JUDGMENT

B.P. JEEVAN REDDY, J. :-Leave granted.

This appeal is directed against the Judgmentt and Order of a Division Bench of the Bombay High Court dismissing the Letters Patent Appeal No. 807 of 1987 preferred by Union of India and the Collector1 of Customs. The said appeal was preferred against the judgment and order of a learned single Judge allowing the Writ Petition (85 of 1987) filed by the first respondent herein. The learned single Judge had, by his judgment, quashed the order dated 15-9-1986 passed by the Collector of Customs, Bombay confiscating the goods in question under Section 111(d) of the Customs Act, 1962, and directed the Collector of Customs and the Union of India to hand over the said goods (four consignments of raw silk yarn) to the first respondent or his clearing agent, for reshipment to Hong Kong in terms solicited by him. The learned Judge granted a further direction to the effect that for the period the goods were detained, rendering the first respondent liable to pay demurrage to Bombay Port Trust, the Collector of Customs and the Union of India shall issue a detention certificate in his favour.

2. The second respondent Ms. Renu Pahilaj is doing business at Delhi in the name and style of "Acquarius". The first respondent is an Indian national resident abroad doing business at Hong Kong in the name and style of UNISILK. The second respondent obtained an advance import licence on 20-51985 for importing raw silk valid for a period of 18 months from the date of its issue. The import licence was granted subject to the condition that raw silk imported should be utilised for manufacturing garments which ought to be exported by the second respondent. Some time prior to October 1985, the second respondent received three consignments but she did not fulfil the aforesaid condition. During October.-November, 1985, the first respondent exported certain quantities of raw silk in four lots, deliverable to the second respondent. The requisite documents were sent to the first respondents bankers with instructions to deliver the same to the second respondent on receiving the payment. When the said four consignments arrived at Bombay, the second respondent appeared before the customs authorities and claimed the right to take delivery of the goods. By this time, however, the customs authorities had come to know of the non-compliance of the aforesaid condition with respect to the three earlier consignments and also of the alleged misrepresentation made by her while obtaining the Advance import licence. Proceedings were accordingly initiated against her and two other persons by the Collector of Customs, Bombay. The first respondent appeared in the said proceedings on his own and was heard. Probably in view of the proceedings taken against her - or otherwise - the second respondent failed to make the payment and receive the documents. She took no steps whatever to clear the goods. In effect, she abandoned them.

3. The first respondent submitted before the Collector that title to the goods has not passed to the second respondent, that he is still the owner of the goods and that therefore the said goods cannot be confiscated or proceeded against for the violations, if any, committed by the second respondent. He submitted that he was not a party to the misuse of the earlier imports nor was he aware of the alleged fraud practiced by the second respondent in obtaining the advance import licence. He requested that he may be permitted to re-export the said goods to Hong Kong.

4. While the said proceedings were pending before the Collector of Customs, the advance import licence granted to second respondent was cancelled by the Competent Authority on May 12, 1986. No orders were passed with respect to the said goods.

5. The Collector of Customs, Bombay passed orders on September 9, 1986, whereunder he imposed a penalty of rupees five lacs on the second respondent. Penalties were also levied upon two other persons, said to be associates