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Issues Involved:
1. Contravention of clause 5(3) of the Import Trade (Control) Order, 1955. 2. Classification of imported goods as spares. Detailed Analysis: 1. Contravention of Clause 5(3) of the Import Trade (Control) Order, 1955: The primary issue was whether the appellants violated clause 5(3) of the Import Trade (Control) Order, 1955, by purchasing goods on a High Sea Sales basis before the goods were imported and cleared through customs. The Department argued that the licence holder, M/s. Hindustan Spinning & Weaving Mills Ltd., sold the goods prior to their importation, which is against the provisions of clause 5(3). This clause mandates that the goods must remain the property of the licence holder until they are cleared through customs, except in cases where the licence is issued to eligible export houses or trading houses for disposal to actual users. The appellants contended that the import was effected in the name of M/s. Hindustan Spinning & Weaving Mills Ltd., and the sale on High Sea Sales basis should be considered a technical violation. They argued that the delivery of goods occurred only after adjudication, and the goods were imported as spares, which can be sold to any person under para 186(10) read with para 185 of the Import Policy. The Tribunal found that the title of the goods had already passed to the appellants before the importation, as evidenced by the contract terms and the appellants' admission in their appeal memorandum. The Tribunal concluded that there was a clear contravention of clause 5(3) of the Import (Control) Order, and this violation could not be dismissed as a mere technical omission. The relaxation in clause 5(3) applies only to sales to actual users, not traders, and since the appellants were trading concerns, the High Sea Sales to them were not permitted. 2. Classification of Imported Goods as Spares: The second issue was whether the imported sodium vapour lamps could be classified as spares under the Import Policy. The appellants argued that the sodium vapour lamp is an assembly of components and should be considered a spare, as defined in para 5(11) of the Policy. They referred to the definition of spares, which includes a part or sub-assembly for substitution, and cited various case laws and clarifications from the licensing authority to support their claim. The Tribunal examined the definition of spares and the relevant provisions of the Import Policy. Para 186(9) of the Policy allows additional licences for importing spares of items falling under specified heading numbers of Schedule 1 to the Imports (Control) Order, 1955. The appellants claimed that the sodium vapour lamps fell under Heading 85.20, which covers electrical filament lamps and electric discharge lamps. The Tribunal noted that most items specified in para 186(9) are machinery or equipment, and only components of the bulbs could be allowed import under a strict interpretation. However, the Tribunal considered a benevolent construction of the entry 85.20, acknowledging that components of the bulb are not needed as spares because the entire bulb must be replaced if any component is worn out. Despite this, the Tribunal concluded that the sodium vapour lamps could not be categorized as spares for street lighting, as they are items for replacement by consumers, not for use as spare parts in manufactured products. Conclusion: The Tribunal upheld the order of confiscation and imposition of redemption fine on the grounds of contravention of clause 5(3) of the Import (Control) Order. However, considering the nature of the goods imported, the redemption fine was reduced to Rs. 1.5 lakhs. The penalty imposed was deemed justified and was not modified. The appeal was disposed of with consequential relief to follow. Separate Judgment: One member, while agreeing with the proposed order, pointed out additional infirmities in the appellants' plea of High Sea Sale. The agreement for High Sea Sale was entered into before the placement of the order with the foreign supplier, which is contrary to the concept of High Sea Sale. The agreement indicated that the goods were imported on behalf of the appellants, suggesting that the non-transferable licence was transferred under the guise of High Sea Sale agreements.
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