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PETITIONER: COLLECTOR OF CUSTOMS, MADRAS & ANR.

       Vs.

RESPONDENT: C.TARACHAND

DATE OF JUDGMENT05/04/1974

BENCH: BEG, M. HAMEEDULLAH BENCH: BEG, M. HAMEEDULLAH SARKARIA, RANJIT SINGH

CITATION:  1974 AIR 1209            1974 SCR  (3) 852  1974 SCC  (4) 540

ACT: Imports and Exports (Control) Act, 1947--S. 3--Scope of.

HEADNOTE: The  respondent had imported sewing machine needles under  a licence.   Claiming that the import licence did  not  ’cover the  needles  for  domestic  sewing  machines  the   Customs Authorities  imposed  a penalty and confiscated  the  goods. The  respondent claimed that the needles imported  could  be used in both domestic and industrial sewing machines or were interchangeable  and that the prohibition was not meant  for such  interchangeable  needles  which  could  be  used   for "domestic"  as well as "industrial" sewing machines but  was confined to needles capable of being used only for  domestic sewing machines.  A single Judge of the High Court get aside the  penalty  but confirmed the order of  confiscation.   On appeal  the  Division Bench, without going  into  the  other question  raised by the respondent, held that there  was  no prohibition  or restriction during the relevant  period  for the import of domestic sewing machine needles.  It therefore quashed the confiscation order. Allowing  the  appeal  and remitting the case  to  the  High Court, HELD  :  There was the required prohibition  against  import without licence of needles specified.  Sec. 3 of the imports JUDGMENT: prohibition  and  restriction of imports and cl.  3  of  the Import Control Order directly prohibits, in unambiguous  and mandatory  terms that "no person shall import any  goods  of the description specified in Schedule I except under and  in accordance  with the licence or a customs clearance,  permit granted  by.  the  Central  Government  or  by  any  officer specified  in  Schedule II".  This language  cannot  have  a meaning other than that the prohibition was there so long as the goods of the description given in the schedule were  not imported in accordance with the import licence. [856 E;  854 H; 855 A-B] (2)The prohibition is conditional in as much as it can  be lifted  by a licence which permits it; the question  whether the  respondent’s  licence  covered  the  particular   goods imported, was not specifically considered or decided by  the division bench.  The division bench did not also consider it

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necessary  to  decide whether any rules of  natural  justice were   violated  at  the  inquiry  held.   If  the   customs authorities had not acted in accordance with law in  holding the imported goods to be of the prohibited category the High Court could correct this error of law. [855 D-E]

& CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  1161  of 1973. Appeal  by Special Leave from the judgment and  order  dated the 26th June, 1973 of the, Madras High Court in Writ Appeal No. 381 of 1972 and 106 of 1973. G.   L. Sanghi and S. P. Nayar, for the appellants. K.   Jayaram, for the respondent. The Judgment of the Court was delivered by BEG,  J.-The Collector of Customs, Madras, has come  up,  by grant of special leave to appeal, against the judgment of  a Division Bench of the Madras High Court quashing an order of the  Central  Government which confirmed an  order  of  the, appellant confiscating 853 a large quantity of sewing machine needles.  The  respondent had  imported  the needles under a licence  which  did  not, according to the case of the Customs’ Department, cover  the goods  imported.  A learned Single Judge of the  High  Court had  set  aside  a penalty of  Rs.  5,000/imposed  upon  the respondent as the sewing needles imported by the petitioner- respondent were not, according to the learned judge,  proved to  belong  to the prohibited class,  but  the  confiscation order  bad, rather inconsistently, been maintained.   On  an appeal  by the, respondent against the refusal to quash  the confiscation  order, the Division Bench of the  Madras  High Court  came to the conclusion that there was no  prohibition at  all as contemplated by Section 3 of the  Import  Control Order,  1955,  made under Sections 3 & 4A of the  Imports  & Exports (Control) Act, 1947 (hereinafter referred to as ’the Act’), so that no further question need be considered.   The Division  Bench,  therefore,  did  not  go  into  the  other questions  raised  by  the respondent,  who  was  petitioner before  the  High Court, relating to violation of  rules  of natural  justice or the merits of the case that  the  sewing needles   imported  were  covered  by  the   licence.    It, therefore, held that the confiscation order could not  stand and had to be quashed with the penalty. The  Division  Bench was of opinion that  a  prohibition  or restriction  authorised  by the Act should be imposed  by  a Control  Order  such  as  the Control  Order  of  1955  duly notified in the official Gazette and not by any other means. It  held  that the prohibition relied upon  by  the  Customs Department  in  the  instant  case  did  not  satisfy   this requirement.               Section 3 of the Act reads as follows :               "3. Powers to prohibit or restrict imports and               exports.               (1)The   Central  Government  may,  by   order               published  in.  the  official  Gazette,   make               provisions  for  prohibiting,  restricting  or               otherwise  controlling  in  all  cases  or  in               specified  classes  of cases, and  subject  to               such exceptions, if any, as may be made by  or               under the order :-               (a)   the  import, export, carriage  coastwise               or  shipment as ships stores of goods  of  any

