Value based advance licence limits cannot be expanded by later policy clarifications for earlier imports

A value based advance licence must be interpreted under the policy in force on the date of issue, so the value earmarked for Sensitive List-III items could not be diverted for duty-free import of non-sensitive goods. The later clarification permitting use of unutilised sensitive-item value for other imports did not apply to the 1993-94 licence period. As the relevant entitlement was exhausted, the imported Non-Alloy Steel Melting Scrap was not eligible for exemption under Notification No. 203/92-Cus. and was liable to duty.

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Issues: (i) Whether, under the Export-Import Policy 1992-1997 and the terms of the value based advance licence issued in 1993, the value earmarked for Sensitive List-III items could be utilised for duty-free import of non-sensitive items within the same group; (ii) whether the appellants were entitled to the benefit of Notification No. 203/92-Cus. for the imported Non-Alloy Steel Melting Scrap.

Issue (i): Whether, under the Export-Import Policy 1992-1997 and the terms of the value based advance licence issued in 1993, the value earmarked for Sensitive List-III items could be utilised for duty-free import of non-sensitive items within the same group.

Analysis: The relevant policy position for the licence period 1993-94 excluded the value of sensitive items from the value available for import of other items. The licence itself provided that where individual quantity and value were indicated, import was restricted to that extent and the CIF value could not be used for other items, while flexibility was confined to imports within a group and did not override the specific exclusion applicable to sensitive items. The later clarification and amended policy provision permitting use of unutilised sensitive-item value for non-sensitive items was held inapplicable to the licensing period in question.

Conclusion: The value earmarked for Sensitive List-III items could not be used for importing the non-sensitive scrap in question, and the appellants were not entitled to treat that value as available for duty-free clearance.

Issue (ii): Whether the appellants were entitled to the benefit of Notification No. 203/92-Cus. for the imported Non-Alloy Steel Melting Scrap.

Analysis: As the relevant value limit under the licence stood exhausted for the non-sensitive item, the goods were not imported within the permissible duty-free entitlement under the licence and policy. The authorities therefore assessed the goods on merits at the applicable duty rate, and the exemption claim under the notification could not be sustained.

Conclusion: The appellants were not entitled to the benefit of Notification No. 203/92-Cus. in respect of the disputed import.

Final Conclusion: The operative view is that the licence and policy regime applicable to the 1993-94 period barred utilisation of the sensitive-item value for the disputed non-sensitive import, so the exemption claim failed and the appeal was dismissed.

Ratio Decidendi: A value based advance licence must be construed in accordance with the policy in force on the date of issue, and where that policy excludes the value of sensitive items from being used for other imports, later clarifications under amended provisions cannot enlarge the importer's entitlement for an earlier licence period.

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