2009 (8) TMI 82 - HC - Customs

Court rules in favor of export company in importation case, emphasizing policy adherence. Successful appeal sets aside impugned orders.

The court ruled in favor of the petitioners, an export-oriented company, in a case concerning the importation of a second-hand machine following changes ... 100% EOU – Import of Second Hand Machinery - Plain Thread Grinding Machine - two policies - promissory estoppel – In the instant case admittedly considering para.9 as the petitioners could have imported the goods having satisfied the said requirement and as in the meantime a new policy had come into force the petitioners by their communication dated 18th April, 1990 and 18th June, 1990 had called on the Chief Controller of Imports and Exports for a clarification regarding the import of the said machine – Held that - The clarification, in our opinion, considering para.24 would result in the petitioners having acted in good faith on the said clarification and consequently the import, therefore, cannot be said to be illegal. In the light of that the impugned order in Original as also the Order of CESTAT are set aside Issues:1. Interpretation of Import and Export Policy regarding the importation of a second-hand 'Plain Thread Grinding Machine'.2. Validity of the Letter of Credit extension and permission for importation post the introduction of a new Import Policy.3. Confiscation of goods and imposition of a fine by the Respondent for alleged unauthorized importation without a license.4. Reliance on the clarification provided by the Chief Controller of Imports and Exports (CCI and E) for extending the Letter of Credit and importing the machine.5. Appeal to CESTAT against the original order and subsequent dismissal of the appeal.Detailed Analysis:1. The petitioners, an export-oriented company, sought to import a second-hand 'Plain Thread Grinding Machine' from the UK for manufacturing Precision Screw Gauges. The machine was ordered before the introduction of a new Import Policy that removed second-hand machines from the Open General Licence list. The petitioners argued that they followed the policy in place during the order placement and subsequent extensions of the Letter of Credit, as per the Import and Export Policy.2. Post the introduction of the new Import Policy, the petitioners faced challenges with the validity of the Letter of Credit extension for importing the machine. The Respondents refused to extend the Letter of Credit, prompting the petitioners to seek clarification from the Chief Controller of Imports and Exports. The clarification received allowed the extension of the Letter of Credit until 30th September, 1990, based on the earlier policy requirements.3. The Respondent alleged that the importation was unauthorized as it lacked a license and imposed a fine but did not penalize the petitioners. The petitioners contended that the import was in line with the previous policy and the clarification provided by the CCI and E, making the confiscation and fine unjustified.4. The petitioners heavily relied on the clarification from the CCI and E, emphasizing that it should prevail over any conflicting interpretations by other authorities. The court acknowledged the significance of the clarification in guiding the petitioners' actions and deemed the importation lawful based on the understanding of the policy requirements.5. An appeal to CESTAT was made against the original order, which was subsequently dismissed. The court, after detailed analysis, set aside the impugned orders, ruling in favor of the petitioners based on their adherence to the policy requirements and the clarification received. The petitioners were allowed to remove the goods, and the ruling was made absolute with no costs imposed.This detailed analysis showcases the legal intricacies surrounding the importation of the machine, the role of policy interpretation, and the significance of official clarifications in guiding import-related decisions, ultimately leading to a favorable judgment for the petitioners.