Pass Book scheme compliance failure justified confiscation, while later export-obligation proof reduced redemption fine and penalty.

Duty-free imports under the Pass Book scheme required prior disclosure and endorsement where goods were to be used through an intermediate manufacturer or in the importer's own factory. The absence of the intermediate manufacturer's name on the Pass Book at the material time meant the exemption conditions were not met, and a later endorsement did not cure the earlier non-compliance. The policy requirements were not otherwise shown to have been satisfied by actual processing in the importer's factory, so confiscation under the Customs Act was justified. Subsequent documents evidencing export obligation compliance were treated as mitigating factors, leading to reduction of the redemption fine and penalty.

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Issues: Whether duty-free import under the Pass Book scheme was invalidated by the absence of prior endorsement of the intermediate manufacturer and, if so, whether confiscation, redemption fine, and penalty were justified.

Analysis: The import facility was subject to the conditions in paragraph 231(2) and paragraph 231(4) of the Import Policy 1985-88, requiring the goods to be used either in the importer's own factory or in the factory of a declared intermediate manufacturer, with prior disclosure and endorsement in the Pass Book. On the material date, the Pass Book did not bear the name of the intermediate manufacturer, and the goods had already been made available before the endorsement was obtained. The subsequent endorsement did not cure the earlier non-compliance. The enquiry also did not establish that the goods were actually processed in the importer's own factory in the manner required by the policy. The contravention therefore attracted confiscation under the Customs Act, 1962. At the same time, subsequent production of documents showing fulfilment of export obligation furnished mitigating circumstances for reduction of monetary consequences.

Conclusion: The import was held to be in violation of the exemption conditions and the confiscation was sustained, but the redemption fine and penalty were reduced.

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