Import licence endorsement protected the importer; later customs clarification could not override the amended licence position.

An importer who acted on an import licence as endorsed by the competent authority, with the value restriction deleted, could not be fastened with customs duty on the basis of a later clarification. The article notes that no misrepresentation, suppression, or collusion by the importer was shown, and that the importer had altered its position in reliance on the endorsed licence. A departmental mistake could not be used to impose liability contrary to the licence position applicable to the transaction, and the later clarification was inapplicable to the importer's import. The impugned customs demand process was therefore quashed.

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Issues: Whether the show cause notice demanding customs duty was sustainable when the import licence had been endorsed by the authority deleting the value restriction, and whether the subsequent clarification could be applied against the importer.

Analysis: The licence endorsement deleting the value restriction induced the importer to act on the footing that the import was permitted within the licence terms, and the goods were imported accordingly. No misrepresentation or suppression by the importer was shown, nor was there any material to suggest collusion in the deletion of the condition. In these circumstances, the revenue could not rely on a bona fide departmental mistake or on the import policy to fasten liability on the importer after the importer had altered its position to its prejudice. The clarification issued later could not override the licence position applicable to the petitioner's import transaction.

Conclusion: The show cause notice was unjustified, the clarification was held inapplicable to the petitioner's licence and import, and the challenge succeeded in favour of the assessee.

Final Conclusion: The impugned customs demand process was quashed because the importer had acted on the licence as amended by the department and could not be penalised for the authority's own error.

Ratio Decidendi: Where an importer acts on a licence as endorsed by the competent authority and there is no misrepresentation or collusion by the importer, the revenue cannot sustain a contrary demand or clarify the position to the importer's prejudice on the basis of a departmental mistake.

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