2014 (2) TMI 69 - AT - Customs

Import of sandalwood - Import made without obtaining proper license - Confiscation of goods - Goods released on bank guarantee - Bank guarantee encashed - Imposition of redemption fine - Held that - proforma invoice is dated 30.03.2006, the remittance for the value of sandalwood to be imported was also made on 30.03.2006; the customs invoice, the fumigation certificate and the Bill of lading, though issued later establish a concretised agreement for export of sandalwood prior to 07.04.2006 (when the restriction on import of sandalwood were issued by the policy circular). The agreement to import the sandalwood thus got crystallised prior to 07.04.2006 - since the import of the sandalwood was bonafide, there is no justification for imposing a redemption fine or confiscating the goods; and that existence of a concluded contract could be inferred from other circumstances, even in the absence of an irrevocable letter of credit. The material on record establishes on the basis of the relevant circumstances that an agreement between the parties for the export and import was entered into and had crystallised prior to the change in the policy - where an importer has entered into a contract in good faith, at a time when goods were importable freely, without restrictions; and had no means to forseeing restrictive changes in the import policy, there is no justification for imposing a redemption fine - Decided in favour of assessee.

Summary

Issues:
- Import of sandalwood without a license
- Confiscation of goods
- Imposition of penalty under Customs Act, 1962

Import of Sandalwood without a License:
The appellant imported sandalwood without a required license, seeking provisional release under Section 143 of the Customs Act, 1962. Despite extensions of bank guarantee validity, the appellant failed to obtain the license, leading to a show cause notice for confiscation and penalty. The appellant argued that prior to policy changes, a firm contract was in place, supported by documents and payments made. The appellant relied on legal precedents to support their case, emphasizing a concluded agreement before policy alterations.

Confiscation of Goods:
The Additional Commissioner ordered the confiscation of the imported sandalwood, providing an option for redemption on payment of a fine and imposing a penalty under Section 112(a) of the Customs Act, 1962. The Commissioner (Appeals) upheld the order, stating the appellant could not benefit from the provisions of the Foreign Trade Policy due to the absence of an irrevocable letter of credit and contravention of import license requirements. The appellate authority dismissed the appeal, emphasizing the import of restricted goods without a license.

Imposition of Penalty under Customs Act, 1962:
The appellant's appeal was based on evidence showing a concrete agreement for sandalwood import before policy changes. The documents, including invoices, certificates, and agreements, indicated a pre-existing arrangement with the exporter. The appellant's compliance with the Foreign Trade Policy provision allowed for the import despite subsequent restrictions. Legal precedents supported the appellant's argument for a concluded contract before policy alterations, justifying the reversal of the confiscation order and penalty imposition.

In conclusion, the Tribunal quashed the orders of the adjudicating authority and Commissioner (Appeals), allowing the appeal without costs due to the appellant's established agreement for sandalwood import before policy changes, as supported by legal precedents and documented evidence.