Transferability of duty free licences cannot be denied on reclassification grounds without notice, hearing, and cancellation of the licence.

Advance duty free licences issued under the Export and Import Policy, 1997-2002 were transferable after fulfilment of the export obligation, because the scheme treated transferability as an accrued entitlement under the Duty Exemption Scheme. The distinction between the norms and no norms categories went to the issuance procedure, not to the validity of transferability once the licence was granted. A licensing authority could not refuse endorsement of transferability on a reclassification objection without first cancelling the licence after notice and hearing, as natural justice applied before depriving the holder of the benefit. The later policy did not defeat the accrued entitlement.

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Issues: Whether advance duty free licences issued under the Export and Import Policy, 1997-2002 were transferable after fulfilment of export obligation, and whether refusal of endorsement of transferability on the ground that the licences had been issued under the wrong category was sustainable.

Analysis: The Duty Exemption Scheme under the Export and Import Policy, 1997-2002, framed under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992, treated duty free licences as transferable after completion of export obligation. Clause 7.19(a) permitted transferability, and Clause 7.27 also contemplated endorsement of transferability, with the distinction between the norms category and the no norms category lying only in the procedure for issuance under Clause 7.4. The refusal was based on the view that the licences ought to have been issued in the norms category and may have been contrary to the circular issued by the authorities, but the licences had not been cancelled and no show cause notice or hearing had been given before depriving the licence holder of the benefit. The grant of the licences created enforceable rights, and any withdrawal or denial of those rights required observance of natural justice. The later policy did not show any material inconsistency affecting the accrued entitlement.

Conclusion: The refusal to endorse transferability was unsustainable, and the licences were held transferable as claimed by the appellant.

Ratio Decidendi: Where a duty free licence is validly granted under an export policy that permits transferability after export obligation is fulfilled, the licensing authority cannot deny endorsement of transferability on a reclassification objection without first cancelling the licence after notice and hearing in accordance with natural justice.

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