Licensed import of SKD components cannot attract customs confiscation absent an express prohibition in the import policy.

Import of photocopier components in SKD condition was treated as lawful where the importer held licences for component parts and the goods were not shown to be complete machines at the point of import. The Court applied the principle that fiscal and customs liability must arise from an express breach of the statutory text or import policy, not from an alleged inconsistency with its spirit. Because no express prohibition covered the dismantled components imported here, confiscation and penalty under the Customs Act could not stand and the customs order was quashed accordingly.

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Issues: Whether the import of photocopier components in SKD condition, which could be assembled into complete machines in India, violated the import licence or the Import Trade Control policy so as to attract confiscation and penalty under the Customs Act.

Analysis: The importers held licences for component parts and the evidence showed that the consignments consisted of dismantled components, not complete machines as presented for import. The Court distinguished cases where the whole article was banned or where the policy expressly restricted import beyond a permitted percentage. It held that fiscal and taxing statutes must be applied according to their express terms, and that liability cannot be created merely because a transaction may be viewed as contrary to the spirit of the policy if the letter of the law is not breached. Since no express prohibition prevented import of the component parts imported here, and since the goods were not found to be complete machines crossing the frontier, the basis for confiscation and penalty failed.

Conclusion: The import was held to be lawful under the licences held by the petitioner, and the confiscation and penalty under the Customs Act were set aside in favour of the assessee.

Final Conclusion: The writ petition succeeded, and the impugned customs order was quashed to the extent it directed confiscation and imposed penalty, with consequential discharge of the bonds and bank guarantees.

Ratio Decidendi: In the absence of an express prohibition in the relevant fiscal regime, import of licensed component parts cannot be treated as unlawful merely because the components may be assembled into a complete article in India; fiscal liability must rest on breach of the statutory text and not on the supposed spirit of the policy.

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