Canalising agency import permission treated as valid licence; matter remanded to reconsider licence conditions before confiscation and penalty.

Permission addressed to a canalising agency can constitute a valid import licence where imports occur through a State Trading Enterprise, and high seas sale may be treated as import for customs purposes; the tribunal accepted that permission issued to the canalising agency (MMTC) qualified as the proper licence. However, the ministry's permission was subject to conditions that the adjudicating authority had not examined; confiscation and penalty proceedings under customs law were therefore remanded for fresh consideration of those licence conditions and decided expeditiously. Appeal allowed by remand.

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Issues: Whether the permission/letter issued by the Ministry of Chemicals & Fertilisers addressed to the canalising agency (MMTC) permitting import by high seas sale constitutes a valid licence for the appellants to import technical grade urea and whether the adjudicating authority's rejection on the ground that the letter was not issued by DGFT and not addressed to the party was sustainable.

Analysis: The Tribunal examined the practice relating to canalised imports effected through State Trading Enterprises where the STE places the order on the foreign supplier and subsequently effects high seas sale to the Indian buyer; earlier authorities establish that where imports follow consistent past practice through STEs, questions of confiscation under Section 111(d) and penalty under Section 112 of the Customs Act may not arise. The Tribunal found that the permission dated 15.05.2013 issued to MMTC by the Ministry, allowing the appellants to bring in specified quantity subject to conditions, falls within the recognized regime for canalised/high seas imports. However, the permission itself is subject to conditions which the departmental records had not been considered by the adjudicating authority; accordingly, the Tribunal did not decide the compliance with those conditions on the record but required the adjudicating authority to examine them afresh.

Conclusion: The permission addressed to MMTC can be treated as a valid licence permitting the appellants to import by high seas sale; the matter is remanded to the adjudicating authority to consider the conditions in the permission and decide the case expeditiously in accordance with law.

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