2000 (8) TMI 90 - HC - Customs

High Court affirms appellant's license status and imported goods legitimacy, dismissing need for irrevocable letter of credit.

The High Court ruled in favor of the appellant, affirming the legitimacy of the imported goods and the appellant's status as a licensee. The judgment ... Import trade control - 'Firm contract' Issues:1. Requirement of irrevocable letter of credit for firm contract backing.Analysis:The judgment revolves around the issue of whether a firm contract needed to be supported by an irrevocable letter of credit for the appellant to benefit from import licenses dated 21-1-1988 and 27-7-1987, which were assigned to the appellant on 3-9-1989. The original licensees had placed orders on foreign suppliers before the assignment, resulting in the importation of Faximilo Transmission Equipment. The import trade control policy for April-March 1988-91 mandated placing a firm order within six months of license issuance, without requiring an irrevocable letter of credit for goods under open general license (O.G.L.). The appellant demonstrated placing a firm order with the foreign supplier, leading to a contractual obligation without the necessity of a letter of credit.The Tribunal's view that the requirement of an irrevocable letter of credit should be implied into the policy and firm order placement was deemed erroneous. The concept of a 'firm order' did not inherently entail establishing a letter of credit or financial arrangements at the time of order placement. The terms of payment were at the discretion of the supplier, and not all foreign orders required letters of credit. The judgment highlighted the distinction in the Import Policy between O.G.L. goods and those shifted under public notice, with the latter necessitating a letter of credit. The appellant's compliance with the license terms by placing a firm order within the stipulated period was considered satisfactory, rejecting the Tribunal's imposition of an additional letter of credit requirement.Ultimately, the High Court ruled in favor of the appellant, affirming the legitimacy of the imported goods and the appellant's status as a licensee. The judgment emphasized that the appellant had fulfilled the license terms by placing a firm order, dismissing the need for an irrevocable letter of credit not mandated by the policy or license terms. The decision favored the appellant against the Revenue, concluding that the appellant's actions aligned with the licensing requirements, thereby validating the importation of goods into India under the assigned licenses.