Licence remains valid until cancelled; customs cannot block import or demand deposit without lawful adjudication.

Customs authorities cannot block clearance of goods or insist on a deposit merely on suspicion of breach of an actual user condition when no show cause notice or adjudication has commenced. Investigation may continue, but any action affecting the licence or import must follow the statutory procedure under the Customs Act, including notice and adjudication under Sections 28 and 124. The validity of the licence and any breach of its conditions remain matters for the licensing authority, and a licence continues to operate until lawfully cancelled by the competent authority. On these facts, the importer could proceed with the import under the existing licence.

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Issues: Whether, in the absence of commencement of adjudication under the Customs Act and in the absence of cancellation or other action by the licensing authority, the customs authorities could prevent the importer from clearing the goods or insist on a deposit of 50% of the customs duty on the basis of suspected breach of the actual user condition.

Analysis: The licence was issued subject to actual user conditions and the import had to be completed by the stipulated date, but no show cause notice had been issued and no adjudication had commenced. The customs authorities had only issued summons under Section 108 and received objections. The Court held that investigation could continue, and that the customs authorities were not without power to inquire, but any final action affecting the licence or the import had to be taken in accordance with law after the statutory procedure under Section 28 and Section 124. The validity of the licence and any alleged breach of its conditions were matters for the licensing authority to examine, and until such lawful action was taken the import could not be blocked on a presumption of breach. The Court also relied on the principle that a licence remains valid until cancelled by the competent licensing authority, and that customs authorities cannot refuse the benefit of the licence merely on allegations of misrepresentation or misuse.

Conclusion: The customs authorities could not withhold the licence or condition release of the goods on the basis of alleged breach without lawful adjudication, and the importer was entitled to proceed with the import under the existing licence.

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