Contextual interpretation of REP licence endorsements limits generic item descriptions to the specific export product for which they were issued.

An REP licence endorsement for a generic item must be construed in the context of the specific export product against which it was issued. Where the endorsed description admits of different types, only goods actually used as raw materials or components in that export product fall within the licence, and the licensing authority or customs may verify and exclude goods outside that scope. On that approach, an endorsement of "evaporators" against machine-tool exports did not extend to evaporators for air-conditioners, because the licence description was product-specific and not a general authorisation.

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Issues: Whether the endorsement "evaporators" in the REP licence shopping list covered evaporators for air-conditioners, or only evaporators actually used in the manufacture of machine tools under the relevant export product group.

Analysis: Paragraph 8 of Appendix 17 of the Export-Import Policy, 1985-88 required the items listed for an REP licence to be those actually used as raw materials or components in the manufacture of the exported product, and empowered the licensing authority to scrutinise and exclude items not so used. Where the endorsed item is of a generic description and admits of different types, the description has to be read in the context of the export product against which the licence was issued. The endorsement "evaporators" against export product A-46 could therefore refer only to evaporators used in machine tools and not to evaporators for air-conditioners. Customs was not going beyond the licence description in verifying whether the imported goods matched the endorsed item.

Conclusion: The licence did not cover evaporators for air-conditioners, and the objection of the revenue was upheld.

Final Conclusion: The confiscation was sustained, the redemption fine was reduced, and the appeal failed in substance.

Ratio Decidendi: Where an import licence contains a generic item endorsed in relation to a specified export product, the endorsement must be construed with reference to the product for which it was issued, and customs may verify whether the imported goods fall within that endorsed description.

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