Customs exemption under advance licences upheld where authorities could not add a quantity restriction not stated in the notification.

Customs authorities could not refuse Notification No. 203/92 exemption on the ground that value based advance licences lacked quantity restrictions or were said to conflict with the import policy. The notification required verification only of the express conditions for exemption, namely production of a value based DEEC and compliance with the bond and undertaking requirements. The authorities had no jurisdiction to go behind the licence or deny the benefit on an extraneous policy objection. A contemporaneous DGFT clarification also supported that quantity restriction was not required when the licences were issued. Duty-free clearance was therefore upheld and the departmental appeals failed.

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Issues: Whether customs authorities could deny the benefit of Notification No. 203/92 to imports made under value based advance licences on the ground that the licences did not contain quantity restrictions and were said to be inconsistent with the import policy.

Analysis: The licences were issued before the goods were brought into Sensitive List III, and the notification required the customs authorities only to verify the conditions expressly stipulated for availing exemption. Those conditions were limited to production of a value based DEEC and compliance with the bond and undertaking requirements. The customs authorities had no jurisdiction to go behind the licence or to refuse exemption on an extraneous ground such as alleged non-conformity with policy requirements relating to quantity restriction. The contemporaneous clarification from DGFT also supported the position that quantity restriction was not required when the licences were issued.

Conclusion: The denial of duty-free clearance was unjustified, and the exemption benefit was correctly allowed to the importers.

Final Conclusion: The departmental appeals failed, and the orders granting duty-free clearance were sustained.

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