TMI Blog1993 (4) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... Rajendra Enterprises. The purchase was only for part of the value of the licence to an extent of Rs. 11,75,000/- in each case. The petitioners have paid a sum of Rs. 7,40,000/- as a premium to the said M/s. Rajendra Enterprises for the purchase of the licence. The licence, purchased by the petitioners enabled them to import and clear goods specified in the licence without payment of duty. The respondents are also bound to return the licence to the owners for transacting the balance of the licence. The petitioners have imported Staple Pins from Japan and the goods arrived by ship around December, 1992. Staple Pins can be imported under the Open General Licence. With a view to clear the goods without payment of duty, the petitioners submitted the above Value Based Advance Licence to the first respondent along with the relevant bills of entry and the advance licence had been detained by the second respondent for certain investigations. On 11-1-1993 when the petitioners approached the second respondent, they were served with summons under Section 10(B) of the Customs Act and statements were recorded from the petitioners. Even thereafter, the licence has not been returned and the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was urged by the learned counsel for the petitioners that under the export and import policy relating to the period from 1-4-1992 to 31-3-1997, imports can be made without any restriction except to the extent that such imports are regulated by the negative list, that so far as the Staple Pins are concerned, there are no restrictions for the import of the goods and the same is admittedly allowed to be imported subject to payment of duty and that inasmuch as the petitioners have purchased a Value Based Advance Licence which entitle them to clear the Staple Pins without payment of duty, there is no justification for the respondents to delay the clearance without payment of duty. The learned Single Judge took the view that the petitioner's claim for exemption from payment of duty on the ground that they are having a Value Based Advance Licence and if the said licence is ultimately found to be defective and it did not have the amendment relating to Staple Pins, it would mean that the clearance of the goods Staple Pins without payment of duty, will be illegal. The learned Single Judge also took the view that the goods cannot be cleared without payment of duty when the question of frau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the imports already made and the imports cannot be treated as unauthorised. In support of this contention, the learned counsel for the petitioners heavily relied on the following passage in the judgment of the Supreme Court in East India Commercial Company v. Collector of Customs [A.I.R. 1962 S.C. 1898 = 1983 (13) E.L.T. 1342 (S.C.)]. "Nor is there any legal basis for the contention that licence obtained by misrepresentation makes the licence non est, with the result that the goods should be deemed to have been imported without licence in contravention of the order issued under Section 3 of the Act so as to bring the case within Clause (8) of Section 167 of the Sea Customs Act. Assuming that the principles of law of contract apply to the issue of a licence under the Act, a licence obtained by fraud is only voidable; it is good till avoided in the manner prescribed by law...." "... The specified authority has not cancelled the licence issued in this case on the ground that the condition has been infringed. We need not consider the question whether the Chief Controller of Imports or the Government of India, as the case may be, can cancel a licence after the term of the licence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Pins. Further, it is significant to note that the original licencee, namely, M/s. Indo International Limited, Madras, itself has admitted in its letter dated 29-12-1992 that it did not apply to the licensing authority to include Staple Pins as an item in the licence since it did not utilise such Staple Pins as materials for the manufacture of the goods exported by them. In such circumstances, the original licence itself was not eligible for the import of Staple Pins free of duty under the Value Based Advance Licence, since exemption provided for under Notification No. 203, Customs dated 19-5-1992, extends only to the import of materials as defined in explanation (iii) to the said Notification, wherein materials only mean those materials used for the purpose of manufacture/packing of the export goods. The relevant portion of the letter dated 29-12-1992, given by the original licencee reads thus : "With reference to your specific query we state that, we requested the Licensing Authorities to issue licence as per standard norms and never made representation for inclusion of any other item for the purpose of consideration by Regional Licensing Authority. You would also find from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctual materials referred above, prima facie go to show that this is not a case of import under a valid licence subsequently invalidated but a case where there was no licence for the goods in question, namely, Staple Pins even at the time of import. The decisions referred above and relied on by the learned counsel for the petitioners are not helpful to the petitioners because, they are clearly distinguishable on facts. The decisions relied on by the learned counsel for the petitioners, are only authorities to the proposition that a licence, until invalidated, would continue to be valid and therefore, an import made until such invalidation would not be unauthorised. Again, it must be pointed out, the cases relied on by the learned counsel for the petitioners arose out of a situation where post-import conditions of licence were not fulfilled by the importers, subsequent to the import and clearance of the goods and therefore, the licences were sought to be cancelled. In such circumstances, courts have held that subsequent cancellation of the licence would not make the imports, which had already taken place, unauthorised. That is not the position in the present case. 9. As the materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the manufacture of export goods, which alone would attract the applicability of Notification 203/92. It must be remembered that a forged Value Based Advance Licence, as far as Staple Pins are concerned, cannot convey any right to the petitioners even assuming that they are bona fide purchasers of the licence for value. Therefore, we have no hesitation in rejecting the last contention of the learned counsel for the petitioners. In these circumstances, we see no merit in the Writ Appeals 315 and 316 of 1993 filed by the petitioners. 11. Now let us examine whether there is any merit in W.A. Nos. 353 and 354 of 1993 filed by the Department. Mr. C.A. Sundaram, learned Additional Central Government Standing Counsel appearing for the appellants in the said writ appeals contended that the learned Single Judge is not correct in permitting the clearance of the goods on the conditions stipulated in the order and that the learned Single Judge on the facts and circumstances of the present case ought not to have ordered the release of the goods pending investigation. The learned Counsel further contended that since the goods namely, Staple Pins were sought to be cleared without payment of du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and Import Policy relating to the period from 1-4-1992 to 31-3-1997 imports can be done without any restrictions except to the extent such imports have been regulated by the negative list of imports and any other provision of the policy and any other law for the time being in force. Paragraph 10 of the Export and Import Policy says that negative list may consist of goods, the import or export of which is prohibited restricted through licensing otherwise, or canalised. Paragraph 12 of the said policy provides that any goods, the export or import of which is restricted through licensing, may be exported or imported only in accordance with a licence issued in this behalf. Admittedly, the goods in question does not figure either in the negative list or in the sensitive list of imports. For the goods in question there are no restrictions for import and they can be imported lawfully without licence but subject to payment of duty. In these circumstances, it has to be held that the goods in question are not liable to confiscation under Section 111 of the Act and to such a case, principles laid down in Collector of Customs, Madras and Others v. D. Bhoormull [A.I.R. 1974 S.C. 859 - 1983 (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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