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2017 (10) TMI 671 - AT - CustomsBenefit of transitional arrangement - issuance of LC - N/N. 41 (RE-2008) dt. 18.09.2008 of DGFT - case of Revenue is that the said LC was not issued by Respondent but by M/s Asian Granito India Ltd., the respondent being High Seas Buyer there is no question of LC being opened by the respondent buyer for the foreign supplier - Held that - The objective of allowing transitional arrangements is only on the basis that if LC issued before issuance of Notification to avoid the retrospective effect of such Notification. It is not significant who has opened the LC, the important aspect is the LC in respect of subject Import. It is also pertinent to note that LC in normal course is never opened by High Seas Buyer for the reason that High Seas Buyer has no Locus Standi as regard payment of transaction of imported goods. It is between foreign supplier and original importer (High Seas Seller) of the imported goods - the benefit of transitional arrangement in terms of para 1.5 of Foreign Trade Policy was clearly available to the Respondent - appeal dismissed - decided against Revenue.
Issues:
1. Interpretation of transitional arrangements under para 1.5 of Foreign Trade Policy. 2. Validity of LC issued before the issuance of Notification No.41 (RE-2008). 3. Confiscation of goods under Section 3 and 11 of Foreign Trade (D.R.) 1992. 4. Imposition of redemption fine and penalty under Customs Act, 1962. Analysis: Issue 1: Interpretation of transitional arrangements under para 1.5 of Foreign Trade Policy The case involved a dispute regarding the applicability of transitional arrangements under para 1.5 of the Foreign Trade Policy. The Adjudicating Authority confiscated the goods due to the absence of a license and permission from the DGFT for transitional arrangements. However, the Commissioner (Appeals) allowed the appeal, extending the transitional arrangements as the LC was issued before the relevant notification. The Tribunal upheld this decision, emphasizing that the objective of transitional arrangements is to prevent the retrospective effect of notifications and that the identity of the entity opening the LC is not crucial as long as it pertains to the subject import. Issue 2: Validity of LC issued before the issuance of Notification No.41 (RE-2008) The core contention revolved around the validity of the LC issued before the issuance of Notification No.41 (RE-2008). The revenue argued that since the LC was opened by the original importer and not the respondent, the transitional provisions were not available. However, the Tribunal disagreed, stating that the benefit of transitional provisions was indeed available to the respondent as the LC was issued before the notification. The Tribunal highlighted that the High Seas Buyer, in this case, had no obligation to open the LC, and compliance with the transitional arrangement conditions was sufficient. Issue 3: Confiscation of goods under Section 3 and 11 of Foreign Trade (D.R.) 1992 The Adjudicating Authority confiscated the goods under Section 3 and 11 of the Foreign Trade (D.R.) 1992 due to the perceived violation of import restrictions. However, the Tribunal, considering the valid issuance of the LC before the notification date, deemed the confiscation unjustified and upheld the decision to allow the redemption of the goods upon payment of a fine. Issue 4: Imposition of redemption fine and penalty under Customs Act, 1962 A penalty was imposed on the respondent under Section 112(a) of the Customs Act, 1962, along with a redemption fine. The Commissioner (Appeals) had set aside these penalties, and the Tribunal, in line with its findings on the LC validity and transitional provisions, dismissed the revenue's appeal, thereby upholding the decision to waive the penalties imposed on the respondent. In conclusion, the Tribunal's judgment centered on the correct interpretation of transitional arrangements, the validity of the LC issued before the notification, the confiscation of goods, and the imposition of penalties under the relevant laws. The decision favored the respondent, emphasizing compliance with the transitional provisions and the timing of the LC issuance as crucial factors in determining the applicability of import regulations and penalties.
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