1987 (8) TMI 122 - AT - Customs

Summary

Issues Involved:

1. Validity of the import license for industrial crude palm oil.
2. Firm commitment by opening an irrevocable letter of credit before 1-5-1979.
3. Distinction between licensee and letter of authority holder.
4. Compliance with para 211 of the Import Policy AM-80.
5. Ownership and importation rights under the Customs Act and Import-Export Procedures.

Issue-wise Detailed Analysis:

1. Validity of the Import License for Industrial Crude Palm Oil:

The respondents, M/s. Jain Exports Pvt. Ltd., sought clearance of industrial crude palm oil against a license issued to M/s. P & S Exports Corporation. The Customs authorities objected, citing that the license was invalid under para 211 of the Policy AM-80 as crude palm oil was canalised and no firm commitments were made before 1-5-1979. The Collector of Customs held the import unauthorized and ordered confiscation, allowing redemption on payment of a fine. The Central Board of Excise & Customs reversed this decision, allowing the import on the basis that a firm commitment was made before 1-5-1979.

2. Firm Commitment by Opening an Irrevocable Letter of Credit Before 1-5-1979:

The respondents opened an irrevocable letter of credit on 3-4-1979 for importing industrial palm oil. Initially, this was against licenses issued to M/s. Thalwar & Khuller Pvt. Ltd. However, due to insufficient balance in these licenses, an amendment was made on 9-9-1979 to include a license issued to M/s. P & S Exports Corporation. The Collector and the Government of India argued that this amendment did not constitute a firm commitment before 1-5-1979, thus invalidating the license for the import. The Board, however, held that the firm commitment was established by the original letter of credit and the amendment was a necessary procedural adjustment.

3. Distinction Between Licensee and Letter of Authority Holder:

Shri Krishnamurthy, representing the respondents, argued that a letter of authority holder becomes a license holder upon execution of the letter of authority. He cited the definition of "letter of authority" under Section 2(h) of the Imports & Exports (Control) Act, suggesting that the respondents, as letter of authority holders, had the same rights as the licensee. The Customs authorities contended that the firm commitment must be made by the licensee, not the letter of authority holder, as per para 211 of the Policy AM-80.

4. Compliance with Para 211 of the Import Policy AM-80:

Para 211 of the Policy AM-80 invalidates REP licenses for importing items listed in Appendices 3, 6, 8, and 9 unless a firm commitment was made by opening an irrevocable letter of credit before 1-5-1979. The Collector and the Government of India argued that the irrevocable letter of credit opened on 30-4-1979 was on behalf of M/s. Thalwar & Khuller Pvt. Ltd., not M/s. P & S Exports Corporation. Therefore, no firm commitment existed for the latter before the critical date. The Board, however, interpreted para 211 to include the actions of the letter of authority holder as fulfilling the requirement for a firm commitment.

5. Ownership and Importation Rights Under the Customs Act and Import-Export Procedures:

The Customs authorities argued that the respondents, as letter of authority holders, were not the owners of the goods, and the import license should be in the name of the actual owner at the time of import. Section 147 of the Customs Act allows agents to act on behalf of the owner, but this does not extend to fulfilling requirements under the Import Policy. The Board's decision was based on the interpretation that the letter of authority holder could act on behalf of the licensee, including opening letters of credit and making firm commitments.

Separate Judgments:

Member (Judicial): The appeal should be rejected, supporting the Board's view that the firm commitment by the letter of authority holder before 1-5-1979 was valid, thus the import was authorized.

Member (Technical): The appeal should be allowed, supporting the Collector's view that no firm commitment was made by the licensee before 1-5-1979, thus the import was unauthorized.

Final Decision by the President:

The President constituted a Bench of three Members to resolve the difference. The Bench concluded that the appeal by the Collector of Customs, Bombay, should be allowed, agreeing with the Member (Technical) that no firm commitment was made by the licensee before 1-5-1979. The Board's order was set aside, and the Collector's order of confiscation and fine was restored.