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PETITIONER: SHARP BUSINESS MACHINES PVT. LTD.. BANGALORE

       Vs.

RESPONDENT: COLLECTOR OF CUSTOMS, BANGALORE

DATE OF JUDGMENT24/08/1990

BENCH: KASLIWAL, N.M. (J) BENCH: KASLIWAL, N.M. (J) AGRAWAL, S.C. (J)

CITATION:  1990 SCR  Supl. (1)  28  1991 SCC  (1) 154  JT 1990 (4)    74        1990 SCALE  (2)435

ACT:     Customs  Act,  1962: Ss. 14(1), 111(d),  111(m),  112  & 130(e)--Import  of copiers in SKD/CKD form--Confiscation  of for misdescription and misdeclaration of value--Validity  of Personal penalties-Justification  for.

HEADNOTE:     Section  14(1)  of the Customs Act, 1962  provides  that where a duty of customs is chargeable on any goods by refer- ence to their value, the value of such goods shall be deemed to  be the price at which such or like goods are  ordinarily sold or offered for sale. for delivery at the time and place of importation. in the course of international trade.     The  appellant-company,  a small scale  manufacturer  of plain paper copiers. had submitted. alongwith their applica- tion for approval of the phased manufacturing programme, the quotations received by them from their foreign collaborators based  in Hongkong in respect of the various components  and obtained  a licenee in this regard for  Rs.4,94,500.  Subse- quently, they imported three consignments of components  and consumables  in SKD/CKD form from suppliers at Hongkong  and another consignment from Singapore. The total value declared under the four bills of entry was Rs.99,612.     The Collector of Customs found that the invoices submit- ted by the company were undervalued and determined the price of  goods at Rs.7,15,485 with reference to  the  quotations, for  the purposes of s. 14(1) of the Act. He thus held  that there  was  a  misdeclaration  of  value  to  the  tune   of Rs.6,15,873,   that  the  duty  payable  thereon  would   be Rs.10,96,228.20  and  that the entire goods were  liable  to confiscation  under s. 111(m) of the Act. He also held  that the  goods imported were fully finished copiers in  SKD/CKI) form and as such there was a misdeclaration that the import- ed goods were only parts of the copiers, that description of most  of  the items in the invoices  had  been  deliberately manipulated  to  suit the description in the  licence,  that fully assembled copiers were not permissible to be  imported and  this was a clear violation of the Act and the terms  of the licence. In the alternative he held that even if all the parts contained in SKD/CKD packs were 29 viewed  individually, none of the items was covered  by  the

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licence. He further held that the value of the parts import- ed  for  the  purposes  of s. 14(1)  of  the  Act  would  be Rs.5,63,332, whereas the importers were permitted to  import goods  worth Rs.4,94,500, that there was thus an  excess  of Rs.68,832 and as such the goods were liable to  confiscation under  s. 111(d) of the Act. Consequently, he directed  con- fiscation of the entire goods with an option to the  company to  pay  Rs.3 lakhs in lieu thereof and also Rs.2  lakhs  in personal  penalties. The Customs, Excise and Gold  (Control) Appellate Tribunal dismissed their appeals.     In these appeals under section 130(e) of the Act, it was contended  for the appellants that the quotations had  indi- cated  prices at Hongkong and not the place of  importation, that at the time of submitting the application for grant  of licence the prices were quoted for fixing the upper limit of the  value  of the licence, that when  the  actual  purchase transactions  were entered into the company  negotiated  for the  price and having regard to the quantum of purchase  and the  prospects of future sales the company was given 25  per cent  discount by the suppliers, and that in the absence  of any  other material on record the invoice price alone  could form  the basis of valuation of the imported goods. For  the respondents, it was contended that the prices quoted by  the collaborators were based on the prices given by the manufac- turers.  and there was no question of supplying  the  compo- nents  on  a lesser price than given  by  the  manufacturers themselves,  that the goods imported were not components  of plain  paper copiers as declared, that the cartons  in  fact comprised  of all the parts required for full  and  complete assembly  of 14 copiers, that the company in importing  them in the guise of separate components and accessories had  not only  violated the terms and conditions of the  licence  but also  committed a complete fraud, that in the  circumstances the  adjudicating authority was fully justified  in  placing reliance on the prices mentioned in the quotations. Dismissing  the  appeals  under s. 130(e) of  the  Act,  the Court,     HELD: 1.1 According to S. 14(1) of the Customs Act, 1962 for  purposes of assessment the value of the imported  goods is to be deemed to be the price at which such or like  goods are  ordinarily sold, or offered for sale, for  delivery  at the time and place of importation, in the course of interna- tional trade, where the seller and the buyer have no  inter- est in the business of each other and the price is the  sole consideration for the sale or offer for sale. [36G-H] 1.2  In  the instant case the appellant-company  itself  had produced 30 a copy of the quotations received by them from their collab- orators  at  Hongkong in respect of the  copiers  and  other items imported, alongwith their application for approval  of their phased manufacturing programme. They, therefore. could not  dispute the correctness of the prices mentioned in  the said  quotations.  Not only that, they have also  failed  to produce any other material on record to show that the  value mentioned  in the invoices was the correct market  value  of the  goods imported at the relevant time.  The  adjudicating authority in these circumstances was perfectly justified  in taking the prices mentioned in the quotations as a basis for determining the correct value of the imported goods. [37A-C]     2.1 The goods covered by the three bills of entry  dated 3rd  February,  1987 had been shipped from Hongkong  on  the same  day i.e. on 21st January, 1987. The entire  goods  had arrived  on  the  same day and by the same  flight  on  30th January,  1987.  These goods had been supplied by  the  same

