Advance licence flexibility supports waiver of pre-deposit where imports stay within licence terms and DGFT amendment is the proper remedy.

Advance licences allowing 20% flexibility in both quantity and value of the sensitive item, subject to the overall CIF value not being exceeded, were treated as validly utilised where imports remained within the licence terms. Where the revenue alleged inflation in the VABAL application value, the proper course was to seek amendment of the licence through the DGFT as the competent authority. Consistent with Board Circular No. 23/96-Cus dated 19-4-1996, this approach supported complete waiver of pre-deposit of duty, interest and penalty and stay of recovery pending disposal of the appeals.

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Issues: Whether the appellants had made out a prima facie case for complete waiver of pre-deposit and stay of recovery on the ground that the advance licences were validly utilised within the permissible flexibility under the Exim Policy.

Analysis: The licences permitted 20% flexibility in both quantity and value of the sensitive item, subject to the overall CIF value of the advance licence not being exceeded. The imports were found to be within the licence terms. On the allegation that the value shown in the VABAL application had been inflated, the proper course for the revenue was to seek amendment of the licence through the DGFT, the competent authority. This position was consistent with the Board's Circular No. 23/96-Cus dated 19-4-1996.

Conclusion: The appellants established a prima facie case for complete waiver of pre-deposit of duty, interest and penalty, and recovery was stayed until disposal of the appeals.

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