Retrospective quantity restriction in an amended advance licence cannot defeat customs exemption for imports already made under the original licence terms.

A later quantity restriction inserted into an amended value-based advance licence does not retrospectively defeat customs exemption for imports already made within the licence's overall CIF value limit under Notification No. 203/92-Cus. The imports were effected before the restriction existed and complied with the licence conditions then in force; a subsequent enhancement of the licence value with added quantity limits was only prospective. Because the licensing authority had accepted the imports, Customs could not later treat them as a breach of the original licence conditions or deny exemption on the basis of the later amendment. The resulting duty demand was therefore unsustainable.

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Issues: Whether a subsequent quantity restriction introduced in an amended value-based advance licence could operate retrospectively to deny customs exemption for imports already made within the overall CIF value limit under Notification No. 203/92-Cus.

Analysis: The imports were made before any quantity restriction was inserted, and at the relevant time the licence permitted clearance within the overall CIF value. The later enhancement of the licence value, accompanied by quantity restrictions, could not alter the legal character of imports already completed. A subsequent amendment to the licence was only prospective in effect. The imports, having been made without violation of the licence conditions then in force and having been accepted by the licensing authority, could not later be treated by Customs as infringing the licence conditions. The exemption under the notification therefore could not be denied on the basis of a later restriction.

Conclusion: The subsequent quantity restriction did not apply retrospectively, and the duty demand was unsustainable; the appeal was allowed in favour of the assessee.

Ratio Decidendi: A later amendment imposing quantity restrictions on a value-based advance licence cannot retrospectively defeat exemption for imports already made in compliance with the licence as it stood at the time of import.

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