Advance licence value cannot be altered by Customs on alleged misrepresentation; exemption and penalties fail absent licence cancellation.

Customs authorities cannot question, scale down, or otherwise alter a value-based advance licence on allegations of misrepresentation where the licensing authority has not cancelled or amended the licence. The power to grant or modify the licence remains with the licensing authority, and Customs must accept the licence as issued for purposes of exemption. Where the import remains within the licence value and no independent customs violation is shown, demand, confiscation, redemption fine, and penalty are unsustainable.

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Issues: Whether the Customs authorities could question, scale down, or otherwise modify the value-based advance licence on the ground of alleged misrepresentation in the licence application, and whether the consequent demand, confiscation, and penalty could be sustained.

Analysis: The dispute turned on the boundary between the Customs authorities' power to assess imports under the customs law and the licensing authority's exclusive domain over the grant or amendment of the advance licence. The licence had not been cancelled or modified by the licensing authority, and the correspondence relied upon by the department did not amount to a valid proceeding for amendment of the licence. The Court applied the settled principle that once an advance licence is issued and remains unchallenged by the licensing authority, Customs cannot deny the exemption or reduce the licence value on an allegation that the licence was obtained by misrepresentation. The import was found to be within the value limit of the licence, and there was no independent violation of the customs conditions that would justify confiscation or penalty.

Conclusion: The Customs authorities had no jurisdiction to alter or question the value-based advance licence, and the demand, confiscation, redemption fine, and penalty were unsustainable.

Ratio Decidendi: Where an advance licence has been issued and not cancelled or amended by the licensing authority, Customs cannot refuse the exemption or alter the licence value on the basis of alleged misrepresentation; any such action lies within the domain of the licensing authority alone.

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