Old and Used propping pipes for construction service are capital goods which are freely importable

Peri (India) Pvt. Ltd. (the Appellant) imported old and used pipes declaring them as ‘old and used Prop Pep 20-300’ (Impugned goods) and classified them under Customs Tariff Heading (CTH) 7308 4000. The said classification was accepted and duty was demanded accordingly.

Since, these pipes were old and used, the Authorities held that Impugned goods are not covered under capital goods as defined in Para 9.12 of Foreign Trade Policy (“FTP”) and are not freely importable in terms of Para 2.17 of FTP 2004-09. Further, since no license for importation of the Impugned goods was produced by the Appellant, the Impugned goods were liable for confiscation and allowed to be redeemed on payment of Redemption Fine and penalty. Later, the Impugned goods were released but the Appellant relying upon the decision in the case of Cinda Engineering & Constructions P. Ltd. [2012 (289) ELT 509 (Tri-Bang)] (“Cindla case”)challenged the imposition of Redemption Fine and penalty before the Hon’ble CESTAT, Mumbai.

The Hon’ble CESTAT, Mumbai  allowed the Appeal and set aside the penalty and Redemption Fine with the following observations:

• The Appellant has imported Propping pipes and classified them under CTH 7308 4000. The CTH 7308 40 deals with equipment for scaffolding, shuttering, propping or pit-propping;
• Para 9.12of FTP defines ‘Capital goods’ as“Capital goods means any plant, machinery, equipment or accessories required for manufacture or production either directly or indirectly, of goods for rendering services.”;
• The Appellant imported the Impugned goods for rendering construction service;
• It was held in the Cindla case that “equipments used for rendering services are also capital goods”. In the instant case, the Impugned goods imported by the Appellant as equipment for rendering construction service. Therefore, same are held as capital goods;
• Further, in terms of Para 2.17 of the FTP, the second hand capital goods are freely importable. Therefore, the Impugned goods are freely importable without any licence.