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supplier.  They comprised of ten numbers copiers in  SKD/CKD condition,  accessories,  spares,  consumables  and   excess items. The goods covered by the 4th bill of entry were  four numbers  copiers in SKD/CKD condition and  consumables.   If assembled together these would constitute full and  complete copiers.  The licenee produced was valid for certain  compo- nents  and  was not valid for fully assembled  copiers.  The appellant-company  was thus doing indirectly what they  were not permitted to do directly under the licence. [37H; 38A-B] Girdbari Lal Bansi Dhar v. Union of India, [1964] 7 SCR 62. referred to.     Union  of India v. Tarachand Gupta & Bros., AIR 1971  SC 1558. distinguished.     2.2  The intention and purpose of the import policy  was to give incentive and encouragement to the new entrepreneurs establishing  small scale industries and in the first  phase to  import  62%  of the components of the  copiers  and  the balance of 38% was to be manufactured by them  indigenously. This  percentage of 62% was to be reduced in the  subsequent years.  The import policy was not meant for  such  entrepre- neurs  who instead of importing 62% of the  components,  im- ported  100% of the components of a fully finished and  com- plete  goods manufactured by a foreign country.  Fully  fin- ished  plain paper copiers were the end product of  the  im- porters and hence could not be imported by them. The  device a,  looted  by the company in the instant case  was  thus  a complete fraud on the import policy itself. [37D-F] 31     2.3  The order confiscating the goods and imposing  fine was, therefore, rightly made. [43A]

JUDGMENT:     CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.  2403-05 of 1989     From Orders Nos. 568 to 570/88-A dated 31.10.1988 of the Customs  Excise and Gold (Control) Appellate  Tribunal,  New Delhi  in  Appeal  No. C/A. No. 808 to  810  of  1987-A  and C/Misc. No. 390 of 1987-A. S.K. Dholakia and S.K. Kulkarni for the Appellant.     Kapil Sibal, Additional Solicitor General, P.  Parmeswa- ran and Mrs. R. Rangaswamy for the Respondent. The Judgment of the Court was delivered by     KASLIWAL, J. All these appeals under Sec. 130(e) of  the Customs  Act, 1962 (hereinafter referred to as the Act)  are directed  against  the  common order made  by  the  Customs, Excise  and  Gold (Control) Appellate  Tribunal,  New  Delhi dated 31.10.88 in C.A. Nos. 808 to 8 10/87-A.     Brief  facts  of the case are that M/s.  Sharp  Business Machines (Pvt.) Ltd., Bangalore (hereinafter referred to  as the company) is a small scale manufacturing unit duly regis- tered as such since 1984. The company had started the phased manufacture of plain paper copiers and obtained a licence in this regard dated 25.11.86 for Rs.4,94,500 from the  licens- ing authority. The company imported components and  consuma- bles in SKD/CKD for plain paper copiers. Three  consignments were  imported from M/s. Paralax Industrial Corp.,  Hongkong under airways bill numbers 098, 4960, 3120; 098, 4960, 3116; and  098, 4960, 3105 all dated 21.1.87. The goods  were  re- ceived  at  the air cargo complex,  Bangalore.  The  company sought  the clearance of the imported goods under  bills  of entry Nos. 2044, 2045 and 2046 all dated 3.2.87.  Similarly, the goods were also imported from M/s. Alpha Papyrus Trading Co. Pvt. Ltd., Singapore under airway bill No. 098 4925 4914

