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SC defers hearing on second-hand goods issue
April, 19th 2007

The Supreme Court has deferred hearing on a batch of petitions challenging the Kerala High Court order which held that second-hand personal computers, laptops and photocopier machines are capital goods and require an import licence from the government.

A bench headed by Ashok Bhan last week deferred hearing on the matter for four weeks after Additional Solicitor General Vikas Singh sought more time to file a reply.

However, the court restrained the Customs department to take any coercive measures against petitioners - Kolkata-based importer Atul Commodities and Gujarat-based Mech & Tech. Earlier, it had issued a notice to Commissioner of Customs.

In the face of conflicting views by different high courts, the importers have sought the apex court's directions on the issue.

According to the companies, the Directorate General of Foreign Trade (DGFT) had notified in October 2005 that while import of second hand goods would be allowed freely, in the case of personal computers, laptops and photocopiers machines and diesel generating sets, an importer would need licence.

While submitting that the DGFT amendment in the Foreign Trade Policy of 2004-09 was prospective, they said the Kerala High Court has held the changes in the policy should be effective retrospectively and importers would require licence.

However, the Andhra Pradesh High Court held that these were capital goods and did not require import license, they added.

According to the petitions, prior to the amendment there was no restriction. It was effective from the date of amendment and cannot apply to the past imports.

"When the provisions of Foreign Trade Policy are quite clear and unambiguous, the same are binding and have to be applied," they added.

According to the companies, the larger bench of Customs, Excise and Service Tax Appellate Tribunal had also held that second-hand photocopiers were capital goods and import policy in respect of these was free and these goods can be imported without any licensing restriction.
The Commissioner of Customs, Cochin, had confiscated various models of used photcopier machines imported by Atul Commodities on the ground that second-hand photocopiers were not capital goods and so the company was liable to pay penalty under Customs Act 1962.

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