1995 (12) TMI 183 - AT - Customs

Issues Involved:
1. Grounds for upholding the adjudication order.
2. Reliance on the UK Compositors case.
3. Definition of "firm contract" and requirement of a letter of credit.
4. Interpretation of "firm order" in the import policy.
5. Tribunal's theoretical considerations of "firm order."
6. Binding nature of the supplier's commitment.
7. Tribunal's imposition of letter of credit requirement.
8. Harmonious interpretation of "firm order."
9. Impact of letter of credit requirement on policy.
10. Mens rea and bona fide in upholding confiscation and fine.

Issue-wise Detailed Analysis:

1. Grounds for Upholding the Adjudication Order:
The Tribunal upheld the Additional Collector's adjudication order, which was based on the interpretation that the placement of a firm order required the opening of an irrevocable Letter of Credit (L/C). This was despite the fact that this requirement was not explicitly stated in the Import Policy or raised during the hearing.

2. Reliance on the UK Compositors Case:
The Tribunal relied on the case of UK Compositors v. Collector of Customs, Madras, despite no copy of the order or published report being available to the Applicant at the time of the hearing. The Tribunal concluded that the UK Compositors case established a ratio that a "firm contract" requires support by the opening of a letter of credit.

3. Definition of "Firm Contract" and Requirement of a Letter of Credit:
The Tribunal concluded that a "firm contract" within the meaning of para 3 of Appendix 6 requires the opening of a letter of credit. This interpretation was contested by the Applicant, who argued that the Import Policy did not explicitly require a letter of credit for a firm order.

4. Interpretation of "Firm Order" in the Import Policy:
The Applicant argued that the expression "firm order backed by irrevocable letter of credit" in sub-para (ii) of para 5 of Appendix 6 implies that a firm order does not necessarily require a letter of credit. The Tribunal, however, interpreted the policy as requiring a letter of credit for a firm order.

5. Tribunal's Theoretical Considerations of "Firm Order":
The Tribunal held that a "firm order" was not placed based on theoretical considerations, unsupported by any definition in the import policy or statutory authority. The Applicant argued that the imported goods and all attendant circumstances conformed to the order on the supplier and acceptance by him.

6. Binding Nature of the Supplier's Commitment:
The Tribunal concluded that there was no firm commitment binding on the supplier or the Applicant regarding the time schedule for importation of the goods and mode of payment. The Applicant contested this, citing specific stipulations in the order and acceptance.

7. Tribunal's Imposition of Letter of Credit Requirement:
The Tribunal imposed the condition that an order must be backed by a letter of credit for it to be accepted as a "firm order," despite there being no such definition or provision in the Import Policy. The Applicant argued that this amounted to a change of policy, which the Tribunal was not empowered to make.

8. Harmonious Interpretation of "Firm Order":
The Applicant argued that the expression "firm order" should have been interpreted harmoniously with para 218(2) of the April 1988 - March 1991 Policy Book, which provides for the transferability of the licence throughout its validity period.

9. Impact of Letter of Credit Requirement on Policy:
The Applicant contended that the Tribunal's construction of "firm order" requiring the opening of a letter of credit within six months of the licence date negated the policy dispensation referred to in para 218(2).

10. Mens Rea and Bona Fide in Upholding Confiscation and Fine:
The Tribunal upheld the order of confiscation and the fine-in-lieu of confiscation, despite there being no finding of mens rea or lack of bona fide on the part of the Applicant. The Tribunal's decision was based on the interpretation of the Import Policy and the requirement of a letter of credit for a firm order.

Conclusion:
The Tribunal concluded that a question of law had arisen regarding whether the requirement of a letter of credit for a firm order was justified when there was no such definition or provision in the Import Policy. This question was referred to the Hon'ble High Court for an authoritative decision. The request for inclusion of other points raised by the Applicant was rejected, and the Tribunal's reliance on the UK Compositors case was deemed incidental to the central issue.

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