Import restrictions must flow from the policy itself; Handbook of Procedure cannot create a standalone actual user condition.

Import of spares for earth-moving machinery was treated as permissible under the 1992-1997 Export-Import Policy, which allowed such imports by any person and limited the actual user condition to cases where a licence was otherwise required and no dispensation existed. The Handbook of Procedure could not independently create a substantive import restriction in the absence of a supporting policy notification. On that basis, the imports were found not to contravene the import law in force, and the penalty was held unjustified.

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Issues: Whether the import of spares for earth moving machinery during the relevant period was subject to an actual user condition under the Import Policy, and whether the Handbook of Procedure could impose such a restriction so as to sustain the penalty.

Analysis: Paragraph 23 of the Export & Import Policy for 1992-1997 permitted import of spares for capital goods by any person, whether actual user or not, and the actual user restriction applied only where a licence was otherwise required and no dispensation had been granted. The restriction relied upon by the adjudicating authority was drawn from paragraph 75 of the Handbook of Procedure. The Handbook was treated as containing administrative guidelines and not substantive restrictions, and restrictions on import could not be created through the Handbook in the absence of a supporting notification under the policy.

Conclusion: The imports were not in violation of the Export-Import law in force during the relevant period, and the penalty was unjustified.

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

Ratio Decidendi: Import restrictions must arise from the operative import policy or a valid notification, and not from the Handbook of Procedure unless the policy itself authorises such restriction.

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