Foreign trade import restriction and re-export: redemption fine and penalty not sustained despite unauthorised import finding.

Import of Special Boiling Point Spirit was treated as unauthorised because paragraph 2.20 of the Foreign Trade Policy 2015-20 restricts import of the notified goods to the regulated State Trading Enterprises channel. However, once re-export of the goods was permitted, redemption fine was not justified. Penalty under the Customs Act, 1962 was also not sustained because the goods were correctly described and classified in the bill of entry, were intended for captive manufacture, and there was no misdeclaration, suppression, or mala fide conduct.

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Issues: Whether the import of Special Boiling Point Spirit was unauthorised under paragraph 2.20 of the Foreign Trade Policy 2015-20 and whether, after permitting re-export, redemption fine and penalty could still be sustained.

Analysis: Paragraph 2.20 permits import of the notified goods only through State Trading Enterprises, and any authorization under sub-paragraph (c) is confined to that regulated channel. The import was therefore unauthorised. However, once re-export of the goods was accepted, the imposition of redemption fine was not justified. The importer had correctly described the goods and classified them properly in the bill of entry, the goods were for captive use in manufacture, the value was low, and there was no misdeclaration, suppression, or mala fide to support penalty under the Customs Act, 1962.

Conclusion: The redemption fine and penalty were set aside and re-export of the goods was allowed.

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