Fraud-tainted import licence remains voidable, not void; later cancellation cannot retroactively justify confiscation or redemption fine.

Goods imported against REP licences were treated as lawfully imported where the licences were valid on the date of import, even though their procurement was later found tainted by fraud and the licences were subsequently cancelled. A licence obtained by fraud was treated as voidable rather than non est, so later cancellation did not retrospectively make the import unauthorised. As the goods had already been processed and disposed of and were no longer available, confiscation and consequential redemption fine were held unsustainable. Penalties were also set aside, and the appeals were allowed in favour of the assessee.

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Issues: Whether goods imported against REP licences, later found to have been procured on forged documents and subsequently cancelled, were liable to confiscation and penalty, and whether redemption fine could be imposed when the goods were no longer available.

Analysis: The licences were issued by the competent authority and were valid on the date of import, though the original procurement was tainted by fraud. On the reasoning applied, a licence obtained by fraud is not non est; it remains voidable and its later cancellation does not retrospectively render the import unauthorised. The goods had already been processed and disposed of and were not available for confiscation. In such a situation, confiscation and consequential redemption fine were held to be unsustainable. The grounds urged on limitation were not required to be separately examined for the final disposal.

Conclusion: The confiscation, redemption fine and penalties were set aside and the appeals were allowed in favour of the assessee.

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