By TIOL News Service

MUMBAI, AUG 29, 2014: THE appellant imported ‘old and used pipes' declared as “old and used Prop Pep 20-300” and classified them under CTH 7308 4000.

The classification was accepted but it was the view of the lower authorities that since the Pipes are ‘Old & used' they are not covered as capital goods as defined in para 9.12 of Foreign Trade Policy and hence not freely importable as per para 2.17 of FTP 2004-09 .

As the appellant could not produce the licence for importation of the goods, the same were held liable for confiscation and allowed to be redeemed on payment of Redemption Fine and penalty.

The importer is before the CESTAT challenging the imposition of Redemption Fine and penalty.

It is submitted that the goods are equipments& since the classification under CTH 7308 4000 has been accepted by the department they are to be treated as capital goods.

The Revenue representative submitted that CTH 7308 deals with structures and structures cannot be the capital goods and hence the proceedings have been rightly initiated and the order of the lower authority needs to be upheld.

The Bench observed -

++ Appellant has imported Propping pipes and classified the same under CTH 7308 4000. The CTH 7308 40 deals with equipment for scaffolding, shuttering, propping or pit-propping.

++ As per the definition of ‘capital goods' in FTP in para 9.12 deals with “Capital goods means any plant, machinery, equipment or accessories required for manufacture or production either directly or indirectly, of goods for rendering services.”

++ In this case, this propping pipes imported by the appellant for rendering construction service and, therefore, same are held as capital goods and as per para 2.17 of the Foreign Trade Policy the second hand capital goods are freely importable.

++ Therefore, as no licence is required for importation of the said goods, the confiscation of the impugned goods was not warranted.

In fine, confiscation was set aside and consequently the penalty and Redemption Fine was also set aside.

The appeal was allowed with consequential relief.

(See 2014-TIOL-1630-CESTAT-MUM)