Re-export of duty-exempt imports for home consumption requires prior approval; unauthorised diversion justified penalty.

Goods imported under Open General Licence and cleared for home consumption with duty exemption could not be diverted for re-export without prior approval under the import control scheme. The clarification that such goods were meant for domestic use was treated as consistent with the statutory framework and its public-interest object, and the phrase "stock and sale" was read as permitting domestic consumption rather than unrestricted export abroad. The penalty was also sustained because the unauthorised diversion had yielded substantial profit and the goods were not available for ordinary confiscation treatment.

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Issues: (i) Whether goods imported under Open General Licence and cleared for home consumption with duty exemption could be re-exported without permission of the import control authority and whether the clarification that such goods were meant for use within India was binding; (ii) whether the penalty imposed required interference.

Issue (i): Whether goods imported under Open General Licence and cleared for home consumption with duty exemption could be re-exported without permission of the import control authority and whether the clarification that such goods were meant for use within India was binding.

Analysis: The import and export regime permitted exemption in public interest, but the goods in question were cleared on a bill of entry for home consumption and not for export-oriented use. The Tribunal treated the clarification issued by the import control authority as supported by the statutory scheme, particularly the power to regulate disposal of imported goods where they were not to be utilised for the intended purpose. The distinction between mere import under Open General Licence and import coupled with full duty exemption for life-saving equipment was held material. In that setting, re-export after clearance for home consumption was held not permissible without prior approval, and the expression "stock and sale" was construed in the context of domestic consumption rather than an unrestricted right to export abroad.

Conclusion: The issue was decided against the assessee and in favour of Revenue.

Issue (ii): Whether the penalty imposed required interference.

Analysis: The Tribunal found that the appellants had derived substantial profit from the unauthorised diversion of the goods for export and that the penalty was intended to account for that gain, especially since the goods were not available for confiscation in the ordinary manner. On that basis, no ground was found to reduce or modify the penalty.

Conclusion: The issue was decided against the assessee and in favour of Revenue.

Final Conclusion: The appeal failed on all substantive grounds, and the confiscation-related penalty order was sustained in full.

Ratio Decidendi: Goods imported under Open General Licence and cleared for home consumption for domestic stock and sale cannot be diverted for re-export without the approval contemplated by the import control scheme, and the exemption framework must be construed in accordance with its public-interest object.

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