Bona fide pre-restriction imports and letter of credit requirements: later policy changes cannot defeat genuine prior contracts.

A bona fide import under a concluded pre-restriction contract was treated as outside the mischief of a later restrictive policy change. The absence of an irrevocable letter of credit, by itself, did not establish contravention of the import policy where the contract had already been entered into in good faith and no antedating, fraud, or mala fides was shown. The commentary also notes that the floor-price restriction was aimed at preventing post-notification arrangements, not invalidating genuine pre-notification commitments. On that reasoning, confiscation under section 111(d) of the Customs Act and the associated redemption fine were not sustainable.

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Issues: Whether imports under a concluded bona fide contract, entered into before the restrictive policy change, could be confiscated under section 111(d) of the Customs Act, 1962 for want of a letter of credit and for import value below the notified floor price, and whether the redemption fine imposed was sustainable.

Analysis: The contract was not found to be antedated, suspect, or fraudulent, and the importer had attempted to cancel the contract after the policy change. The restriction introduced by Notification No. 34/(RE-98)/1997-2002 dated 10-12-1998 had to be applied in the context of bona fide pre-existing commitments, and the absence of an irrevocable letter of credit by itself did not establish that the import was contrary to the policy where the contract had already been concluded in good faith. The decision also drew support from the view that the letter of credit condition was meant to prevent post-notification contracts, not to invalidate genuine pre-notification commitments.

Conclusion: Confiscation under section 111(d) of the Customs Act, 1962 was not justified, and the redemption fine could not be sustained.

Final Conclusion: The impugned order was set aside and the appeals succeeded with consequential relief.

Ratio Decidendi: A bona fide import under a concluded pre-restriction contract cannot be denied clearance or confiscated merely because no letter of credit was opened, where the restrictive policy change came later and no mala fides are established.

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