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dated 19.2.87. the clearance for this consignment was sought under bill of entry No. 4993 dated 11.3.87. The company  had declared the value of each of the consignments at  Rs.32,182 Rs.43.359),  Rs.5,412 and Rs.18,659 respectively in  respect of the above mentioned bills of entry Nos. 2044, 2045.  2046 and  4993. The total value declared was Rs.99,612 under  all the four bills. 32     Proceedings  were held before the Appraiser  of  Customs air  cargo complex Bangalore for verification of  the  goods and their valuation etc. and the statements of the company’s Managing  Director  Sh.  Sadanand  were  also  recorded   on 11.2.87.10.3.87  and 18.3.87 under Sec. 108 of the Act.  The Collector  of Customs issued a notice to the  company  under Sec. 124 of the Act on 4.3.87 relating to the first consign- ment. In the said notice it was stated that 4 items were not covered by the licence and the same were liable for  confis- cation.  However.  on 30.3.87 the Collector  issued  another notice  in supersession of the earlier notice dated  4.3.87. Notice  was also issued on the same date in respect of  bill of  entry dated 11.3.87. By the said notices  the  Collector proposed  to  enhance the value of the  goods  imported  and further proposed to confiscate the entire goods imported and also  to levy a fine and other penalties. The company was accused  of misdescription of the goods,  misdeclaration  of value,  suppression of the relationship with the  suppliers, suppression of the place of origin of goods etc.     The Collector by his order dated 13.4.87 decided all the points  against  the company. The Collector  held  that  the quotations  given by M/s.  Shun Hing Technology Ltd.  along- with  the application for approval of their PMP during  July 1986  should  be  taken as the correct value  of  the  goods imported. and the plea of the company that it had received a special  discount in view of the bulk purchases and  promise of future purchases was not accepted. The Collector in these circumstances   determined  the  price  of  the   goods   at Rs.7,15,485  for the purposes of Sec. 14(1) of the Act.  The Collector  thus held that there was a misdeclaration of  the value to the tune of Rs.6,15,873 and the duty payable there- on  would  be Rs.10.96,228.20p. The Collector  further  held that  the entire goods imported were liable to  confiscation under  Sec. 111(m) of the Act. The Collector also held  that the  goods imported were fully finished copiers  in  SKD/CKD form and as such there was a misdeclaration that the import- ed goods were only parts of the copiers. The Collector  also held  that description of most of the items in the  invoices had been deliberately manipulated to suit the description in the licence. The goods covered by three bills 2044, 2045 and 2046  were held to be one consignment and one AWB  and  thus viewed as one consignment, it amounted to the import of  ten copiers. The goods imported under the 4th bill No. 4993 were four  fully finished copiers in SKD/CKD form. The  Collector further  held that in terms of note (i) to  Imports  Control Order.  1955 and Customs Tarrif Act, 1975, these goods  will be  deemed to be filly assembled copiers for the purpose  of valuation and licence. Thus the goods imported as 33 fully assembled copiers were not permissible to be  imported and  this was a clear violation of the Act and the terms  of the  licence. It was also held in the alternative that  even if all the parts imported were viewed individually, none  of the  items  tally with the licence. The  Collector  in  this regard  gave detailed reasons for arriving at  this  conclu- sion.  The Collector also held that the value of  the  parts imported for the purposes of Sec. 14(1) of the Act would  be

