2013 (11) TMI 948 - AT - Customs

Regularisation of licence - Confiscation of goods - Import of rough marble blocks on 11-10-2001 - The licensing authority had suspended the advance licence on 17-10-2001 - Held that - The purpose of regularisation of licence is to rectify/cure the defects, if any, in respect of the transaction and by its very nature, regularisation action is retrospective. What can be regularised is only a wrong action done earlier. Inasmuch as in the present case the advance licence dated 11-10-2001 has been regularised by the licensing authority vide letter dated 17-3-2006, it would imply that the licence has been revived and the appellant are permitted to import rough marble blocks subject to payment of penalty as provided for under the Foreign Trade (Development & Regulation) Act. In the instant case, the appellant has paid the penalties of Rs. 46 lakhs imposed on them by the DGFT authorities. Order of the Adjudicating authority is totally based on the decision of this Tribunal in the case of Bhilwara Spinners Ltd., cited supra. However, since the said decision has been set aside the by the Hon ble High Court of Bombay in 2011 (3) TMI 112 - BOMBAY HIGH COURT the impugned order cannot be sustained in law - Therefore, Adjudicating authority is directed to reconsider the matter afresh in the light of the decision of the Hon ble Bombay High Court.

Summary

Issues:
- Regularization of import license and subsequent confiscation of goods
- Validity of penalty and fine imposed by the Adjudicating authority
- Interpretation of Customs Act and Foreign Trade Policy

Analysis:

Issue 1: Regularization of import license and subsequent confiscation of goods
The appellant had imported goods under an advance license that was later suspended by the licensing authority. The Department issued a show cause notice proposing confiscation of the goods. The Adjudicating authority initially confiscated the goods but later, upon appeal, the Tribunal directed a fresh decision considering the regularization of the import license. The impugned order once again confiscated the goods, leading to the current appeal. The appellant argued that the regularization by the Grievance Redressal Committee of the Ministry of Commerce should prevent confiscation, as they had already paid fines and penalties for regularization. The Tribunal noted that the purpose of regularization is to rectify past wrongs and that in this case, the license had been revived, allowing the import subject to penalties. The Tribunal found the impugned order unsustainable in light of subsequent legal developments and directed a fresh consideration by the Adjudicating authority.

Issue 2: Validity of penalty and fine imposed by the Adjudicating authority
The appellant contested the penalty and fine imposed by the Adjudicating authority, arguing that the license regularization should prevent further penalties. The Adjudicating authority had relied on a decision of the Tribunal and other court judgments to support the penalty imposition. However, the Tribunal noted that the cited Tribunal decision had been set aside by the High Court, rendering the basis for the penalty invalid. Considering the fines and penalties already paid by the appellant, the Tribunal found them sufficient and set aside the impugned order, directing a fresh decision.

Issue 3: Interpretation of Customs Act and Foreign Trade Policy
The dispute centered around the interpretation of the Customs Act and the Foreign Trade Policy regarding the validity of the import license and the subsequent confiscation of goods. The appellant argued that the licensing authority's decision to regularize the license should protect them from further penalties. The Revenue department contended that the license had been cancelled, making the goods liable for confiscation and penalties. The Tribunal found that the license regularization retroactively revived the license, allowing the import subject to penalties. The Tribunal highlighted the importance of legal developments, including the setting aside of previous decisions, in determining the validity of the impugned order. Consequently, the Tribunal allowed the appeal by remanding the matter for fresh consideration based on the updated legal landscape.