1983 (11) TMI 320 - AT - Customs

Summary

Issues Involved:
1. Validity of the import licence.
2. Authority of the Additional Collector of Customs to confiscate goods.
3. Applicability of Section 111(d) of the Customs Act.
4. Entitlement to sale proceeds of auctioned goods.

Detailed Analysis:

1. Validity of the Import Licence:

The appellants imported goods under an import licence issued to M/s Laxmi Metals. This licence was later cancelled by the Deputy Chief Controller of Imports & Exports (Dy. CCI&E) on 10-3-1981. The appellants argued that the licence was valid when the goods were shipped and that the cancellation could only take effect from the date of the cancellation order, not retroactively. The Tribunal noted that the cancellation order did not indicate that it was to take effect from a prior date and that the licence was valid until 10-3-1981. The Tribunal rejected the Department's contention that the cancellation rendered the licence void ab-initio.

2. Authority of the Additional Collector of Customs to Confiscate Goods:

The Additional Collector of Customs confiscated the goods without giving the importers an option to redeem them. The appellants contended that the confiscation was based on an incorrect interpretation of the licence's validity. The Tribunal found that the Additional Collector had no basis or supporting material for his view that the importers' intentions were mala fide and that the goods could not be delivered to the actual user who had ceased to exist. The Tribunal held that the confiscation was unjustified.

3. Applicability of Section 111(d) of the Customs Act:

The appellants argued that the goods were imported when the licence was still valid and thus did not contravene Section 111(d) of the Customs Act. The Tribunal agreed, stating that the relevant date for determining the validity of the import was when the goods entered Indian Customs Waters, at which time the licence was valid. The Tribunal cited the Supreme Court judgment in East India Commercial Co. v. Collector of Customs, which held that a licence obtained by fraud is voidable but valid until cancelled in the prescribed manner. Therefore, the goods could not be deemed imported without a valid licence.

4. Entitlement to Sale Proceeds of Auctioned Goods:

The appellants did not redeem the goods, which were subsequently auctioned by the Customs authorities. The Tribunal held that the appellants were entitled to the sale proceeds after deducting the expenses of sale and the duty leviable on the goods. The Tribunal directed the Additional Collector of Customs to give effect to this order within three months.

Conclusion:

The Tribunal allowed the appeal, setting aside the orders of the lower authorities. It concluded that the import licence was valid at the time of import, the confiscation of goods was unjustified, and the appellants were entitled to the sale proceeds of the auctioned goods after necessary deductions.