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Rs.5,63,332  whereas the importers were permitted to  import goods  worth  Rs.4,94,500.  There  was  thus  an  excess  of Rs.68,832 and as such the goods were liable to  confiscation under Sec. III(d) of the Act. The Collector in these circum- stances passed an order for confiscation of the entire goods with an option to the company to redeem them on payment of a fine of Rs.3 lacs. The Collector also imposed a fine of Rs.1 lac on the company and Rs. 1 lac on Sh. Sadanand the  Manag- ing Director of the Company.     The  company  filed two appeals  aggrieved  against  the common  order of the Collector relating to both the  notices and  a separate third appeal was preferred by  the  Managing Director  before  the  Customs, Excise  and  Gold  (Control) Appellate  Tribunal.  The Tribunal dismissed all  the  three appeals  by a common order dated 31.10.88. The  company  and the  Managing  Director aggrieved against the order  of  the Tribunal have filed the above mentioned three appeals before this Court.     One of the arguments raised before the Tribunal was that the Collector erred in treating SKD/CKD parts of the copiers imported, as assembled copiers, for the purpose of  Schedule I to the Imports (Control) Order. 1955 and the case Union of India  v. Tarachand Gupta & Bros., AIR 1971 SC 1558  applied on  all  force  to the instant case. The  Tribunal  in  this regard  set aside the finding recorded by the Collector  and placing reliance on a decision of the Calcutta High Court in Collector  of Customs, Calcutta v. Misuny Electronic  Works, [1987]  30 ELT, 345 held that one has to look into  the  re- spective  licence and not to the fact that if all  the  con- signments  covered by all the bills of entry  are  assembled together,  there  will be complete machines.  The  Tribunal, however, upheld the other findings recorded by the Collector to the effect that even if all the imported parts  contained in  SKD/CKD  packs of copiers were viewed  individually  the licence produced was not valid for any of the items  import- ed. The. Tribunal thus held that the Collector was right  in holding  that  the imported goods were not  covered  by  the valid licence. The Tribunal also held that the Collector was right  in  rejecting the price shown by the company  in  the invoices. The Tribunal also rejected the contention made  by the counsel for the 34 company  that  the  valuation  made  by  the  Collector  was exorbitant.  As  regards the question of imposing  fine  and penalty  also the Tribunal found the order of the  Collector as correct. and did not find any cogent reason to  interfere in the order of the Collector.     We  have heard Mr. Dholakia for the appellants  and  Mr. Kapil  Sibley  learned Addl. Solicitor General for  the  re- spondents.     It was argued by Mr. Dholakia that the Tribunal  commit- ted  a serious error in holding that the invoices  submitted by the company were undervalued and could not be relied upon for determining the correct value of the goods imported.  It was contended that the Collector Customs was not correct  in determining the value of the imported goods on the basis  of the quotations of M/s. Shun Hing Technology Ltd.,  Hongkong. The quotation of Shun Hing indicated prices at Hongkong  and not the place of importation. There was no other material on record to determine the value of the imported goods. It  was thus  contended  that in the absence of any  other  relevant material, the invoice price has to be taken as the basis for valuation. It was also submitted that there was no  justifi- cation  in discarding the price shown in the invoices  which contained  the  correct value of the goods imported  and  in

