2006 (7) TMI 347 - AT - Customs

Summary

Issues:
1. Validity of Special Import Licences (SILs) acquired by the appellant.
2. Allegation of false/bogus transfer letters regarding SILs.
3. Benefit of Notification 117/94-Cus. regarding exemption for goods.
4. Limitation on cancellation/invalidation of SILs.
5. Penalty under Section 114A of the Customs Act, 1962.
6. Confiscation, fine, and penalty under Section 112 of the Customs Act, 1962.

Validity of SILs:
The appellant acquired 22 SILs through a chain of transfers. The licenses were verified by the DGFT before acquisition. The SILs had no endorsements of cancellation or defacement when used for imports, and proper officers cleared the goods without questioning the validity of the licenses. The Tribunal found the SILs valid, transferable, and akin to negotiable instruments. The holders acquired them in good faith with full consideration, absolving them of liability for any alleged irregularities by previous holders.

Benefit of Notification:
Notification 117/94-Cus. exempts goods covered by SILs, irrespective of the validity of transfer letters. The exemption applies as long as the importer presents a valid SIL matching the imported goods. The Tribunal cited legal precedents supporting the validity of SILs until avoided, ensuring the benefit of exemption even if the SILs are subsequently cancelled.

Limitation on Cancellation/Invalidation:
The appellants were not involved in any cancellation or invalidation of SILs and were unaware of any such proceedings. The Tribunal noted a prima facie case on limitation due to lack of conclusive evidence establishing the cancellation by the DGFT beyond reasonable doubt.

Penalty under Section 114A:
No penalty was imposed under Section 114A as the requirements for penalty were not met in this case. The Tribunal rejected comparisons to other cases involving fictitious importers, emphasizing that the appellants were genuine holders who acquired the SILs in good faith.

Confiscation, Fine, and Penalty under Section 112:
Since the imports were not found to be flawed, no confiscation, penalties, or duty demands were justified. The Tribunal modified the pre-deposit order, waiving the requirement as the appellants made a strong prima facie case.

In conclusion, the Tribunal ruled in favor of the appellants, upholding the validity of the SILs, granting the benefit of exemption under the notification, and dismissing penalties and confiscation due to the lack of evidence supporting any irregularities in the imports.