2009 (8) TMI 110 - HC - Customs

Whether considering Regulation 5(4), was it open to an importer to import capital goods and other goods for setting out a Project Import Scheme and in such an event whether the same would be covered by tariff entry 98.01? Held that - Considering the language of Regulation 5(4) the said regulation will have to be read to mean that if contracts entered into are registered with then the import can be done either under an Import Trade Control licence or R.E.P. Licence so long as the importer has a contract in which the goods sought to be imported are specified and the import is based on the Import Policy. Once such held, it would be clear that the appropriate Customs House Officer had the jurisdiction to register the contract as long as the application was made to him along with the accompanying contract entered into between importer and the person from whom the goods are to be imported. In the instant case, the fact that the importer entered into a contract has not been disputed. The fact that the importer had REP licence were not disputed. In that context, the relief sought for would have to be granted. Petition allowed, the respondents have been directed to register the contract on complying with the requirements set out therein. The bank guarantee furnished, pursuant to the order for 20% of differential duty is directed to be returned duly cancelled.

Issues Involved:

1. Requirement of specific import licence under Regulation 5(4) of the Project Import Regulations, 1986.
2. Validity of REP licences for concessional customs duty under Tariff Heading 98.01.
3. Interpretation of Regulation 5(4) concerning the term "wherever required."
4. Jurisdiction of Customs House Officer to register contracts under REP licences.

Issue-wise Detailed Analysis:

1. Requirement of Specific Import Licence under Regulation 5(4) of the Project Import Regulations, 1986:

The petitioners argued that the Regulations do not mandate a specific import licence for availing the benefit of project import. They claimed that the refusal by the respondent to register the contracts based on the absence of a specific import licence was arbitrary and ultra vires. The respondents contended that the petitioners needed to comply with Regulation 5(4), which requires an import licence for the goods in question. The court examined Regulation 5(4) and noted that the import trade control licence is required "wherever required," implying that it is not always mandatory.

2. Validity of REP Licences for Concessional Customs Duty under Tariff Heading 98.01:

The respondents argued that REP licences could not be used for concessional duty under Tariff Heading 98.01, as these licences do not specifically describe the articles to be imported. The court referred to the Import Policy, which allows REP licences for importing items listed in specific appendices, including capital goods, under certain conditions. The court concluded that REP licences are valid for importing goods under Tariff Heading 98.01 if the contracts are registered and the imports are based on the Import Policy.

3. Interpretation of Regulation 5(4) Concerning the Term "Wherever Required":

The court emphasized that the term "wherever required" in Regulation 5(4) must be given meaning and not rendered superfluous. It interpreted this to mean that an import trade control licence is necessary only when specifically required by the Import Policy. In cases where goods can be imported under an REP licence, there is no need for an additional import trade control licence. This interpretation aligns with the legislative intent to facilitate project imports without unnecessary bureaucratic hurdles.

4. Jurisdiction of Customs House Officer to Register Contracts under REP Licences:

The court held that the Customs House Officer has the jurisdiction to register contracts under REP licences as long as the importer has a valid contract specifying the goods to be imported and the import is in accordance with the Import Policy. The court found that the petitioners had valid REP licences and had entered into contracts for importing the goods, thus meeting the requirements for registration under the Project Import Regulations.

Conclusion:

The court allowed the petition, directing the respondents to register the contracts and return the bank guarantee furnished by the petitioners. The judgment clarified that REP licences are valid for concessional customs duty under Tariff Heading 98.01, provided the contracts are registered and the imports comply with the Import Policy. The court emphasized the importance of interpreting regulations in a manner that facilitates legitimate trade activities without unnecessary restrictions.

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