1991 (1) TMI 141 - HC - Customs

Court rules in favor of partnership firm on imprest license revalidation issue. Imports deemed valid.

P. RIPALKUMAR & CO. Versus UNION OF INDIA

The court ruled in favor of the appellants, a partnership firm, in a case concerning the revalidation and endorsement of an imprest license for importing ... Confiscation and Redemption fine - Customs Issues Involved:1. Legality of the revalidation and endorsement of the imprest licence.2. Validity of the import of marble slabs, Potassium Cyanide, and Ethyl Diglycol Ether under the imprest licence.3. Justification for the confiscation of goods and imposition of redemption fines by Customs Authorities.4. Applicability of Supreme Court judgments on additional licences to imprest licences.5. Determination of bona fide import and its implications on confiscation orders.Detailed Analysis:1. Legality of the Revalidation and Endorsement of the Imprest Licence:The appellants, a partnership firm engaged in the export of cut and polished diamonds, were granted an imprest licence for importing uncut and unset diamonds under the 1982-83 Import Policy. The appellants fulfilled their export obligations and sought revalidation of the imprest licence for importing OGL items, which was initially rejected by the authorities based on the 1984-85 Policy. The rejection was deemed extraneous as the 1982-83 Policy allowed such revalidation. Following legal proceedings, including a Supreme Court decision, the authorities eventually revalidated the licence and made the requisite endorsement.2. Validity of the Import of Marble Slabs, Potassium Cyanide, and Ethyl Diglycol Ether:The appellants imported marble slabs, Potassium Cyanide, and Ethyl Diglycol Ether under the revalidated imprest licence. The Customs Authorities questioned the validity of these imports, arguing that the items were not permissible under the current policy. However, the endorsement on the imprest licence, made in accordance with the decision of Mr. Justice Pratap and upheld by the Supreme Court, allowed the import of all OGL items not specifically banned. The imports were made in good faith based on this endorsement.3. Justification for the Confiscation of Goods and Imposition of Redemption Fines:The Customs Authorities confiscated the imported goods and imposed redemption fines, arguing that the imports were not permissible under the 1985-88 Policy. The appellants challenged this, arguing that the imports were bona fide and based on the valid endorsement on their imprest licence. The court found that the appellants acted in good faith, following the endorsement and legal precedents, and thus the confiscation and fines were unjustified.4. Applicability of Supreme Court Judgments on Additional Licences to Imprest Licences:The learned Single Judge initially applied the principles from Supreme Court judgments on additional licences to the case of imprest licences, leading to the dismissal of the appellants' writ petitions. However, the appellants argued that there is a distinction between additional licences and imprest licences, and the principles should not be directly applied. The court acknowledged this distinction and found that the appellants' imports were based on a valid endorsement specific to imprest licences.5. Determination of Bona Fide Import and Its Implications on Confiscation Orders:The court examined whether the imports were made bona fide. Given that the endorsement on the imprest licence allowed the import of OGL items not specifically banned and the imports were made before the Supreme Court's decision in Navinchandra's case, the court concluded that the imports were bona fide. Consequently, the confiscation orders were set aside, and the appellants were entitled to refunds of the redemption fines paid.Judgments Delivered:1. Appeal No. 1105 of 1987: The order of confiscation dated December 4, 1989, was set aside, and the respondents were directed to refund the redemption fine of Rs. 28,260/- to the appellants within eight weeks.2. Appeal No. 1047 of 1987: The order of confiscation dated May 19, 1987, was set aside, and the respondents were directed to refund Rs. 60,000/- to the appellants within eight weeks.3. Writ Petition No. 2985 of 1987: The order of confiscation dated July 11, 1987, was set aside, and the appellants were permitted to clear the goods on payment of requisite duty and demurrage charges. The Customs Authorities were directed to issue a detention certificate.4. Writ Petition No. 2270 of 1987: The order of confiscation dated June 17, 1987, was set aside, and the appellants were permitted to clear the goods on payment of necessary duty and demurrage charges. The Customs Authorities were directed to issue a detention certificate.The appellants were also given the liberty to approach the Joint Controller of Imports and Exports for revalidation of the imprest licence if some value of the licence was still outstanding.