Reasoned adjudication required before cancelling an advance licence and penalty; mixed fraud findings were held unsustainable.

An order cancelling an advance licence and imposing penalty was found unsustainable where the adjudicating authority relied on allegations of fraud, suppression and misrepresentation without properly addressing the petitioners' material contentions or mitigating facts. The reasoning did not engage with the plea that imports were within the revised entitlement, export obligation had been discharged, and the transferee had not been shown to have participated in the original procurement of the licence. The charge findings were also expressed in uncertain and mixed terms, without clearly identifying which allegation was established. Because the order lacked cogent reasoning and failed to deal with the admitted factual position and without-prejudice submissions, the cancellation and consequential penalty were quashed.

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Issues: Whether the order cancelling the advance licence and imposing penalty could be sustained when the authority proceeded on allegations of fraud, suppression and misrepresentation without dealing with the petitioners' material contentions and mitigating circumstances.

Analysis: The licence had been issued, amended and transferred in the factual setting of the export policy and input-output norms then in force. The impugned adjudication largely reiterated the allegations in the show cause notice and did not meaningfully address the petitioners' contention that their imports were within the revised entitlement, that export obligation had been discharged, and that the transferee was not shown to have participated in the original procurement of the licence. The finding was also expressed in mixed and uncertain terms, referring to fraud, suppression of facts and misrepresentation without clearly identifying which charge was established against the petitioners. In these circumstances, the order lacked cogent and satisfactory reasoning and did not deal with the admitted factual position and without-prejudice submissions.

Conclusion: The cancellation order and consequential penalty were unsustainable and were quashed.

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