ORDER
Gowri Shankar, Member (T)
1. The appellant imported a consignment of goods described as Magnetic Flow meter Transmitter (MFT) designed to measure the flow of liquids and by converting the signal into the required readable signal output. The Customs was of the view that the goods were covered by Entry 175 of Appendix 2B of the Import Policy 1990-93. On this objection being communicated to the appellant, it waived the issue of written notice. After hearing it the Collector has held that the goods will not be entitled to import under the REP Licence produced, since the Policy prohibited the import of goods falling under Appendix 2B under such a licence. The Collector, therefore, confiscated the goods with an option to redeem them on payment of fine and imposed a penalty on the appellant.
2. The representative of the appellant contends that the goods are capital goods and therefore, will not fall in the scope of Appendix II, which is for raw materials, components, consumables, tools and spares. He said that they are in the nature of complete equipment and are not raw material components, consumables, tools or spares. They are measuring instruments and since they are not listed in Appendix B, their import was not prohibited. He relies upon their clarification by the Chief Controller of Imports and Exports.
3. The Departmental representative points out that Paragraph 7(12) of the Policy stated presumably non-OGL goods to be those capital goods not appearing in Appendix 1A, 2B and B of the Policy and that it is thus clear that Appendix 2B covers capital goods also. He contends that the clarification by the CCI & E is for import of a different product 1054 PH analyse and not for the goods in question.
4. The Collector had found that the goods would be covered by the description in Entry 175 of Para B of Appendix II. The entry is for “electronic equipment, systems, excluding those specifically allowed under OGL in this Policy or specified elsewhere”. It is not disputed that the goods imported are complete instruments and that their function is to measure the flow of liquids. They are, therefore, measuring instruments. Chapter III of the Policy contains the provisions relating to import of instruments. It provides in Para 31(2) for import by actual users under OGL of measuring or testing instruments listed in Appendix-I. It provides in Para 36(1) and elsewhere that restricted instruments listed in Appendix-A will not normally be permitted for import. Sub-para (2) of Para 36 provides that import of instruments shall be allowed under the capital goods procedure if imported as capital goods, and under the supplementary licensing procedure if imported as components or spares. The appellant had claimed import under REP licences to which the facility of Para 177,88-91 Policy was available. Sub-para (2) of this para provided utilisation of these licences for import of capital goods. The definition of capital goods in Para 6 of the Policy includes equipment and accessories, including those required for replacement/required for the production of goods or for providing services, it covers within its scope the instruments in question. This is made more manifest by the reference to import of instruments in the sub-para. The Collector has mis-interpreted the provisions of sub-para (1) of 36 when he says that it provides that import of instruments, other than those in Appendix 8 as capital goods, law be made only by following the supplementary licensing procedure.
5. It will be evident that the vast majority of modern measuring instruments operate on electronic principles; they would therefore, contain electrical assemblies sub-assemblies etc. Surely, the object of Entry 175 in appendix was not to prohibit the import of such instruments which have been permitted to be imported under Chapter III. The words ‘instrument’, ‘equipment’ and ‘system’ are defined as follows in the Mc Graw Hill Dictionary of Scientific and Technical Terms:
‘Instrument’ – A device for measuring and sometimes also recording and controlling the value of a quantity under observation
‘Equipment’ – One or more assemblies capable of performing a complete function.
‘System’ – A combination of several pieces of equipment integrated to perform a specific function; thus a fire control system may include a tracking radar, compute and gun.
The omission of the word ‘instrument’ which signifies us a device specialised to a particular function from Entry 175 is significant. Further, there is an elaborate and detailed policy governing the import of instruments. Some instruments, which required electrical components for the working have already been listed in Appendix I for import under OGL. It will obviously not have been possible for the licensing authority to list each and every instrument. There would be innumerable such instruments, specialised to particular uses in particular industries. Hence the specific policy in Chapter-Ill to permit the import of instruments other than mentioned in Appendix 8. This explains the apparent contradiction between these provisions and the entry in Appendix 175. It would surely not have been the intention of the licensing authority to take away by a single entry the provisions of much of Chapter III. It will, therefore, have to be considered that the words “not specified elsewhere” would not include instruments the import of which these specifically enumerated elsewhere in the Policy. This would explain the clarification given by the licensing authority to the appellant permitting import of [M.F.T.] meters in terms of the Policy. No doubt this is an instrument different from that imported. However, it is an indication of the interpretation by the licensing authority of the Policy. This would also explain the previous importation, of such goods. In any event the importer is entitled to the benefit of the considerable doubt that exists.
6. Appeal allowed. Impugned order set aside.