1987 (8) TMI 276 - AT - Customs

Issues Involved:

1. Interpretation of Letter of Credit (L/C) dated 25-11-1980.
2. Validity of licences under Import Policy A.M. 1981 versus A.M. 1982.
3. Firm commitment prior to 1-4-1981.
4. Applicability of Import Policy year 1980-81 or 1981-82.

Detailed Analysis:

1. Interpretation of Letter of Credit (L/C) dated 25-11-1980:

The applicants argued that the L/C dated 25-11-1980 was a confirmed irrevocable commercial Letter of Credit for U.S. $3,78,300, despite an additional condition limiting its validity to U.S. $75,660 initially. The Customs Authorities contended that the L/C was only valid for U.S. $75,660 and subsequent amendments were fresh commitments. The Tribunal had to determine whether the L/C was irrevocable for the entire sum or only for the initial amount. The Tribunal found that the L/C was only irrevocable up to U.S. $75,660. The applicants argued that the interpretation of the L/C by the Tribunal was incorrect and that the correct interpretation of the L/C was a question of law that needed to be referred to the High Court.

2. Validity of licences under Import Policy A.M. 1981 versus A.M. 1982:

The applicants contended that the licences issued during the Policy A.M. 1981 should govern the imports, and the subsequent Policy A.M. 1982 should not affect the validity of these licences. The Customs Authorities argued that the Policy A.M. 1982, which banned the import of the goods in question, governed the imports since the goods were shipped and arrived during the currency of this policy. The Tribunal held that the changes in the subsequent policy (A.M. 1982) would govern the imports due to a condition in the licences stating that the grant of licences was subject to any prohibition or regulation affecting the importation of goods at the time of their arrival.

3. Firm commitment prior to 1-4-1981:

The applicants argued that they had made a firm commitment by opening an irrevocable L/C prior to 1-4-1981, which should validate the imports under the Policy A.M. 1981. The Customs Authorities contended that the L/C was not valid for the entire amount before 1-4-1981, and the amendments made were fresh commitments. The Tribunal had to decide whether there was a firm commitment before 1-4-1981. The Tribunal found that the commitment was only for U.S. $75,660 initially and not for the entire amount.

4. Applicability of Import Policy year 1980-81 or 1981-82:

The applicants argued that the imports should be governed by the policy year 1980-81 under which the licences were issued. The Customs Authorities contended that the imports should be governed by the policy year 1981-82, which was in effect at the time of the importation of goods. The Tribunal had to determine which policy year governed the imports. The Tribunal held that the imports were governed by the policy year 1981-82 due to the condition in the licences and the timing of the shipments and arrivals.

Separate Judgments Delivered:

1. Member (Judicial): Agreed that the questions of law should be referred to the High Court, emphasizing the interpretation of the L/C and the validity of the licences under the respective import policies.
2. Member (Technical): Disagreed, arguing that the interpretation of documents not required under the Customs Act should not be referred to the High Court and that the questions raised were settled by the Supreme Court.
3. Third Member: Agreed with the Member (Judicial) that the questions raised were indeed questions of law and should be referred to the High Court for interpretation.

Final Order:

The majority view held that the following questions of law should be referred to the High Court for opinion:

1. Whether the L/C dated 25-11-1980 is a confirmed irrevocable Letter of Credit for U.S. $3,78,300.
2. Whether there was a firm commitment prior to 1-4-1981 by opening an irrevocable Letter of Credit to cover the goods ordered to be confiscated.
3. Whether the additional licences are valid to cover the goods shipped after the Policy A.M. 1982 came into force.
4. Whether the imports are governed by the policy year 1980-81 or 1981-82.

The Reference Applications were allowed, and the questions were referred to the Hon'ble Bombay High Court for opinion.

← Previous Next →