2003 (5) TMI 528 - AT - Customs

Summary

Issues Involved:
1. Interpretation of the conditions of the Value-Based Advance Licence.
2. Application of EXIM Policy provisions.
3. Jurisdiction of Customs authorities versus Licensing authorities.
4. Binding nature of DGFT circulars on Customs authorities.
5. Applicability of judicial precedents.

Detailed Analysis:

1. Interpretation of the Conditions of the Value-Based Advance Licence:
The primary issue was whether the value earmarked for sensitive items under the Value-Based Advance Licence could be utilized for importing non-sensitive items. The appellants argued that the licence allowed flexibility within the same group, permitting the import of non-sensitive items using the value allocated for sensitive items. The Customs authorities, however, contended that the licence conditions and EXIM Policy provisions restricted such flexibility, specifically prohibiting the use of sensitive item values for other imports.

The tribunal examined the licence condition which stated, "Where the individual quantity and values of specific items are indicated, import shall be restricted to that extent and the CIF value shall not be utilized for import of other items." This was interpreted in conjunction with the EXIM Policy, leading to the conclusion that the value for sensitive items could not be used for non-sensitive items.

2. Application of EXIM Policy Provisions:
The EXIM Policy 1992-97 and its amendments were central to the dispute. The tribunal noted that during the period when the licence was issued (1993-94), the policy explicitly excluded the use of sensitive item values for importing other items. The tribunal highlighted Paragraph 110 of the Handbook of Procedures, which reinforced this exclusion. The policy applicable at the time of licence issuance did not permit the flexibility claimed by the appellants.

3. Jurisdiction of Customs Authorities versus Licensing Authorities:
The appellants argued that Customs authorities were not competent to question the terms of the licence issued by the Licensing authority (DGFT). They cited judicial precedents asserting that Customs must adhere to the licence conditions as interpreted by the licensing authority. However, the tribunal found that the Customs authorities acted within their jurisdiction by interpreting the licence in light of the prevailing EXIM Policy provisions.

4. Binding Nature of DGFT Circulars on Customs Authorities:
The appellants relied on DGFT Circular No. 20/95, which they claimed allowed the use of unutilized sensitive item values for non-sensitive items. The tribunal, however, noted that this circular applied to a period after the issuance of the licence and was based on an amended version of the EXIM Policy. The tribunal concluded that the circular did not apply retroactively to the policy period relevant to the case.

5. Applicability of Judicial Precedents:
The appellants cited several judicial precedents to support their case, including decisions from the Delhi High Court and the Supreme Court. The tribunal distinguished these cases based on their specific facts and the policy periods they addressed. The tribunal emphasized that the cited cases did not alter the clear provisions of the EXIM Policy applicable during 1993-94, which governed the disputed licence.

Separate Judgments:
- Member (Technical): Concluded that the appellants were not entitled to the benefit of the notification and upheld the order denying duty-free import of the Non-Alloy Steel Melting Scrap.
- Member (Judicial): Disagreed, arguing that the circulars and licence conditions provided the necessary flexibility, and thus the appellants should be granted the benefit of the notification.
- Third Member (Technical): Concurred with the Member (Technical), emphasizing the harmonious construction of the licence conditions with the EXIM Policy and dismissing the appeal.

Conclusion:
The tribunal concluded that the appellants were not entitled to use the value earmarked for sensitive items for importing non-sensitive items under the DEEC scheme. The appeal was dismissed, affirming the orders of the lower authorities.