Validity of duty free scrips at import: valid scrips later cancelled for misrepresentation must be honoured; forged scrips permit confiscation.

Validity of duty free licences and scrips turns on their status at the time of import: where a DGFT issued scrip was valid at import but later cancelled due to earlier misrepresentation by the original exporter, customs must honour the licence and cannot raise demands; interest and penalties do not survive. By contrast, imports made on forged licences permit confiscation and permit invocation of the extended limitation period. The distinction between scrips obtained by misrepresentation and forged scrips is decisive for relief; consequential relief follows where honouring the licence removes the basis for demand.

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Issues: Whether imports made under licences/scrips issued by the licensing authority but subsequently found to have been obtained by misrepresentation by the original licence-holder can be subjected to duty, interest, penalty and confiscation when the licences remained valid at the time of import and were cancelled only later.

Analysis: The question distinguishes licences that are forged or never legitimately issued from licences validly issued but allegedly obtained by misrepresentation. For forged or fake licences the licence is non-existent and imports effected thereunder are unlawful, attracting confiscation and penalties. By contrast, where a licence was legitimately issued and remained valid at the time of import but was obtained by misrepresentation by the original licence-holder, the licence is voidable and the appropriate remedy lies with the licensing authority; until cancellation or suspension by that authority the licence must be treated as valid. Established authorities hold that innocent transferee-importers who imported under licences valid at the time of import are entitled to have those licences honoured by Customs and cannot be subjected to demands, interest or penalties arising from post-import cancellation by the licensing authority.

Conclusion: The appellant is entitled to relief because the imports were made under licences that were valid at the time of import; the post-import cancellation by the licensing authority does not render the licences void ab initio and therefore duty, interest, penalty and confiscation do not survive against the importer.

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