Import licence coverage and promissory estoppel barred customs confiscation, duty denial, and penalty where export obligation was fulfilled.

Imported goods covered by a valid DEEC/advance authorisation could not be confiscated merely because customs considered them technically unsuitable for the end product, where the licence itself imposed no thickness or gauge restriction and the export obligation had been fulfilled. The authorities could not go behind the licence to deny duty exemption or invoke Sections 111(m) and 111(o) of the Customs Act, 1962. Promissory estoppel also bound the Government because importers altered their position on the representation underlying the scheme. With the confiscation failing, no independent basis remained for penalty under Section 112(a), so the penal action was unsustainable.

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Issues: (i) Whether confiscation of the imported CRCA sheets under Section 111(m) and Section 111(o) of the Customs Act, 1962 was sustainable in law; (ii) whether the doctrine of promissory estoppel applied to the import and duty exemption claim; (iii) whether the penalty imposed on the firm and its proprietor under Section 112(a) of the Customs Act, 1962 was lawful.

Issue (i): Whether confiscation of the imported CRCA sheets under Section 111(m) and Section 111(o) of the Customs Act, 1962 was sustainable in law.

Analysis: The licence and the advance authorisation permitted import of defective CRCA sheets and coils without prescribing any thickness or gauge. The licensing authority had scrutinised the requirement and granted the import permission under the DEEC scheme. The customs authorities could not travel beyond the licence and substitute their own view on whether the imported material was technically suitable for manufacture of the exported bicycle parts. Once the goods corresponded to the description in the licence and the condition of export obligation stood fulfilled, confiscation under Section 111(m) or Section 111(o) could not stand.

Conclusion: Confiscation under Section 111(m) and Section 111(o) of the Customs Act, 1962 was not justified and was set aside in favour of the assessee.

Issue (ii): Whether the doctrine of promissory estoppel applied to the import and duty exemption claim.

Analysis: The Government, through the competent licensing authority, had issued the import authorisation on which the importers acted by arranging exports and altering their position. The scheme was implemented on a representation that duty-free replenishment imports would be available upon fulfilment of the export obligation. In these circumstances, the Governmental authorities could not resile from the promise by asserting that the imported material was not suitable for the export product when no such restriction was imposed in the licence.

Conclusion: The doctrine of promissory estoppel applied and operated against the revenue, in favour of the assessee.

Issue (iii): Whether the penalty imposed on the firm and its proprietor under Section 112(a) of the Customs Act, 1962 was lawful.

Analysis: The penalty was founded on the same alleged illegality that led to confiscation. Once the import was held to be covered by the licence and the confiscation itself failed, no independent basis remained for sustaining penal action under Section 112(a). The finding of contravention was therefore unsustainable.

Conclusion: The penalty under Section 112(a) of the Customs Act, 1962 was not sustainable and was quashed in favour of the assessee.

Final Conclusion: The import was held to be within the scope of the licence and the exemption scheme, the confiscation and valuation-based consequences were rejected, and the penal action also failed, resulting in complete relief to the appellants.

Ratio Decidendi: Where imported goods fall within the description authorised by a valid import licence and the export obligation under a duty exemption scheme has been fulfilled, customs authorities cannot go behind the licence to deny exemption or confiscate the goods on the ground of technical unsuitability not expressed in the licence; promissory estoppel may also bind the Government in such a case.

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