Customs exemption cannot be denied on a hyper-technical licensing lapse when substantive eligibility is later satisfied

Exemption under Notification No. 171/90-Cus. could not be denied merely because the drug manufacturing licence was not held at the time of import, where the applicants had already applied for the licence before filing the Bills of Entry and obtained it during adjudication before clearance of the goods. The Tribunal treated the refusal as a hyper-technical approach and held that the substantive conditions of the notification were satisfied and the required licence was subsequently produced. The benefit of the customs exemption was therefore available, the denial was unsustainable, and consequential relief followed.

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Issues: Whether the appellants were entitled to the benefit of Notification No. 171/90-Cus. dated 16-5-1990 despite obtaining the drug manufacturing licence during the pendency of the adjudication proceedings and before clearance of the goods.

Analysis: The notification benefit was denied below solely because the appellants did not hold the drug licence at the time of importation. The record showed, however, that the appellants had applied for the licence before filing the Bills of Entry and obtained the licence during the adjudication proceedings. The Tribunal held that denial of exemption on such a narrow and technical footing was unwarranted when the substantive conditions of the notification had been fulfilled and the required licence was subsequently produced.

Conclusion: The appellants were entitled to the exemption under Notification No. 171/90-Cus. The denial of benefit was unsustainable.

Final Conclusion: The impugned orders were set aside and the appellants obtained consequential relief in accordance with law.

Ratio Decidendi: Exemption under a customs notification should not be denied on a hyper-technical ground where the substantive eligibility conditions are fulfilled and the required licence or supporting document is obtained during the adjudicatory process before final clearance.

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