Constructive custody of import licences can justify revalidation when customs litigation blocks debit and use.

Where Duty Free Import Authorisations remain unutilised because customs litigation prevents debit or use, Customs must furnish the factual certificate required by the licensing authority for revalidation. The Tribunal noted that paragraph 2.13.1 of the Handbook of Procedures allows revalidation on proper factual justification, and the importer cannot be denied the benefit merely because the licences expired during the pendency of the dispute. It treated licences presented for debit and held up by the customs dispute as being in constructive custody for the scheme, even without physical custody by Customs. The certificate was therefore required to enable revalidation of the expired DFIA licences.

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Issues: Whether Customs was required to issue a certificate to the DGFT for revalidation of the Duty Free Import Authorizations when the licences could not be utilized because the admissibility of the imports remained under prolonged litigation and the licences were not in the physical custody of Customs.

Analysis: Paragraph 2.13.1 of the Handbook of Procedures permits revalidation by the licensing authority, but the factual justification for such revalidation must be furnished to the DGFT. The non-utilization of the DFIAs was attributable to the continuing customs dispute over eligibility of the disputed imports, and Customs itself had refused debit for the relevant imports. The Tribunal held that the importer could not be denied the benefit merely because the licences expired during the pendency of the dispute. It further held that the licences, having been presented for debit and effectively held up by the customs dispute, were in constructive custody for the purpose of the scheme.

Conclusion: Customs was bound to issue the certificate to the DGFT to enable revalidation of the DFIA licences.

Final Conclusion: The appeal succeeded, and the importer obtained the relief necessary for revalidation of the expired DFIA licences.

Ratio Decidendi: Where duty-free import authorizations remain unutilized because customs litigation prevents their debit or use, Customs must furnish the factual certificate needed by the licensing authority for revalidation, even if the licences were not in physical custody.

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