Transitional import protection under Foreign Trade Policy can override later DGFT restrictions when shipment conditions are satisfied.

A transitional arrangement under paragraph 1.05(b) of the Foreign Trade Policy 2015-20 can protect an import from a later DGFT restriction where the shipment is covered by an irrevocable commercial letter of credit established before the restriction and the contractual and payment obligations were completed within the protected period. In the described analysis, water melon seeds were treated as having been ordered, contracted for, and fully paid for before the restriction, with shipment-linked documents supporting compliance. On that basis, the later restriction did not defeat the import, and the confiscation and penalties were said to fall away once the import was treated as covered by the transitional regime.

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Issues: (i) whether the transitional arrangement under paragraph 1.05(b) of the Foreign Trade Policy 2015-20 protected the import of water melon seeds from the subsequent restriction imposed by the DGFT notification, and (ii) whether the confiscation of goods and the penalties imposed on the importer were sustainable.

Issue (i): whether the transitional arrangement under paragraph 1.05(b) of the Foreign Trade Policy 2015-20 protected the import of water melon seeds from the subsequent restriction imposed by the DGFT notification

Analysis: The imported goods were initially freely importable and were later subjected to restriction. The relevant transitional provision permits such import notwithstanding the subsequent restriction, where shipment is made within the original validity period of an irrevocable commercial letter of credit established before the date of imposition of the restriction. The documents showed that the goods had been ordered, contracted for, and fully paid for before the restriction was introduced, and the shipment-linked documents supported compliance with the transitional condition.

Conclusion: The transitional arrangement applied, and the import could not be denied on the basis of the later restriction.

Issue (ii): whether the confiscation of goods and the penalties imposed on the importer were sustainable

Analysis: Once the import was held to be covered by the transitional arrangement, the foundation for treating the goods as restricted for the purpose of confiscation fell away. The order imposing confiscation and consequential penalties did not survive the correct application of the foreign trade policy provisions.

Conclusion: The confiscation and the penalties were unsustainable and were set aside in favour of the importer.

Final Conclusion: The appeal succeeded because the import fell within the protected transitional regime, and the adverse order against the importer could not be sustained.

Ratio Decidendi: Where a later import restriction is imposed after shipment-related contractual and payment obligations are completed within the protected period contemplated by the transitional arrangement, the import remains permissible notwithstanding the subsequent restriction.

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