Import exemption conditions must be strictly met; later administrative communication cannot override notification-based liability for confiscation and duty.

An exemption notification and corresponding import policy required the importer to bring goods of the prescribed minimum CIF value within the licence validity period. Non-fulfilment of that condition attracted confiscation, duty and interest. A later DGFT communication treating conversion of a zero-duty licence into a 15% duty licence as retrospective, and waiving interest, could not override the notification because amendment power lay with the issuing authority. The document also notes that while confiscation and penal consequences were upheld in principle, the redemption fine and penalty were considered excessive on the facts and reduced.

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Issues: (i) Whether failure to import goods of the minimum CIF value prescribed under the exemption notification and import policy made the goods liable to confiscation, duty and interest. (ii) Whether the redemption fine and penalty imposed required interference, and if so to what extent.

Issue (i): Whether failure to import goods of the minimum CIF value prescribed under the exemption notification and import policy made the goods liable to confiscation, duty and interest.

Analysis: The exemption under Notification No. 111/95-Cus. and the corresponding import policy condition required import of goods of the specified minimum value within the licence validity period. That condition was not fulfilled. The later communication by the DGFT purporting to treat conversion of the zero-duty licence into a 15% duty licence as retrospective and to waive interest could not override the notification condition, since the power to amend the notification lay with the issuing authority. The goods were cleared on a zero-duty licence, and the subsequent DGFT correspondence could not defeat the statutory consequence of non-fulfilment of the exemption conditions.

Conclusion: The goods were rightly held liable to confiscation and to duty with interest; this issue was decided against the assessee.

Issue (ii): Whether the redemption fine and penalty imposed required interference, and if so to what extent.

Analysis: Although the violation of the import condition justified confiscation and imposition of penal consequences, the facts warranted some leniency on the quantum. The original redemption fine and penalty were considered excessive in the circumstances, and reduction was found appropriate while sustaining the liability in principle.

Conclusion: The redemption fine and penalty were reduced, with the balance appeal dismissed; this issue was partly in favour of the assessee.

Final Conclusion: The appeal succeeded only to the limited extent of reduction of redemption fine and penalty, while the findings on violation, confiscation, duty and interest were sustained.

Ratio Decidendi: A statutory exemption condition and the corresponding import obligation cannot be overridden by a later administrative communication from another authority lacking power to amend the notification, and non-fulfilment of the condition attracts confiscation, duty and interest.

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