1993 (5) TMI 89 - AT - Customs

Summary

Issues:
Unauthorized importation without cover of import license, confiscation of goods, imposition of penalty, eligibility for customs duty exemption under Notification 339/85-Cus., validity of import under OGL No. 20/90, compliance with terms and conditions of Letter of Approval.

Detailed Analysis:

1. Unauthorized Importation without Import License:
The case involved the confiscation of lycra yarn imported without the necessary import license. The appellants had an approved manufacturing unit for ready-made garments but imported yarn not mentioned in their approved project report. The adjudicating authority held the import unauthorized and confiscated the goods, denying the benefit of customs duty exemption.

2. Validity of Import under OGL No. 20/90:
The judgment referred to OGL No. 20/90, which permits units in Export Processing Zones to import goods subject to compliance with terms in the Letter of Approval. Failure to comply is considered a violation, leading to actions under the Imports and Exports (Control) Act, 1947. The imported goods did not align with the project report, indicating a breach of import conditions.

3. Compliance with Letter of Approval Terms:
The Letter of Approval specified the approved items for manufacture in the Export Processing Zone. The importers requested an amendment to include lycra yarn as raw material, indicating awareness of the licensing restrictions. The judgment concluded that the importers knowingly imported goods not covered by the import license.

4. Eligibility for Customs Duty Exemption:
The appellants claimed exemption under Notification 339/85-Cus., which required goods covered by a necessary license. The judgment found that the import did not qualify for this exemption due to non-compliance with OGL No. 20/90 and the absence of machinery to use goods within the Zone for export production.

5. Decision and Upheld Penalties:
The appellate tribunal upheld the confiscation of the unauthorized import, confirmed the duty demand due to the ineligibility for the customs duty exemption, and upheld the penalty of Rs. 5000 for contravention of Section 112. The appeal was rejected, affirming the impugned order.

In conclusion, the judgment emphasized the importance of adhering to import licensing requirements and project report specifications for goods imported into Export Processing Zones. Non-compliance led to the confiscation of goods, denial of customs duty exemption, and imposition of penalties, highlighting the significance of following legal procedures in import transactions.