Import compliance certificate requirements for vehicles were treated as satisfied by later transport authority registration and fitness certification.

Import of new vehicles was examined against the Chapter 87 licensing condition requiring a valid type approval or compliance certificate under Rule 126 at the time of import and proof of conformity of production under Rule 126A within six months. Although the requirement was treated as mandatory, the vehicles were later registered by the competent transport authority and were issued certificates of fitness and tourist permits recording compliance with the motor vehicle law and rules. On that basis, the policy objective was treated as satisfied, and the note states that the earlier procedural deficiency did not justify confiscation or penalty.

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Issues: Whether confiscation and penalty were justified for import of new vehicles on the ground of non-production of the type approval/compliance certificate required under the import licensing note, despite subsequent registration and certification by the transport authorities.

Analysis: The import licensing conditions for Chapter 87 required the importer, at the time of import, to hold a valid certificate of compliance under Rule 126 of the Central Motor Vehicles Rules, 1989 and to submit proof of conformity of production under Rule 126A within six months. The requirement was treated as mandatory, but the facts also showed that the vehicles had been registered by the competent transport authority and had been issued certificates of fitness and tourist permits stating compliance with the motor vehicle law and rules. In that situation, the object of the policy condition stood fulfilled. The Tribunal held that the policy condition was wrongly invoked to sustain confiscation, and that the earlier procedural deficiency did not justify denial of the substantive benefit.

Conclusion: The confiscation and penalty were unsustainable and were set aside in favour of the assessee.

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