High Seas Sale import through a canalising enterprise did not breach policy, so customs confiscation and penalty could not stand.

Import policy permitting Urea through designated State Trading Enterprises was applied to a High Seas Sale procurement, with the Tribunal distinguishing import "through" the enterprise from import "by" it. On the facts, purchase from the canalising enterprise before filing the Bill of Entry satisfied the policy requirement, so no legal breach arose merely because the domestic buyer filed the Bill of Entry. As a result, confiscation under Section 111(d) of the Customs Act, 1962 was not attracted and penalty under Section 112(a)(i) could not be sustained.

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Issues: Whether penalty was sustainable for filing the Bill of Entry in respect of Technical Grade Urea imported through a State Trading Enterprise on a High Seas Sale basis.

Analysis: The governing import policy permitted import of Urea through the designated State Trading Enterprises, and the Tribunal applied the settled distinction between import "through" such enterprise and import "by" it. On the facts, the goods were procured from the State Trading Enterprise on High Seas Sale, which satisfied the policy requirement. The reasoning adopted held that no violation arose merely because the domestic buyer filed the Bill of Entry after such procurement. Once the import was found to be in accordance with the policy and consistent practice, confiscation under Section 111(d) of the Customs Act, 1962 was not attracted and penalty under Section 112(a)(i) of the Customs Act, 1962 could not survive.

Conclusion: Penalty was held to be unsustainable and the issue was decided in favour of the appellant.

Final Conclusion: The impugned order was set aside and the appeal succeeded on the ground that import through the canalising State Trading Enterprise on High Seas Sale did not constitute a legal breach warranting confiscation or penalty.

Ratio Decidendi: Where the import policy permits import through a designated State Trading Enterprise, procurement on High Seas Sale from that enterprise does not defeat compliance, and confiscation or penalty cannot be imposed merely because the buyer filed the Bill of Entry.

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