Earlier import policy protected a transferred REP licence, and a later restriction could not justify confiscation or withholding

A later import restriction could not retrospectively defeat goods covered by a transferred REP licence issued under the earlier import policy and registered contract. The Court noted that entitlement had to be tested by the policy in force at the relevant time, and that prior departmental clearance of identical consignments supported the licence-based import. It also held that a show cause notice proposing confiscation was unsustainable where it followed a changed departmental stand without fresh material, despite earlier permissions on the same licence framework. The notice was treated as lacking jurisdiction, and the authorities were directed to assess the bills of entry and clear the consignments on duty payment.

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Issues: (i) whether the goods covered by the transferred REP licence could be withheld on the ground that tetracycline hydrochloride had become restricted by a later import-linked notification and policy interpretation; (ii) whether the show cause notice proposing confiscation under the Customs law was sustainable.

Issue (i): whether the goods covered by the transferred REP licence could be withheld on the ground that tetracycline hydrochloride had become restricted by a later import-linked notification and policy interpretation.

Analysis: The licence was issued against a registered contract and expressly referred to the 1977-78 import policy, under which the relevant entitlement had to be judged by the policy in force on the date of the contract and the commencement of that policy period. The later inclusion of tetracycline hydrochloride in the export-linked-import list could not operate retrospectively to defeat a licence already governed by the earlier policy position. The record also showed that identical consignments had earlier been cleared on the same or similar licences after departmental scrutiny and clarification, and that the licence had become transferable, making the old actual-user restriction inapplicable in the manner sought to be urged by the customs authorities.

Conclusion: The import was held to be covered by the licence and the goods could not be withheld on the ground taken by the customs authorities.

Issue (ii): whether the show cause notice proposing confiscation under the Customs law was sustainable.

Analysis: The Court found that the notice was issued after a change of stand unsupported by any fresh material, despite earlier departmental orders permitting identical clearances. On the record, there was no contravention warranting confiscation under the Imports (Control) Order or the Customs Act, and the notice reflected non-application of mind and a colourable exercise of power rather than an independent adjudicatory decision.

Conclusion: The show cause notice was held unsustainable and without jurisdiction.

Final Conclusion: The petition succeeded and the customs authorities were directed to assess the bills of entry, clear the consignments on payment of duty, and complete the release formalities with exemption from wharfage and demurrage for the relevant period.

Ratio Decidendi: A later restriction or changed departmental view cannot retrospectively defeat a licence governed by an earlier import policy, and where identical imports have already been permitted on the same licence framework, a contrary show cause notice issued without fresh material is unsustainable.

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