2015 (4) TMI 642 - HC - 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 - Whether a concluded contract had been arrived at between the respondent and the foreign supplier prior to 07.04.2006 - Held that - Prior to 07.04.2006, sandalwood could be imported against an open general licence (OGL). The Tribunal relied upon two vital facts for coming to the conclusion that the respondent had entered into a valid and binding contract for the purchase of sandalwood from their foreign supplier on 30.03.2006 i.e. before the notification dated 07.04.2006. Firstly, an invoice dated 30.03.2006 was issued. Although the document states that it was a proforma invoice, it would make no difference in the facts and circumstances of the case. Admittedly, on 30.03.2006, the appellant paid the supplier a sum of US 38,000 in respect of the goods. In fact, due to a short supply, the supplier had refunded an amount of 4921. The Tribunal s conclusion that the facts establish the formation of a contract between the parties on or before 30.03.2006 is justified and in any event cannot be said to be absurd or perverse. In fact, the finding appears to be correct - No substantial question of law arises - Decided against Revenue.

Summary

Issues: Appeal against CESTAT order setting aside adjudicating authority's decision on sandalwood import restrictions.

Analysis:
1. Substantial Questions of Law:
- The appellant raised several substantial questions of law regarding the Tribunal's decision to set aside the original order. These questions revolved around the timing of the contract, import restrictions, validity of the letter of credit, and the application of import-export policy provisions and previous case law.

2. Validity of Contract:
- The main issue was whether a concluded contract existed before the import restrictions came into effect on 07.04.2006. The Tribunal found that a valid contract was in place between the respondent and the foreign supplier on 30.03.2006, supported by the issuance of an invoice and payment made by the appellant on that date. The Tribunal's conclusion was deemed justified and not absurd, leading to the dismissal of the appeal.

3. Payment and Contract Formation:
- The appellant's payment of US$38,000 to the supplier on 30.03.2006, along with a refund due to short supply, indicated a binding agreement before the regulatory changes. The issuance of a proforma invoice was not considered a hindrance to contract formation, as the essential elements of a contract were present.

4. Legal Entitlement and Precedent:
- The Tribunal's decision to grant the respondent the benefit of import-export policy provisions and apply the precedent of previous cases where contracts were made before shipment/import was upheld. The Tribunal's reliance on factual evidence and legal principles was found to be appropriate, leading to the rejection of the appeal.

5. Dismissal of Appeal:
- The High Court dismissed the appeal against the CESTAT order, emphasizing the validity of the contract formed before the import restrictions on sandalwood. The Court found no substantial question of law raised by the appellant, affirming the Tribunal's decision based on factual and legal grounds.

In conclusion, the High Court upheld the Tribunal's decision regarding the existence of a valid contract before the regulatory changes, dismissing the appeal against the CESTAT order on sandalwood import restrictions. The Court found no merit in the substantial questions of law raised by the appellant, affirming the Tribunal's reliance on factual evidence and legal principles in reaching its decision.