REP licence imports and capital goods treatment under the applicable policy defeated confiscation, fine and penalty.

Imported TV broadcast and studio equipment was analysed against the import policy in force when the REP licence was issued. Applying the policy for AM 1988-91, the goods were treated as capital goods permitted under para 177(2), and the later transitional provision in para 214(6) did not alter that position on the stated facts. On that basis, the goods were said to be covered by the REP licences, so confiscation was not justified and the redemption fine and penalty were unsustainable.

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Issues: Whether the imported TV broadcast and studio equipment was covered by the REP licences and importable under para 177(2) of AM 1988-91 Policy, and consequently whether confiscation, redemption fine and penalty were sustainable.

Analysis: The imported goods were examined in the light of the applicable import policy governing REP licences issued during AM 1988-91. The binding High Court view, relied upon in the order, held that the import had to be tested under the policy in force when the licence was issued and that TV broadcast and studio equipment did not fall within the relevant restrictive entry so as to lose its character as capital goods. The transitional provision in para 214(6) of the later policy did not alter that position on the facts, because the goods remained within the class of capital goods permitted against REP licence under para 177(2) of AM 1988-91.

Conclusion: The imported goods were covered by the REP licences and were not liable to confiscation; the redemption fine and penalty were unsustainable and were set aside in favour of the assessee.

Final Conclusion: The appeal succeeded, and the impugned confiscation and consequential monetary liabilities were annulled.

Ratio Decidendi: Goods imported against a valid REP licence are to be assessed under the import policy governing the licence, and where the goods remain capital goods permitted by that policy, confiscation, redemption fine and penalty cannot be sustained.

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