Transitional import benefit under Foreign Trade Policy applies where a pre-notification letter of credit covered the import, even in high seas sale deals.

A restrictive import notification issued after a letter of credit has already been established for the subject import does not defeat transitional protection under paragraph 1.5 of the Foreign Trade Policy if the import otherwise satisfies the policy conditions. The decisive factor is the pre-existing letter of credit relating to the import, not whether it was opened by the original importer or the high seas buyer. In a high seas sale, the buyer would ordinarily not open the original letter of credit, and transitional benefit may still be claimed where the submission is made to the DGFT authorities. Confiscation and penalty are not sustainable on the sole ground that the letter of credit was opened by the original importer.

---

---

Issues: Whether the import was entitled to the benefit of the transitional arrangement under paragraph 1.5 of the Foreign Trade Policy when the letter of credit had been issued before Notification No. 41 (RE-2008), and whether the benefit could be denied merely because the letter of credit was opened by the original importer and not by the high seas buyer.

Analysis: The imported goods were covered by a letter of credit issued on 05.09.2008, which was prior to Notification No. 41 (RE-2008) dated 18.09.2008. The purpose of the transitional arrangement was to protect imports already covered by an earlier letter of credit from the effect of the later restriction. The decisive factor was the letter of credit relating to the import itself, not the identity of the person who opened it. In a high seas sale transaction, the buyer would not ordinarily open the original letter of credit, and the submission seeking transitional benefit had also been made to the DGFT authorities.

Conclusion: The transitional benefit under paragraph 1.5 of the Foreign Trade Policy was available, and the denial of such benefit on the ground that the letter of credit was opened by the original importer was unsustainable. The confiscation and penalty were not to be restored.

Final Conclusion: The impugned order allowing the appeal was sustained, and the revenue's challenge failed.

Ratio Decidendi: Where a restrictive import notification is issued after a letter of credit has already been established for the subject import, the transitional protection is available if the import otherwise satisfies the policy conditions, and it cannot be denied merely because the letter of credit was opened by the original importer in a high seas sale transaction.

---