Import licence validity and Customs jurisdiction: licensing policy cannot override a licence already issued under the control order.

Import licences issued for niacinamide were treated as valid until cancelled under the Imports (Control) Order, 1955, and the import control policy itself was not given statutory force. Licensing authorities were responsible for determining licensability before issue, while Customs could only check whether the goods matched the licence and its conditions; they could not reassess policy validity. Clause 10C applied only to validly imported goods and did not support directions based on an alleged ban. Public notices and executive instructions could not override existing licences or Clause 9 cancellation procedure, and any price fixation under Clause 10C had to include relevant charges and remain reasonable.

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Issues: (i) whether the Customs authorities could refuse clearance of goods covered by a valid import licence by treating them as banned merely on the basis of import policy, and (ii) whether the order made under Clause 10C of the Imports (Control) Order, 1955 and the related public notice could validly restrict the petitioner from using or dealing with the imported goods.

Issue (i): whether the Customs authorities could refuse clearance of goods covered by a valid import licence by treating them as banned merely on the basis of import policy.

Analysis: The licence having been granted, the Customs authorities were required to confine themselves to the description in the licence and to the conditions attached to it. Under Section 2(33) of the Customs Act, 1962 and Section 47 of that Act, the proper officer could withhold clearance only if the goods were prohibited goods or the licence conditions were not satisfied. The import policy did not authorise the Customs authorities to sit in appeal over the licensing authority or to nullify a subsisting licence. The decision of the licensing authority was binding until cancelled or rendered ineffective in accordance with the Imports (Control) Order, 1955.

Conclusion: The Customs authorities could not lawfully refuse clearance on that basis, and the petitioner succeeded on this issue.

Issue (ii): whether the order made under Clause 10C of the Imports (Control) Order, 1955 and the related public notice could validly restrict the petitioner from using or dealing with the imported goods.

Analysis: Clause 10C operated only in respect of validly imported goods and only where the importer was physically unable to use them in accordance with the licence. The material on record showed that the petitioner was capable of utilising the goods in its factory, and the show cause notice proceeded on an erroneous assumption that the goods were merely banned and therefore unavailable for use. A public notice could not override the statutory scheme under the Imports and Exports (Control) Act, 1947 and the Imports (Control) Order, 1955 or alter the terms of an already issued licence. The record also did not establish any concluded consent or acquiescence by the petitioner to the Clause 10C order.

Conclusion: The Clause 10C order and the public notice were without jurisdiction and could not be sustained against the petitioner.

Final Conclusion: The petitioner was entitled to clearance and use of the imported goods under the subsisting licence, and the impugned restraint and diversion orders were quashed.

Ratio Decidendi: Once a valid import licence is granted, Customs authorities must act within the licence and the Customs Act and cannot displace it by relying on import policy or administrative notices; any cancellation or ineffectiveness must occur only under the prescribed statutory order.

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