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             specified description;               (b)   the  bringing into any port or place  in               India  of goods of any  specified  description               intended  to  be taken  out  of  India-without               being  removed from the ship or conveyance  in               which they are being carried.               (2)   All goods to which any order under  sub-               section  (1)  applies shall be  deemed  to  be               goods  of which the import or export has  been               prohibited  under section 1 1 of  the  Customs               Act, 1962 (52 of 1962), and all the provisions               of that Act shall have effect accordingly.               (3)Notwithstanding  anything  contained  in               the aforesaid Act, the Central Government may,               by  order published in the  Official  Gazette,               prohibit, restrict or impose conditions on the               clearance, whether for home consumption or for               shipinent  abroad  of any goods  or  class  of               goods imported into India.                854                And clause 3 of the Import Control Order 1955               lays down               "3.  Restriction of Import of certain  goods.-               (1) Save as otherwise provided in this  Order,               no  person  shall  import  any  goods  of  the               description  specified in  Schedule  I,-except               under, and in accordance with, a licence or  a               customs   clearance  permit  granted  by   the               Central Government or by any officer specified               in Schedule 11.               (2)If,  in any ease, it is found  that  the               goods imported under a licence do not  conform               to  the  description given in the  licence  or               were shipped prior to the date of issue of the               licence  under which they are claimed to  have               been imported, then,’ without prejudice to any               action that may be taken against the  licensee               under  the Customs Act, 1962 (52 of 1962),  in               respect  of the said importation, the  licence               may  be  treated as having been  utilised  for               importing the, said goods".               Item  288 of Schedule 1 of the  Control  Order               specifies                "(a) parts of sewing machines domestic.                (b) Needles for domestic sewing machines".               The case of the Customs Department is that the               imported  sewing  machine needles  fall  under               this description.  The contention is that,  as               they  were duly notified, no question  of  any               failure to impose a prohibition in  accordance               with the provisions of the Act arose.               The Division Bench had held :               "Our  attention, however, was invited  by  the               learned Counsel for the Central Government  to               Section  3 of the Act and the  Import  Control               Order, 1955.  That Section merely invests  the               Central  Government  with power  to  prohibit,               restrict  or otherwise control specific  goods               or  classes  of goods  specified,  subject  to               exceptions.   Such prohibition or  restriction               should  be made by an order published  in  the               official Gazette.  The Imports Control  Order,               1955, as applicable to the relevant year,  did               not  specify,  as  far as  our  attention  was               drawn, the goods imported in the instant case.

