1986 (4) TMI 173 - AT - Customs

Summary

Issues Involved:
1. Validity of import licenses under the Import Policy.
2. Interpretation of relevant paragraphs of the Import Policy.
3. Relevance of imported goods to the exported or manufactured products.
4. Jurisdiction and authority of Customs officials.
5. Applicability of communications and clarifications from licensing authorities.

Detailed Analysis:

1. Validity of Import Licenses Under the Import Policy:
The appellants imported prime galvanized sheets in coils using three import licenses issued under Appendix 17 of the Import Policy. The Collector of Customs, Madras, imposed a fine of Rs. 30,000/- under Section 125 of the Customs Act, 1962, arguing that the licenses were issued for materials related to frozen shrimp exports, not for galvanized steel sheets. The appellants contended that these licenses were valid for importing raw materials for manufacturing corrugated sheets in their branch factory.

2. Interpretation of Relevant Paragraphs of the Import Policy:
The appellants relied on paragraphs 138(1) of the Import and Export Policy for AM 1984-85 and 204(1) of the Policy for AM 1985-88. They argued that these paragraphs allowed the import of raw materials related to any product exported or manufactured by the exporter, not just the exported product. The Collector's interpretation was that the licenses only permitted imports directly related to the exported product. The Tribunal found that the terms "exported or manufactured" in para 138(1) were disjunctive, allowing imports related to either the exported or manufactured products.

3. Relevance of Imported Goods to the Exported or Manufactured Products:
The appellants manufactured corrugated sheets from galvanized steel sheets in their branch factory, which was not disputed. The Tribunal concluded that the imported galvanized sheets were permissible under the licenses since they were used for manufacturing corrugated sheets, a product manufactured by the appellants.

4. Jurisdiction and Authority of Customs Officials:
The appellants argued that the Customs authorities could not ignore the specific endorsements on the licenses referring to para 138 of the Policy AM 1984-85. The Tribunal agreed, stating that the Customs officials lacked the jurisdiction to reinterpret the scope of the licenses against the clear terms set by the licensing authorities.

5. Applicability of Communications and Clarifications from Licensing Authorities:
The appellants presented a communication from the Joint Chief Controller of Imports and Exports, New Delhi, clarifying that products imported under para 138(1) of AM 1984-85 and para 204(1) of AM 1985-88 need not be related to the exported product. This communication, though not available to the Collector at the time of the impugned order, was considered crucial by the Tribunal. The Tribunal noted that interpretations from the Chief Controller of Imports and Exports prevail over other clarifications, as per para 274(2) of Policy AM 1984-85 and para 25(2) of Policy AM 1985-88.

Conclusion:
The Tribunal set aside the impugned order, holding that the imported galvanized sheets were covered by the terms of the licenses relied upon by the appellants. The appeal was allowed based on the interpretation of the relevant paragraphs of the Import Policy and the authoritative clarification from the licensing authorities.