Judgment:
1. All these appeals involving common question of law and facts were heard together and are being disposed through this common order.
2. The Appellants on the basis of letter of approval issued by the Government of India set up 100% EOU for manufacturing various types of Industrial Batteries in Kandla Free Trade Zone (KFTZ). In 1989, the appellants obtained substantial export orders for batteries for which they were required to import capital goods on urgent basis. The Appellants applied to the Development Commissioner, KFTZ, for permission to import capital goods. In anticipation of the approval of the Development Commissioner, they, in the meantime, imported consignments of capital goods and filed Bill of Entry for their clearance. They also requested the Development Commissioner to accord approval for the import of certain most essential items of capital goods. Since formal permission had not been received appellants were served with show cause notice alleging offences under Export and Import Control Act for having imported goods without approval of the Development Commissioner and proposing penal action. Duty was also demanded on the ground that goods were not eligible for exemption under Notification No. 77/80-Cus., dated 17-4-1980. The Application for import of capital goods was sent to the Development Commissioner, KFTZ., New Delhi and was rejected. They, however, went in appeal before the Appellate Authority who redirected the appeal to the Development Commissioner for review. Subsequently Development Commissioner gave them necessary approval. Adjudicating authority held that at the material time of shipment they did not have the approval of the Development Commissioner and therefore there was contravention of the Import and Export Trade Control Act. He also held that conditions of Notification No. 77/80-Cus., dated 17-4-1980 were not fulfilled. The Notification requires the importer to have necessary licence for the import of capital goods and further the importer should satisfy the Development Commissioner that the goods so imported will be used in connection with the production of packaging of the goods for export out of India or with the promotion. He, therefore, held that since the goods at the time of import were not covered by valid licence benefit under Notification was not applicable. Adjudicating Authority, however, held that since subsequently approval has been obtained from the Development Commissioner the matter called for a lenient view. While, therefore, confiscating the goods under Section 111(d) of the Customs Act he allowed the goods to be released on payment of redemption fine ranging from Rs. 5,000/- to Rs. 70,000/-.
3. Arguing on behalf of the Appellants the Ld. Counsel submitted that the very fact subsequently necessary permission was given by the Development Commissioner would clearly go to the prove that goods were legally imported and the imports were not unauthorised. Show cause notice was issued to them on the ground that they had informed the Customs that their request for regularisation of import was not considered. Since subsequently such approval was given to them the offence alleged in the show cause notice did not survive. Open General Licence in fact gives permission to actual users located in Free Trade Zone to import capital goods. It is not a pre-condition that before import approval of the Development Commissioner is to be taken. In any case, such approval was subsequently given and therefore there was no offence as such. Once the Development Commissioner permitted the import through his letter dated February, 1992 exemption from Customs Duty under Notification No. 77/80-Cus. would automatically follow.
4. We have heard both sides. The Appellants admittedly had not received the approval for additional imports from the Development Commissioner, KFTZ, at the time of shipment. It is true that even after the application for approval was initially rejected the necessary approval was finally given to them subsequently. The fact of their having no approval at the material time can at best result in technical contravention of law only. The very fact that subsequently approval was obtained would clearly dictate a lenient view in the matter. In fact Additional Collector himself has recorded that subsequently approval of the Development Commissioner could entitle them to some lenient treatment. In view of this we are of the view that though goods are technically liable to confiscation, redemption fine imposed to the extent it has been imposed is some what excessive.
5. In regard to the benefit of Notification No. 77/80-Cus., dated 17-4-1980 Adjudicating Authority has denied this exemption on the ground that Notification sets out as pre-condition the grant of necessary licence for import of goods and satisfaction of Development Commissioner that the goods so imported will be used in connection with production or packaging of the goods for export of India.
5.2. O.G.L. 19/88, dated 30th March, 1988 and subsequent O.G.L. 20/90, dated 30th March, 1990 both give general permission to actual users located in the respective Free Trade Zones and Export Processing Zone for import of goods, raw materials, components, spares, samples, tools, prototypes etc. entering Free Trade Zone/Export Processing Zone subject to actual users condition. It was pleaded before us that the appellants are actual users located in the KFTZ. There is no denial of this fact.
In terms of this O.G.L. therefore no licence as such was required and the permission from the Development Commissioner Free Trade Zone was sufficient. In regard to the second condition referred to by the Adjudicating Authority which relates to satisfaction of the Development Commissioner that the imported goods will be used in connection with the production of packaging of the goods for export out of India, the very fact that the Development Commissioner, Kandla subsequently approved the import would clearly establish that he was satisfied in regard to second condition. In any case non-fulfilment of this condition, that is, export out of India, subsequent to import of goods could have made appellants liable to pay duty in terms of condition 7 of Exemption Notification No. 77/80-Cus., dated 17-4-1980 as amended.
Such exemption could not be denied since the condition relating to satisfaction of the Development Commissioner had been fulfilled considering that the Development Commissioner himself had subsequently given necessary approval for import of goods. In view of this we are of the view that exemption could not be denied.
(i) Redemption fine in Appeal No. C/1720/92-B2 is reduced to Rs. 7000/-.
(ii) Redemption fine in Appeal No. C/1721/92-B2 is reduced to Rs. 5000/-.
(iii) Redemption fine in Appeal No. C/1722/92-B2 is reduced to Rs. 5000/-.
(iv) Redemption fine in Appeal No. C/1719/92-B2 is reduced to Rs. 1000/-.
We hold that appellants are entitled to exemption under Notification No. 77/80-Cus. and therefore order of adjudicating authority denying them exemption is to that extent is set aside. Appeals are disposed of in these terms.