Transferred REP licences could not claim Exim Policy flexibility, but penalty relief followed for bona fide import belief.

Transferred REP licences could not invoke Exim Policy flexibility provisions for import of the disputed goods, because the policy expressly denied that benefit to transferred licences and the goods had been assessed as office machines without challenge to that classification. The objection to import was therefore sustained. On confiscation, however, the importer's belief that the goods were importable as non-OGL capital goods was treated as bona fide, making the personal penalty and the high redemption fine excessive. Confiscation remained in place, but the personal penalty was set aside and the redemption fine was reduced to Rs. 20,000.

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Issues: (i) Whether flexibility provisions under the Exim Policy could be availed against transferred REP licences for import of the disputed goods; (ii) whether the confiscation order should stand in full, including the penalty and the quantum of redemption fine.

Issue (i): Whether flexibility provisions under the Exim Policy could be availed against transferred REP licences for import of the disputed goods.

Analysis: The goods were claimed to be importable as non-OGL capital goods under the flexibility provisions. However, the policy expressly denied such flexibility where the REP licences had been transferred. The licences in question were transferred licences, and the item had also been assessed as an office machine without any challenge to that classification. The plea based on another licence specifically endorsed for currency counting machines did not establish a general entitlement under the transferred licences.

Conclusion: The objection to import under the transferred REP licences was upheld and the appeal failed on this issue.

Issue (ii): Whether the confiscation order should stand in full, including the penalty and the quantum of redemption fine.

Analysis: Although the import objection was sustained, the belief that the goods could be imported as non-OGL capital goods was accepted as bona fide. In those circumstances, the imposition of personal penalty and a very high redemption fine was found to be excessive. The confiscation itself was not set aside, but the penal consequences required moderation.

Conclusion: The personal penalty was set aside and the redemption fine was reduced to Rs. 20,000.

Final Conclusion: The appeal succeeded only to the extent of relief against the penalty and reduction of the redemption fine, while the confiscation and underlying objection to import under the transferred licences were maintained.

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