, including personal computers/laptops and refurbished/reconditioned spares thereof, which suffer restricted import. Sub clause (c) of Clause 2.33 is with reference to import of refurbished/reconditioned spares of capital goods, such as what is covered under sub para (b), namely, personal computers/laptops. Thus, the refurbished/ reconditioned spares of capital goods could be allowed for import only on production of Chartered Engineer's certificate that such spares have at least 80% of residual life of original spares. Thus, with classification of goods carrying conditions on import specifying the manner of import, the import policy regime on second hand capital goods dealt with under Para 2.17 is laid down in clear terms in Clause 2.33 of the Hand Book of Procedures (Vol.1) that there could be no confusion in the matter of understanding which type of second hand capital goods goes for free import and what goes for import with conditions. As already noted, Hand Book of Procedures (Vol.1) also specifically deals about refurbished/reconditioned spares of capital goods (Clause 2.33(c)). Thus, even though photocopier and digital multifunction print and copying machines fall under restricted category in second hand capital goods group, yet, going by the only condition specified in Clause 2.33 of the Hand Book of Procedures (Vol.1), we do not find any justifiable ground to accept the contention of the revenue that there exists a conflict between Para 2.17 of the Foreign Trade Policy and Clause 2.33 of the Hand Book of Procedures (Vol.1). Thus, when Para 2.17 of Foreign Trade Policy specifically refers the circumstances or the conditions under which the import policy regime is laid, in the absence of any other restriction specified anywhere either in the policy or in the Hand Book of Procedures (Vol.1) with reference to any of those specified restricted category of second hand capital goods - photocopier machines and digital multifunction printing and copying machines as falling in line with personal computers and laptops, the mere instance of photocopier and digital multifunction printing and copying machines being restricted category of second hand capital goods, cannot bring them under any assumed restriction on par with personal computers/laptops for the purpose of imports into this country.

Thus, the Division Bench upheld the decision of Single Judge and dismissed the Writ Appeals filed by the Revenue.

Before parting: The epicenter of the dispute, para 2.33 has been deleted from the HBP vide Public Notice No 50 /( RE 2012)/2009-2014, Dated: February 28, 2013.

(See 2013-TIOL-359-HC-MAD-CUS)