Import policy for second-hand machinery in Export Processing Zones still governs age and residual-life limits, with penalty relief granted.

Special import permission for Export Processing Zone units did not override the policy condition governing second-hand machinery. The policy had to be read harmoniously so that the age and residual-life declaration retained legal effect; machinery exceeding seven years of age was therefore not permissible for import. However, the factual circumstances that the machinery was supplied free of cost, intended only for export production, stored in a bonded warehouse, and had a residual life of more than five years justified leniency on penalty, leading to reduction of the redemption fine.

---

---

Issues: Whether second-hand machinery imported for use in an Export Processing Zone could be treated as permissible for import despite the age and residual-life condition contained in the import policy.

Analysis: The import policy governing second-hand machinery had to be read harmoniously with the special permission applicable to Export Processing Zone units. The declaration regarding age and residual life would be meaningless unless the machinery satisfied the policy condition limiting import of old machinery. On that construction, the machinery above seven years of age was not permissible for import. At the same time, the facts showed that the machinery had been supplied free of cost, was intended only for export production, was lying in bonded warehouse, and had a residual life exceeding five years, which justified leniency on the quantum of penalty.

Conclusion: The import of the second-hand machinery was held to be not permissible in law, but the redemption fine was reduced from Rs. 1,00,000 to Rs. 25,000.

Final Conclusion: The appeal succeeded only to the limited extent of reduction of fine, while the adverse finding on the permissibility of import was sustained.

Ratio Decidendi: A special import permission for Export Processing Zone units does not override a policy condition on the age and residual life of second-hand machinery, and the policy must be construed so that the prescribed declaration has legal effect.

---