Import licence cancellation is not retrospective; valid imports cannot be confiscated under customs law, and net auction proceeds must be released.

An import licence cancelled under the Imports (Control) Order, 1955 was treated as continuing in force until the date of lawful cancellation, and not as void ab initio. On that basis, goods shipped, arrived and covered by a Bill of Entry while the licence was still operative were not imported without a valid licence, so confiscation under section 111(d) of the Customs Act, 1962 was unsustainable. After confiscation was set aside, the Customs authorities were required to release the auction proceeds to the importer after deducting permissible expenses of sale and duty leviable on the goods.

---

---

Issues: (i) whether cancellation of an import licence under the Imports (Control) Order, 1955 rendered the licence void ab initio so as to attract confiscation under section 111(d) of the Customs Act, 1962; (ii) whether the goods were imported without a valid licence on the relevant dates of shipment, arrival and filing of the Bill of Entry; and (iii) whether, after auction of the goods, the importer was entitled to the sale proceeds after deduction of expenses and duty.

Issue (i): whether cancellation of an import licence under the Imports (Control) Order, 1955 rendered the licence void ab initio so as to attract confiscation under section 111(d) of the Customs Act, 1962.

Analysis: The cancellation order was treated as one made under clause 9(1)(cc) of the Imports (Control) Order, 1955, and there was no material to show that an order under clause 9(3) had been made rendering the licence ineffective from an earlier date. The licence therefore continued to operate until the date of cancellation. The principle applied was that a licence, even if liable to cancellation, is not void ab initio merely because it is later cancelled; it remains effective until duly voided in the manner prescribed by law.

Conclusion: The cancellation did not render the licence void ab initio, and the Department's contention was rejected.

Issue (ii): whether the goods were imported without a valid licence on the relevant dates of shipment, arrival and filing of the Bill of Entry.

Analysis: On the facts, the goods were shipped and arrived while the licence was still in force, and the Bill of Entry was filed before any effective cancellation could deprive the licence of validity retrospectively. Since the licence was valid until 10-3-1981, the import could not be treated as a prohibited import attracting section 111(d) of the Customs Act, 1962. The confiscation therefore lacked a legal basis.

Conclusion: The goods were not imported without a valid licence, and confiscation was unsustainable.

Issue (iii): whether, after auction of the goods, the importer was entitled to the sale proceeds after deduction of expenses and duty.

Analysis: Once the confiscation order was set aside, the Customs authorities were bound to account for the auction proceeds. The importer's entitlement was confined to the net sale proceeds after deduction of the expenses of sale and the duty leviable on the goods.

Conclusion: The importer was held entitled to receive the net auction proceeds after the permissible deductions.

Final Conclusion: The confiscation was set aside, the import was held to have been covered by a valid licence at the material time, and the Customs authorities were directed to release the net sale proceeds to the importer after deduction of expenses and duty.

Ratio Decidendi: An import licence remains effective until it is lawfully cancelled or rendered ineffective under the governing order, and a later cancellation does not operate retrospectively to make an import without licence unless the statute or order expressly provides such retrospective effect.

---