1980 (4) TMI 118 - HC - Central Excise

Court rules in favor of manufacturer-exporter in import license dispute for nickel magnesium alloy

The High Court of Judicature at Bombay, in a case concerning the interpretation of an import license for nickel magnesium alloy, ruled in favor of the ... Import licence - Benefit to importer in case of doubt Issues: Interpretation of import license for nickel magnesium alloy.The judgment delivered by Mody, J. of the High Court of Judicature at Bombay pertains to a case involving the interpretation of an import license for nickel magnesium alloy granted to a manufacturer-exporter of automatic looms for textile mills. The petitioner, a registered importer entitled to obtain a license, had been granted two licenses for the periods April 1971 to March 1972 and April 1972 to March 1973. The dispute arose when the Customs authorities objected to the import of nickel magnesium alloy under the second license and subsequently confiscated the goods. The primary issue was whether the description of goods in the license covered nickel magnesium alloy and whether the authorities had correctly interpreted the license.The petitioner argued that the license description, which referred to components for auto looms as per a previous license, should be construed broadly to include nickel magnesium alloy. The petitioner contended that since the alloy was included in the first license, it should also be deemed permissible under the second license. The Court analyzed the language of the licenses and concluded that the reference to components in the second license must be interpreted in line with the first license, thereby encompassing nickel magnesium alloy. The Court emphasized that any ambiguity in the license description should be resolved in favor of the licensee, following established legal principles.The judgment referenced legal precedents, including an unreported Supreme Court decision, to support the principle that in case of doubt regarding the interpretation of a license, the benefit should be given to the licensee. The Court distinguished another Supreme Court case cited by the respondent, highlighting that the principle of resolving ambiguity in favor of the importer applied specifically to license interpretation issues. Additionally, the Court dismissed the relevance of other judgments cited by the parties, finding them unrelated to the core principles at hand.Ultimately, the Court ruled in favor of the petitioner, quashing the confiscation of the goods and the imposed fine. The judgment made the rule absolute in favor of the petitioner, emphasizing that the license should be construed in a manner favorable to the importer, particularly when previous licenses had included the disputed item. No costs were awarded in light of the circumstances of the case.