1992 (9) TMI 113 - HC - Customs

Summary

Issues Involved:
1. Validity of importation of Synthetic Shoe Uppers under REP licences.
2. Interpretation of Import & Export Policy 1985-88.
3. Legitimacy of the clarification dated 23rd February 1988 by the Chief Controller of Imports & Exports.
4. Application of Paragraph 8 of the General Conditions of Appendix 17.
5. Consistency in the Customs authorities' practice and legitimate expectation.

Detailed Analysis:

1. Validity of Importation of Synthetic Shoe Uppers under REP Licences:
The petitioner challenged the adjudication order dated 11-11-1987 by the Deputy Collector of Customs, which held that the importation of footwear components, including shoe uppers, without a proper licence was prohibited under Section 11 of the Customs Act, 1962, and the Imports & Exports Control Act, 1947. The goods were confiscated under Section 111(d) of the Customs Act, 1962, but a lenient view was taken, allowing the importer to redeem the goods on payment of a fine. The petitioner argued that previous consignments of similar goods had been cleared without objection, and the subsequent refusal to clear similar consignments was inconsistent and unjust.

2. Interpretation of Import & Export Policy 1985-88:
The petitioner contended that the REP licences issued under Serial No. D. 2.1(1) of Appendix 17 of the Import & Export Policy, 1985-88, were valid for importing footwear components, including shoe uppers. The Customs authorities argued that synthetic shoe uppers were not covered by the REP licences under the said policy. The court found that the policy did not explicitly exclude shoe uppers from the category of footwear components, and subsequent policy changes excluding shoe uppers indicated that they were initially included.

3. Legitimacy of the Clarification Dated 23rd February 1988 by the Chief Controller of Imports & Exports:
The petitioner argued that the clarification issued by the Chief Controller of Imports & Exports could not amend the Import & Export Policy and was not binding on the courts. The court agreed, stating that such clarifications could not override the published policy and that the interpretation favoring the assessee should be followed in case of ambiguity.

4. Application of Paragraph 8 of the General Conditions of Appendix 17:
The Customs authorities argued that Paragraph 8 of the General Conditions applied to all entries, making the importation of synthetic shoe uppers unauthorized. The petitioner countered that the licences were valid for items listed in Column 4 of the relevant export product and were not subject to Paragraph 8. The court found that Paragraph 8 did not apply unless specifically mentioned in Column 5, and the REP licences were transferable and not subject to actual user conditions.

5. Consistency in the Customs Authorities' Practice and Legitimate Expectation:
The petitioner highlighted that similar consignments had been cleared previously, and the sudden change in the Customs authorities' stance was unjust. The court agreed, emphasizing the principle of legitimate expectation, where consistent past practice creates an expectation that the authorities cannot arbitrarily change without prior notice. The court referenced previous judgments supporting the view that importers should not be penalized for relying on established practices.

Conclusion:
The court set aside the adjudication order dated 11-11-1987, directing the respondents to assess duty and clear the consignments based on the REP licences, treating them as validly imported under the Import Policy 1985-88. The judgment reinforced the importance of consistent application of policies and the principle of legitimate expectation in administrative actions.