Import licence breach and re-export relief where goods formed part of an export-oriented transaction

Imported machinery components brought into India for assembly and subsequent export required an import licence because they were not merely goods in transit. Even so, the transaction was substantially export-oriented, with significant value addition in India and material foreign exchange earnings, so re-export could be permitted without confiscatory fine. The text recognises a technical breach of import control requirements, but treats equitable relief through re-export as justified where the broader commercial arrangement was directed to export activity.

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Issues: Whether the imported machinery components were liable to confiscation for want of an import licence and whether re-export could be permitted in the circumstances.

Analysis: The goods were deliberately brought into India as part of a larger consignment meant for assembly and subsequent export, and therefore could not strictly be treated as goods in transit. On that footing, an import licence was required. However, the goods formed part of a substantial export-oriented transaction, the value addition in India was significant, and the foreign exchange earning was considerable. In these circumstances, the refusal to interfere with the order permitting re-export without imposing confiscatory consequences was justified.

Conclusion: The goods were technically liable to confiscation for import without a licence, but the order permitting re-export without fine was upheld and the appeal failed.

Final Conclusion: The appellate order was sustained, leaving the assessee free from confiscatory penalty while recognising the technical breach of import control requirements.

Ratio Decidendi: Even where imported goods are technically liable to confiscation for absence of an import licence, re-export may be permitted without fine where the transaction is substantially export-oriented and the equities favour such relief.

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