Specified-port restriction under the DEEC scheme was found unlawful, defeating duty demand, confiscation and penalty.

A specified-port condition under the DEEC scheme was held arbitrary, discriminatory and ultra vires the governing import-export statute, so enforcement action based solely on export through a non-notified port could not stand. The Tribunal applied its earlier ratio on similar scheme-based port restrictions and noted that no separate dispute existed over manufacture from imported inputs. On that basis, the duty demand, confiscation and penalty were unsustainable and were set aside in favour of the assessee.

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Issues: Whether duty demand, confiscation and penalty could be sustained where the export was made through a port not specified under the DEEC scheme.

Analysis: The condition requiring import or export through a specified port was held to be arbitrary, discriminatory and violative of the constitutional guarantees relied upon, and was also found to be ultra vires the controlling import-export statute. The same principle had already been applied by the Tribunal in similar matters concerning movement through a port not covered by the scheme. As the only basis for the impugned action was export through a non-notified port and there was no separate dispute regarding manufacture of the goods from imported inputs, the earlier ratio was treated as fully applicable to the facts.

Conclusion: The duty demands, confiscation and penalty were unsustainable and were set aside in favour of the assessee.

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