Transitional import protection under an irrevocable letter of credit defeated confiscation and penalty for restricted natural rubber imports.

A transitional import-policy protection applied where natural rubber was shipped under an irrevocable letter of credit opened before the restriction date. The decisive date for that protection was the expiry of the letter of credit, not the earlier shipment-date validity noted by the Commissioner. Because the shipment took place before expiry of the letter of credit and before the import restriction took effect, the goods were not covered by the subsequent restriction. The confiscation order and consequential penalty were therefore set aside, and the import was treated as protected under para 1.5 of the Import-Export Policy.

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Issues: Whether the import of natural rubber was protected by the transitional arrangement in the Import-Export Policy, so as to avoid confiscation and penalty after the import restriction was imposed.

Analysis: The applicable policy change introduced a restriction permitting import of natural rubber only through specified customs ports and the dispute turned on para 1.5 of the Import-Export Policy, which protects imports where shipment is made within the original validity of an irrevocable letter of credit opened before the restriction date. The relevant validity was the expiry date of the irrevocable letter of credit, not merely the earlier shipment-date validity noted by the Commissioner. As the shipment was made before expiry of the letter of credit and before the restriction was imposed, the import was not hit by the subsequent restriction.

Conclusion: The goods were not liable to confiscation and the penalty could not survive. The appeal was allowed in favour of the assessee.

Final Conclusion: The confiscation order and consequential penalty were set aside because the import fell within the protective transitional arrangement available under the policy.

Ratio Decidendi: Where a policy restriction is imposed after issue of an irrevocable letter of credit, the decisive date for transitional protection is the expiry of the letter of credit, and imports shipped within that period are not liable to confiscation under the subsequent restriction.

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