Mens rea is essential for import licence penalty; absence of linkage to the import led to setting aside the order.

Penalty for alleged misuse of an additional import licence could not be sustained where the record showed no material linking the petitioner to the letter of authority, the revalidation request, or the import of the canalised goods. The Court found that the letter of authority holder, not the petitioner, had sought revalidation and imported the goods, and there was no evidence that the import was at the petitioner's instance. In the absence of such linkage, the essential ingredient of mens rea was not established. Penalty was held impermissible for a merely technical or venial breach, and the penalty orders were set aside.

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Issues: Whether the penalty imposed for alleged misuse of an additional import licence could be sustained when there was no material to show that the petitioner had issued the letter of authority, had requested revalidation, or had any direct involvement in the import of the canalised goods.

Analysis: The impugned orders proceeded on the basis that the petitioner was responsible for proper utilisation of the licence and had issued the letter of authority in favour of the importer. The record did not support that assumption. The letter of authority holder, not the petitioner, had sought revalidation and subsidiary licences, and the canalised item was imported by that holder. The Court found no evidence linking the petitioner to the import transaction or showing that the import was at the petitioner's instance. In the absence of such linkage, the essential ingredient of mens rea was not established. The principle governing penalty was that it should be imposed only where there is deliberate defiance of law, conscious disregard of obligation, or contumacious conduct, and not for a merely technical or venial breach.

Conclusion: The penalty could not be sustained against the petitioner and the orders imposing and affirming the penalty were set aside.

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