DTA sale permission and retrospective withdrawal: confiscation and penalty were held unsustainable for re-constructed diesel engines.

DTA clearance of re-constructed diesel engines made under specific permission from the Development Commissioner was treated as lawful, because duty was paid and the later withdrawal of a similar permission had already been held not to operate retrospectively. On that basis, the clearances were not contrary to the Exim Policy, and the record did not show any requirement of an import licence for such sales. The finding regarding payment from an EEFC account could not be relied on because it was outside the scope of the show cause notice. Confiscation and penalty were therefore not sustainable.

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Issues: Whether DTA clearance of re-constructed diesel engines made on the basis of permission granted by the Development Commissioner was liable to confiscation and penalty for alleged violation of the Exim Policy and licensing restrictions.

Analysis: The clearances were made on the strength of specific permission granted for DTA sale and duty was paid thereon. The later withdrawal of a similar permission in the appellants' own case had already been held to be invalid retrospectively, and that position supported the validity of the earlier permission relied upon here. On that basis, the DTA sale could not be treated as contrary to para 9.10(b) of the Exim Policy. The finding regarding payment from EEFC account was outside the scope of the show cause notice. The record also did not show that the DTA clearances of the re-constructed engines, made pursuant to permission of the Development Commissioner, required an import licence.

Conclusion: The confiscation and penalty were not sustainable, and the appeal succeeded.

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