2009 (1) TMI 249 - AT - Customs

Tribunal rules against retrospective duty demand on imported goods, emphasizing original intent of license.

The Tribunal ruled in favor of the appellant, holding that the retrospective imposition of quantity restrictions on imported goods was impermissible. It ... Advance Licence – held that - At the time of import of the low silica limestone, the licence did not contain any quantity limits. The appellants subsequently applied to the DGFT for enhancement of the value of the licence. The quantity restriction in respect of import of low silica limestone was made at the time of enhancement. By that time, the appellants had already imported the above mentioned quantity of low silica limestone - Revenue’s contention is that differential quantity between the actual imports and restricted quantity mentioned in the subsequent amended licence is not entitled for duty concession in terms of the Notification No. 203/92-Cus. In our view, this is not correct - Any subsequent change made in the licence would not be having retrospective effect. In any case, the DGFT also had accepted the imports/exports made in terms of the licence and cancelled the letter of undertaking. Later, it is not for the customs department to hold that the appellants violated the licence conditions Issues:1. Interpretation of advance licence terms and subsequent amendments.2. Impact of quantity restrictions on imported goods.3. Validity of duty concession under Notification No. 203/92-Cus.4. Retrospective effect of licensing authority's amendments.5. Compliance with EXIM Policy provisions.6. Customs duty demand on excess imported quantity.7. Applicability of sensitive item classification.Analysis:1. The appeal involved the interpretation of an advance licence for importing SMS Grade Limestone without quantity restrictions initially. Subsequent amendments by the licensing authority imposed quantity limits after the goods were imported, leading to a dispute regarding duty liability on excess quantity imported.2. The Customs Authorities demanded duty on the excess quantity of limestone imported beyond the revised limit specified in the amended licence. The issue centered around whether the excess quantity was entitled to duty-free import under Notification No. 203/92-Cus despite the post-import imposition of quantity restrictions.3. The appellant argued that the amendments to the licence by the DGFT, including quantity restrictions, should not affect imports made before such changes. Citing relevant legal precedents, the appellant contended that retrospective amendments to licences are impermissible, and imports made before such changes should be considered valid.4. The Tribunal noted that the imported goods were within the overall value limit of the licence at the time of import, without any breach of licence terms or notifications. The DGFT had accepted the imports and exports under the original licence terms, leading to the cancellation of the letter of undertaking. Therefore, the subsequent imposition of quantity restrictions could not retroactively impact the duty liability.5. The appellant further argued that the goods imported were low silica limestone, not classified as a sensitive item requiring quantity restrictions. Reference was made to the distinction between limestone and low silica limestone in the EXIM Policy, emphasizing that the sensitive item list covered only limestone, not low silica limestone.6. The Tribunal concluded that the revenue's demand for duty on the excess imported quantity was unjustified. The action of the Customs Authorities in introducing quantity restrictions post-import, thereby converting the value-based licence into a quantity-based one, was deemed unsustainable. The appeal was allowed, granting consequential relief to the appellant.7. The judgment highlighted the importance of interpreting licensing terms and subsequent amendments in a manner that upholds the original intent of the licence and ensures compliance with relevant policy provisions and legal principles.