Customs jurisdiction over advance licence misuse upheld where duty-free import conditions under a notification were breached.

Duty-free imports under an advance licence were held to be governed by the Customs notification issued under Section 25(1) of the Customs Act, 1962, so its conditions were independently enforceable under customs law. Breach of those conditions, including diversion or misuse of imported goods, could therefore attract customs action and inquiry. The Court treated the notification, read with the importer's undertaking, as bringing the matter within customs jurisdiction and upheld the power of DRI officers to investigate and record statements under Section 108. The possible application of confiscation provisions under Sections 111(o) and 113(i) further supported the customs authorities' power to examine liability.

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Issues: Whether the Customs authorities had jurisdiction to investigate and issue summons in respect of alleged misuse of Advance Licences issued under the DEEC Scheme and alleged contravention of the Customs notification governing duty-free import.

Analysis: The scheme and the undertaking executed by the importer were read together with Notification No. 159/90 issued under Section 25(1) of the Customs Act, 1962. The notification imposed enforceable conditions on duty-free imports, including the obligation to use the imported goods as permitted and not to divert them in breach of the stated conditions. Breach of those conditions could attract action under the Customs Act, and the power of the Directorate of Revenue Intelligence officers, acting under the Customs Act, to investigate by resort to Section 108 was upheld. The Court distinguished authorities dealing only with licence conditions under the Imports and Exports Control regime and treated the Customs notification as the decisive factor bringing the matter within customs jurisdiction. The possible application of Section 111(o) and Section 113(i) of the Customs Act, 1962 further supported the power to inquire into whether the goods were liable to confiscation or whether there had been attempted improper export.

Conclusion: The Customs authorities had jurisdiction to investigate and summon the petitioners, and the challenge to the summons failed.

Ratio Decidendi: Where duty-free import under an advance licence is governed by a Customs notification issued under Section 25(1) of the Customs Act, 1962, breach of the notification conditions is independently justiciable under the Customs Act and may be investigated by Customs authorities under Section 108.

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