Freely transferable REP licence permits imports for the transferee's factory, not just the original holder's factory.

A freely transferable REP licence was interpreted to allow the transferee, who becomes the licence-holder, to import raw materials, components, consumable stores and packing materials for use in its own factory. The phrase permitting imports required for use in the licence-holder's factory was held not to be confined to the original licence-holder's factory, because such a narrow reading would undermine free transferability and create uncertainty after the shopping list system was discontinued. On that construction, the seizure under the Customs Act was unsustainable and could not be upheld.

---

---

Issues: Whether a transferee of a freely transferable REP licence could import raw materials, components, consumable stores and packing materials for use in its own factory even though those goods could not have been used in the factory of the original licence-holder.

Analysis: Paragraph 30(1) of the Import Trade Control Policy for 1977-78 allowed a manufacturer-exporter who obtained an REP licence in his own name against his own exports to import raw materials, components, consumable stores and packing materials required for use in the licence-holder's factory, subject to the actual user condition. The provision did not confine the permissible imports to goods connected with the exported product. Since REP licences were freely transferable and the transferee also became the licence-holder, restricting the expression to the original holder would defeat the effect of free transferability and create practical uncertainty, especially because the shopping list system had been discontinued. The seizure under Section 111 of the Customs Act, 1962 was therefore unsustainable on the department's interpretation.

Conclusion: The transferee was entitled to import goods for use in its own factory, even if those goods could not have been used in the original licence-holder's factory; the seizure could not be upheld.

Final Conclusion: The petition was allowed and the seizure was set aside by accepting the petitioners' interpretation of the import policy governing the REP licence.

Ratio Decidendi: Where a freely transferable REP licence is held by a transferee who becomes the licence-holder, the phrase permitting import of materials required for use in the licence-holder's factory extends to the transferee's factory and is not confined to the original licence-holder's factory.

---