Import policy benefit for warehoused goods preserved; confiscation and penalties failed where later clearance matched the authorised route.

High Speed Diesel imported through a letter of authority issued by a 100% export oriented undertaking was treated as authorised under the Import-Export Policy, because the policy permitted import of non-prohibited goods, warehousing in a bonded warehouse, and later clearance for home consumption. The appellant's subsequent use of the warehoused goods for supply to the export oriented undertaking and as ship stores, together with the DGFT clarification, supported the claimed policy benefit. The alternative lawful route could not be rejected merely because it was not raised at the initial investigation stage. Confiscation and penalties were therefore not sustainable, and the appeals were allowed with consequential relief.

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Issues: Whether the confiscation of High Speed Diesel imported through an authorised arrangement and the penalties imposed under the Customs Act were justified when the goods were warehoused and subsequently cleared in terms of the Import-Export Policy.

Analysis: The import was not without authority merely because the importer acted through a letter of authority issued by the 100% export oriented undertaking that was entitled to import the goods as actual user. The policy permitted import of non-prohibited goods, warehousing in a private or public bonded warehouse, and later clearance for home consumption in accordance with the policy. The subsequent use of the warehoused goods for supply to a 100% export oriented undertaking and as ship stores, together with the clarification issued by the Director General of Foreign Trade, supported the appellant's stand. The availability of an alternative lawful route could not be denied merely because the plea was not taken at the initial investigation stage, especially when the policy itself contemplated later production of licence where required.

Conclusion: The confiscation and penalties were not sustainable.

Final Conclusion: The appeals were allowed and the impugned order was set aside with consequential relief.

Ratio Decidendi: A benefit available under an alternative statutory or policy provision, if otherwise admissible, cannot be denied merely because it was not asserted at the stage of initial investigation, and warehoused goods cleared in accordance with the policy do not warrant confiscation or penalty.

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