The Justice Department has cleared the way for a Northern Virginia company to import 160,000 M1 rifles from South Korea, although it said the $13 million arms deal may interfere with a continuing criminal investigation.

The arms deal, between the Arlington-based Blue Sky Productions Inc. and Daewoo Inc. in South Korea, had been stalled since 1986, when U.S. Customs Service officials seized shipments of 40,000 M1s on the West Coast.

The customs officials eventually released the weapons to Blue Sky, but revoked the company's import permit for the remaining 160,000 rifles because they said federal law prohibited importation of the rifles.

Myles Ambrose, a former customs commissioner who represents Blue Sky, said the Treasury Department issued an import permit for the remaining rifles yesterday. He said he did not know when the shipments can resume.

The Washington Post reported last week that the arms deal is under investigation by a federal grand jury that is attempting to determine, among other things, whether Blue Sky was associated with an Alexandria gun shop, the Old Town Armory.

Old Town's former owners include Rep. William Dickinson (R-Ala.), the ranking Republican on the House Armed Services Committee, and former Deputy Assistant Defense Secretary Anthony Speros Makris.

Both Dickinson and Makris told The Post they were not involved in the arms deal.

Dickinson said he had been drawn into the investigation because of his personal and business relationship with Rene Carlos Vos. Vos, who died in a private plane crash in November, had testified before the grand jury under immunity last year, sources familiar with the investigation said.

Vos, one of Blue Sky's founders in 1985, sold his interest in the company in 1986 to businessmen Robert Frulla and Richard C. Whitner.

Last month, Congress included a provision in the continuing budget resolution to reinstate Blue Sky's import permit.

That measure contained an unusual provision that gave the Justice, Treasury, State and Defense Departments 20 days in which to object to the deal. Spokesmen for the other three departments said they had no objections to the provision.

Assistant Attorney General John R. Bolton said the Justice Department also would not raise an objection, but Bolton said the department's decision was based on the precise wording of the resolution and not on the merits of the investigation.

Bolton said in a letter to Vice President George Bush that the Justice Department could not certify that reissuing Blue Sky's import permit would interfere with a criminal investigation of alleged violations of the Arms Control Export Act, the law that was amended to allow the importation of some U.S.-made military weapons.

Bolton said that the investigation did not involve alleged violations of that law. "We do believe, however, that the section {reissuing the import permit} might interfere with an ongoing investigation of a possible violation of other federal criminal law."