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             Section  3 in the order does-not prohibit  the               import  of, any goods whatever, if it is  done               under  a  licence.   But what it  does  is  to               prohibit a person from importing any goods  of               the  description  specified  in  Schedule   1,               except  as  specified  and  permitted  by  the               proper authority.  It follows, therefore, that               there was no prohibition or restriction during               the  relevant  period to  the  importation  of               domestic  sewing  machine needles.   The  word               nil’ in the policy book does not mean anything               in the nature of prohibition or restriction". We regret that we are unable to concur with the reasoning of the  Division  Bench.   We find that Section 3  of  the  Act clearly provides for prohibition and restriction of  imports and that. clause 3 of the Control Order directly  prohibits, in  unambiguous and mandatory terms, that "no  person  shall import  any good of the description specified in Schedule  I except under and in accordance with the licence or a 855 Customs clearance permit granted by the Central Govt. or  by any officer specified in Schedule 2".  This language  cannot have  a meaning other than that the prohibition is there  so long  as goods of the description given in the schedule  are not imported in accordance with an import licence.  The case of  the  Department  is  that  the  import  licence  of  the respondent  does  not  cover "needles  for  domestic  sewing machines" which the respondent had imported. It  was  urged  on  behalf of the  respondent  that  it  was demonstrated  that  the needles actually imported  could  be used in both domestic and industrial sewing machines or were interchangeable.    According   to   the   respondent,   the prohibition  was not meant for such interchangeable  needles which  could be used for "domestic" as well as  "industrial" sewing machines but was confined to needles capable of being used  only  for domestic sewing  machines.   This  question, among  other questions, was not specifically  considered  or decided  by the Division bench.  The Division Beach did  not consider it necessary to decide whether any rules of natural justice  were violated at the inquiry held.  If the  Customs authorities had not acted in accordance with law in  holding the imported goods to be of the prohibited category the High Court could correct its error of law.  If they had  violated any  rule of natural justice the case could be  remitted  to them  for decision afresh.  It is agreed by learned  Counsel for  both  sides  that  the  Division  Bench  should  decide questions of law left undecided by it if the Division  Bench was in error in holding, on a preliminary question, that  no prohibition  to import needles for domestic sewing  machines without  a  licence had been imposed at all.  As we  are  of opinion  that the prohibition is conditional, in as much  as it  can  be lifted by a licence which permits it,  the  real question  which  will,  ultimately, have to  be  decided  is whether the respondent’s licence covers the particular goods imported. Before  proceeding further, we may observe that there,  were references in the order of the learned Single Judge as  well as of the Division Bench to what is known as the "Red  Book" containing the "Import Trade Control Policy" with regard  to various types of goods including needles for domestic sewing machines.  In the "Red Book" the word ’nil’ appeared against the  item  in question in the column for  "policy"  for  the relevant  year.  Therefore, the learned Single Judge of  the Madras  High Court had relied upon a decision of this  Court in  the Joint Chief Controller of Imports & Exports,  Madras

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v.  M/S. Amichand Mutha etc.(1) where it was held  (at  page 272) :               "The  last point urged was that subsequent  to               October 1957, Government of India changed  its               policy with respect to import of fountain pens               with  which  some of the present  appeals  are               concerned.   This it was urged amounted  to  a               ban  on  the import of fountain  pens  and  it               would   not  be  open  to  the   Joint   Chief               Controller  to  issue  any  licence  for   any               period,  be  it January-June 1957,  after  the               import  of fountain pens had been banned  from               October 1957.  Now there is no               (1) [1966] 1 SCR 262 @ 272.                856               doubt   that  it  is  open  to   the   Central               Government  under S. 3 to prohibit the  import               of any article but that can only be done by an               order published in the official gazette by the               Central  Government under S. 3 The High  Court                             has found that no such order under S. 3 of  the               Act  has  been published.  Nor  has  any  such               order  by the Central Government been  brought               to our notice.  All that has been said is that               in the declaration of policy as to import, the               word"nil" appears against fountain pens.  That               necessarily does not amount to prohibition  of               import  of  fountain pens unless there  is  an               order of the Central Government to that effect               published   in  the  official   gazette.    We               therefore  agree  with  the  High  Court  that               unless  such an order is produced it would  be               open  to  the licensing authority to  issue  a               licence  for the period of January, June  1957               even after October 1, 1957". We  do not think that the above mentioned reference  to  the Red  Book was at all necessary here or that a decision in  a case   where  the  Customs  authorities  relied  merely   on something  found  in  the Red Book assists us  in  the  case before  us.   Here, we have the item No. 288 in  Schedule  I read  with  clause  3 of the Control Order  which  was  duly published in the Official Gazette.  This had the effect of a categorical  prohibition  against  needles  satisfying   the description  but not covered by a licence.  We think that  a reference  to  the Red Book, in the instant case,  seems  to have misled learned Judges in the High Court. The  result  is  that we hold that  there  is  the  required prohibition  against  import  without  licence  of   needles specified.  Other questions of law which were not gone  into by  the High Court can now be considered and decided by  it. Accordingly,  we allow this appeal, set aside  the  judgment and order of the Division Bench, so that +,he appeal is  now restored  to its original number in the High Court.  It  may be  heard  and  decided  in accordance  with  law.   In  the circumstances  of the case, we award no costs of the  appeal to this Court. P.B.R. Appeal allowed. 857