Licence coverage for imported motor-cycle parts prevails; customs cannot treat them as prohibited CKD imports on assumed assembly intent.

Imported motor-cycle parts covered by a valid licence for parts and accessories had to be assessed by reference to the licence actually held, not by recharacterising the goods as completely knocked down motor cycles on an assumed intention to assemble complete vehicles. The note states that, on the record before the Collector, the consignments lacked tyres, tubes and saddles and could not be treated as a prohibited CKD import. Because the customs authorities adopted the wrong approach in ignoring the licence coverage and proceeding on an erroneous assumption, the confiscation and penalty orders were set aside.

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Issues: Whether the customs authorities were justified in confiscating imported motor-cycle parts and imposing penalty on the footing that the importer had, in substance, brought in motor cycles in completely knocked down condition without a proper licence.

Analysis: The licence held by the importer covered articles adapted for use as parts and accessories of motor cycles under the relevant import control entries. The imported goods were parts and accessories brought in under one licence in several consignments, and the authorities were required first to determine whether the goods actually imported fell within the licence. Instead, the confiscation order proceeded by comparing the goods with the restricted entry for completely knocked down motor cycles and by assuming an intention to assemble complete vehicles, even though the goods lacked tyres, tubes and saddles and could not be treated as a prohibited CKD import on the record before the Collector. On that basis, the Collector adopted the wrong approach and committed an error justifying interference in writ jurisdiction.

Conclusion: The confiscation and penalty orders were rightly quashed and the appeal failed.

Final Conclusion: The controlling question was whether the imports were covered by the licence, and the answer was yes; the customs authorities could not invoke the restriction on completely knocked down motor cycles on the facts found.

Ratio Decidendi: Where imported goods are covered by a valid licence, customs authorities must decide the matter by reference to the licence actually held and cannot confiscate the goods by recharacterising them as a prohibited import on an erroneous assumption of intended assembly.

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