DGFT clarification controls SFIS imports of golf carts; Customs cannot override the policy interpretation and impose confiscation or penalty.

DGFT clarification on the Foreign Trade Policy vehicle restriction governed imports of golf carts under SFIS entitlement, because the licensing authority's interpretation of the policy was controlling. Since DGFT stated that golf carts were not to be treated as vehicles for SFIS purposes and no action was taken for wrongful availment of the benefit, Customs could not ignore that clarification or adopt a contrary view to deny the exemption. On that basis, confiscation, duty demand and penalty were unsustainable, and the impugned order was set aside with consequential relief.

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Issues: Whether golf carts imported under SFIS were covered by the restriction on vehicles in para 3.6.4.5 of the Foreign Trade Policy 2004-2009, and whether DGFT clarifications excluding golf carts from the vehicle restriction were binding on Customs so as to deny confiscation, duty demand and penalty.

Analysis: The import was made against SFIS entitlement under Notification No. 92/2004-Cus. and the controversy turned on the scope of the vehicle restriction in the Foreign Trade Policy and the related customs exemption. The DGFT had issued clarifications stating that golf carts were not to be treated as vehicles for the SFIS restriction, and the licensing authority had not initiated any action for wrongful availment of the benefit. Since the policy interpretation rests with the DGFT, its clarifications governed the matter, and Customs could not disregard them or travel beyond the earlier direction issued in remand.

Conclusion: Golf carts were not treated as prohibited vehicles for SFIS purposes, and the DGFT clarifications were binding on Customs. The confiscation, duty demand and penalty were unsustainable.

Final Conclusion: The appeal succeeded and the impugned order was set aside with consequential relief.

Ratio Decidendi: Where the DGFT, as the licensing authority, clarifies the scope of a Foreign Trade Policy restriction, Customs must give effect to that clarification and cannot deny exemption or impose confiscation and penalty on a contrary interpretation.

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