Appellate tribunal rules goods legally imported despite fraud allegations, criticizes confiscation decision.

M LALLUBHAI & COMPANY Versus COLLECTOR OF CUSTOMS

M LALLUBHAI & COMPANY Versus COLLECTOR OF CUSTOMS - 1989 (43) E.L.T. 127 (Tribunal) Issues:
Validity of transferred license for import, Effect of license suspension on importation, Legal implications of license obtained by misrepresentation, Authority of adjudicating officer in decision-making process.

Analysis:

1. The appeal in question challenged the order of the Additional Collector of Customs, Bombay, regarding the confiscation of goods imported under a transferred REP license. The license was initially issued to a different entity, then transferred to the appellants, who faced issues due to the suspension and potential cancellation of the license.

2. The facts of the case were mostly undisputed, involving the transfer of the REP license to the appellants, their contract with a foreign supplier, and subsequent steps in the importation process. The licensing authority suspended the license pending cancellation proceedings, leading to a show cause notice for confiscation of the goods.

3. The main contention raised by the appellant's advocate was that the license, even if obtained through misrepresentation, remains valid until properly avoided. Citing legal precedents, including a Supreme Court judgment, it was argued that a license obtained by fraud is only voidable and remains in force until annulled as per legal procedures.

4. The respondent, represented by the Collector of Customs, supported the Additional Collector's decision based on a legal opinion suggesting that the license was void ab initio due to fraud. However, it was acknowledged that the appellants were bona fide transferees of the license without notice of any misrepresentation.

5. The Additional Collector's order, influenced by the legal opinion, deemed the license non-existent from its inception, leading to the conclusion that the importation was unauthorized. The adjudicating authority's reliance on external legal opinions was criticized as it should form an independent judgment based on the facts and applicable law.

6. Ultimately, the appellate tribunal, following the legal principles established by the Supreme Court and the Calcutta High Court, ruled in favor of the appellants. It was held that the goods were imported under a valid license, and the Additional Collector erred in ordering confiscation. The appeal was allowed, and any fine paid was ordered to be refunded to the appellants.

In conclusion, the judgment highlighted the importance of legal principles governing the validity of licenses, the impact of fraud on licensing, and the role of adjudicating authorities in making independent decisions based on the law and facts presented before them.