1992 (1) TMI 103 - SC - Customs

Import licence - Cancellation not retrospective - Import control - 'Property of' and 'vest', meaning of

Summary

Issues Involved:
1. Title to the goods.
2. Validity of confiscation under the Customs Act.
3. Impact of the cancellation of the import license.
4. Entitlement to re-export the goods.
5. Issuance of detention certificate.

Detailed Analysis:

1. Title to the Goods:

The primary issue was whether the title to the goods had passed from the first respondent to the second respondent. The court concluded that since the second respondent did not pay for and receive the documents of title, she did not become the owner of the goods. Consequently, the first respondent continued to be the owner. The court stated, "the first respondent continued to be the owner of the goods, he is entitled to re-export the same." The court also interpreted Clause 5(3)(ii) of the Imports (Control) Order, 1955, which states that the goods for which a license is granted shall be the property of the licensee at the time of import and until clearance through customs. The court held that this condition creates a legal fiction for ensuring compliance with the import regulations but does not transfer ownership in cases where the importer abandons the goods.

2. Validity of Confiscation Under the Customs Act:

The court examined whether the confiscation of goods under Section 111(d) and (o) of the Customs Act was valid. Section 111(d) pertains to goods imported contrary to any prohibition imposed by law, and Section 111(o) pertains to goods exempted from duty subject to a condition that is not observed. The court found that Clause (d) was not applicable as "on the date of the import the said goods were covered by a valid import licence." Regarding Clause (o), the court noted that "the subsequent cancellation of licence is of no relevance nor does it retrospectively render the import illegal." Thus, the court concluded that the confiscation was not justified under these provisions.

3. Impact of the Cancellation of the Import License:

The court addressed whether the cancellation of the import license affected the legality of the import and the title to the goods. It was held that "the subsequent cancellation of licence is of no relevance nor does it retrospectively render the import illegal." The court emphasized that the import was legal at the time it occurred, and the cancellation of the license did not retroactively affect the legality of the import or the title of the first respondent to the goods.

4. Entitlement to Re-export the Goods:

The court upheld the first respondent's entitlement to re-export the goods, stating, "the title of the first respondent to the said goods remains free of any cloud." The court also noted that the first respondent was not a party to any misuse or fraud related to the import license. Therefore, the first respondent was entitled to re-export the goods to Hong Kong, subject to compliance with applicable laws and payment of any dues or charges.

5. Issuance of Detention Certificate:

The court did not express an opinion on the issuance of the detention certificate as it was not challenged before them. The lower court had directed that "the Collector of Customs and the Union of India shall issue a detention certificate in his favour" for the period the goods were detained, rendering the first respondent liable to pay demurrage to Bombay Port Trust.

Conclusion:

The appeal was dismissed, and the court affirmed the lower court's judgment that the first respondent continued to be the owner of the goods and was entitled to re-export them. The confiscation of the goods was deemed unjustified under the Customs Act, and the cancellation of the import license did not retroactively affect the legality of the import or the title to the goods. The direction for re-export was upheld, and the issuance of the detention certificate was not contested.