Retrospective import conditions and inadequate inquiry into licence compliance cannot sustain confiscation or penalty under earlier licences.

A later public notice introducing a "prime quality" requirement could not be applied retrospectively to imports made under licences issued earlier; the goods had to be judged by the licence terms actually in force, including the specified gauge and any permissible tolerance. Confiscation and penalty also could not be sustained where the authorities had not properly investigated compliance with those licence conditions or given the importer a fair opportunity to adduce evidence. The orders were set aside and the matter was remanded for fresh disposal confined to compliance with the licence specification and tolerance.

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Issues: (i) whether the condition of "prime quality" could be applied to consignments imported under licences issued before that condition was introduced; (ii) whether the departmental orders sustaining confiscation and penalty could stand without proper investigation into compliance with the licence conditions and the permissible tolerance.

Issue (i): whether the condition of "prime quality" could be applied to consignments imported under licences issued before that condition was introduced.

Analysis: The licences under which the goods were imported were issued in June 1962, whereas the public notice introducing the "prime quality" requirement was issued only on 6 December 1962. A condition imposed later could not be read retrospectively into earlier licences. The import had therefore to be tested against the terms actually contained in the licences, including the gauge specification and any permissible tolerance, and not against a subsequently introduced standard.

Conclusion: The retrospective application of the "prime quality" condition was impermissible and the finding of contravention on that basis could not be sustained.

Issue (ii): whether the departmental orders sustaining confiscation and penalty could stand without proper investigation into compliance with the licence conditions and the permissible tolerance.

Analysis: The Collector and the appellate authority had proceeded mainly on the assumption that the goods were not of prime quality and had not separately examined whether each consignment complied with the licence specification as to 18 gauge, subject to permissible tolerance. The dispute had not been properly investigated, and the importer had not been given an adequate opportunity to establish that there was no substantial deviation from the licence terms or to produce additional evidence. In these circumstances, the revision orders could not be allowed to stand and the matter required reconsideration on merits.

Conclusion: The orders could not be sustained and the revision applications had to be reconsidered after giving the importer an opportunity to adduce evidence.

Final Conclusion: The orders under challenge were set aside and the matters were remanded to the Central Government for fresh disposal according to law confined to compliance with the licence specification and permissible tolerance.

Ratio Decidendi: A condition introduced after the issuance of an import licence cannot be applied retrospectively to imports made under the earlier licence, and confiscation or penalty cannot be upheld without a proper inquiry into actual compliance with the licence terms and an opportunity to lead evidence.

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