2026 (2) TMI 402 - AT - Customs

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 ... Acceptability of permission addressed to canalising agency as a valid license for import - high seas sale as import through a State Trading Enterprise / canalising agency - confiscation u/s 111(d) and imposition of penalty u/s 112 - remand for consideration of licence/permission conditions - HELD THAT:- The appellants in this case rely on the matter of Sunita Commercials P Ltd. & Ors vs CC Mundra [2023 (1) TMI 814 - CESTAT AHMEDABAD]. He draws attention of this court to para 5.4, which is reproduced below to indicate as to how the licenses or permission are granted whenever the item is canalized. It finds that the decision quoted by the learned Advocate covers the matter and the permission which has been granted by addressing to MMTC for allowing the appellants to import can be taken to be the proper license. However since the permission by the Ministry of Chemicals & Fertilizers is subject to various conditions which department has not considered as far as record of this case are concerned. Therefore, for the limited purposes the matter is remanded to the adjudicating authority with expectation that the matter being of small quantity and already delayed, the same shall be decided expeditiously. Appeal allowed by way of remand. 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.