BLUE BLENDS (INDIA) LTD Vs. CC

JUDGEMENT

(1.) THE appellant imported a consignment of polyester filament yarn, in September, 1987 and presented for its clearance a REP import licence. The licence had been issued to M/s. Overseas Enterprises, 266 Jawahar Nagar, Hyderabad and apparently, had been transferred in accordance with law to the importer. The Custom House declined to clear the goods pending enquiries on the information it had received that the licence obtained by M/s. Overseas Enterprises was on the basis of false and forged documents submitted by it. These enquiries and subsequent enquiries with the licensing authority resulted in the issues of orders by the Deputy Chief Controller of Import and Exports, Hyderabad, suspending initially the operation of the import licence in question along with some other licence issued to Overseas Enterprises and subsequently cancelling the import licences on the basis of ground that the licence was obtained on the basis of fraud and misrepresentation of facts and that the firm itself is fictitious.

(2.) ACCORDINGLY , notice was issued to the appellant proposing confiscation of the goods on the ground that the licence was not valid for their clearance. Penalty was also proposed on the ground that it acted in collusion with Shyam Bihani and other persons in obtaining the import licence. Shyam Bihani was a broker, through whom the licence was obtained and apparently known to A.G. Khan of Overseas Enterprises. Notice alleged that importer was well aware that bona fide of Mr. Khan and its firm are doubtful; and purchased the licence at rates much cheaper than the rates prevailing in the markets. Adjudicating on the notice the Collector in the impugned order, has held the goods not to covered by the licence produced and ordered their classification (sic). He has not imposed any penalty on its employee.

(3.) MR . Harikumar, Export Manager of the appellant contends that the goods were imported when the licence was valid. Any subsequent cancellation of the licence could not affect the validity of the import made under that licence. He relies upon the judgement of the Supreme Court in East India Commercial Corporation v. CC ; Union of India v. Sampat Raj Dugar and Anr. 1992 (39) ECR 189 (SC) : ECR C Cus 1875 SC, and other decisions of the Tribunal following this. He contends that the ratio of these judgements is that a licence is followed till it is cancelled and the licence obtained by fraud or misrepresentation is voidable, and till it is a voided it continues to be valid. Therefore imports made against a licence prior to cancellation are covered by the licence. He also contends that there is insufficient evidence to show that the appellant was connected with the acts of Overseas Enterprises, in its acts of falsification of the documents and the mere fact that Shyam Bihani who was the broker for the licence, having connection with Khan of Overseas Enterprises and the fact that the appellant did not pay the full amount for the licence is not sufficient to impose penalty.