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case  of  Customs authorities were not placing  reliance  on such  prices mentioned in the invoices. then the burden  lay on  the Customs department to find out the correct value  of the goods by collecting material and other adequate evidence before  enhancing the value of the imported goods. The  onus to  prove the charge of undervaluation against  the  company was  on the Customs department and the evidence relied  upon by  them, as contained in the adjudication order. is not  at all sufficient to discharge that onus. It was further argued that any reliance placed on the quotations furnished at  the time of submitting the application for grant of licence  was wholly erroneous. At the time of submitting the  application for  grant of licence the prices are quoted for  fixing  the upper  limit  of the value of the licence. When  the  actual purchase transactions were entered into, the company negoti- ated  for  the  price and having regard to  the  quantum  of purchase and the prospects of future sales, the company  was given  25% ,’ count by the suppliers. It was also  submitted that  the prices quoted by M/s. Shun Hing  Technology  Ltd., Hongkong  were not the value of the components  imported  by the company in SKD/CKD form of plain paper copiers. Thus any price quoted by M/s. Shun Hing can never form any basis  for arriving  at  a proper and correct valuation  of  the  goods imported by the company in the present case. 35     On the other hand it was submitted by the learned  Addl. Solicitor  General  that it has been admitted  by  Sh.  P.N. Sadanand, Managing Director of the company in his  statement dated 10.3.87 that the goods imported in the present case by the company were of Japanese origin and manufactured by M/s. Matushita  Electric  Company  Ltd., Japan.  M/s.  Shun  Hing Technology Ltd., Hongkong were the authorised agents of M/s. Matushita Electric Co. Ltd., Japan, who are the  manufactur- ers  of Panasonic copies. He further admitted that  normally the  Panasonic  copies were supplied to  Hongkong  in  fully assembled form and then they were dismantled in Hongkong  by the  agents and thus supplied in India in SKD/CKD form.  Sh. Sadanand  admitted to have visited Hongkong during  January, 1987  alongwith his Engineer Sh. K.S. Radhakrishan for  pur- chase  of 10 copiers--6 Nos. Model EP 1300 and 4 Nos.  Model EP  2625 and that he alongwith the Engineer  dismantled  the fully  assembled  copiers. It was submitted that  the  goods contained in the cartons comprised of all the parts required for  full and complete assembly of copiers. At the  time  of examination  of the goods covered by Bill of Entry No.  4993 dated  11.3.87,  it was found that out of the  six  cartons, four  cartons  were the original cartons  used  for  packing fully finished/assembled copiers Model EP 2625. The descrip- tion,  model  number,  brand, manufacturer  and  country  of origin/manufacture of the copier (viz. Plain Paper Copier EP 2625 Panasoni, Matushita Electric Co. Ltd. and Japan respec- tively)  were clearly marked on these four cartons, one  set of  cassettes, trays, covers, one drum, one  developer  unit and  a  bottle  of developer. It was thus  argued  that  the original  packing  cartons used for packing  fully  finished copiers are normally supplied only if fully finished copiers are  purchased. It was submitted that the  adjudicating  au- thority  has  given detailed reasons for  showing  that  the goods imported were not components of plain paper copiers as declared.  In fact, the company had purchased 14 fully  fin- ished copiers 10 in Hongkong and 4 in Singapore and had then dismantled for importing the same in the guise of components of  copiers. The company had submitted application  for  ap- proval of their phased manufacturing programme to the Devel- opment Commissioner, Small Scale Industries Govt. of  India,

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New Delhi in July, 1986 and alongwith this application  they had also submitted the quotations received by them from M/s. Shun  Hing Technology Ltd., Hongkong which covered  all  the items imported except a few items like toner, drum and table for model FP 2625. The company in the present case not  only violated  the terms and conditions of licence but also  com- mitted a complete fraud in importing fully finished  copiers which  was a totally prohibited item, in the guise of  sepa- rate  components  and accessories by dismantling  the  fully finished copiers. In the above 36 circumstances the adjudicating authority was fully justified in not believing the value mentioned in the invoices and  in placing  reliance on the prices mentioned in the  quotations given  by M/s. Shun Hing Technology Ltd., Hongkong.  It  was further argued by Mr. Sibbal that the prices quoted by  M/s. Shun Hing were based on the prices given by the  manufactur- ers  i.e. M/s. Matushita Electric Co. Ltd., Japan and  there was  no question of supplying the components of the  copiers on  a  lesser price than given by  the  manufacturers  them- selves.  The  company had a special relationship  with  M/s. Shun Hing Technology Ltd., Hongkong as a sort of  collabora- tor with no formal agreement and that M/s. Paralax Industri- al  Corp.,  Hongkong were in turn agents of M/s.  Shun  Hing Technology Ltd., Hongkong.     We  have  considered  the submissions  made  by  learned counsel for the parties. Section 14 of the Act provides  for valuation  of goods for the purpose of  assessment.  Section 14(1) which is relevant for our purposes reads as under: 14. "Valuation of goods for purposes of assessment: (1) For the purposes of the Customs Tariff Act, 1975 (51  of 1975), or any other law for the time being in force whereun- der  a duty of customs is chargeable on any goods by  refer- ence to their value, the value of such goods shall be deemed to  be the price at which such or like goods are  ordinarily sold,  or  offered for sale, for delivery at  the  time  and place of importation or exportation, as the case may be,  in the course of international trade, where the seller and  the buyer have no interest in the business of each other and the price  is the sole consideration for the sale or  offer  for sale: Provided that such price shall be calculated with  reference to  the rate of exchange as in force on the date on which  a bill  of entry is presented under Section 46, or a  shipping bill  or  bill of export, as the case may be,  is  presented under Section 50."      According to the above provision the value of the goods shall be deemed to be the price at which such or like  goods are  ordinarily sold, or offered for sale, for  delivery  at the time and place of importation, in the course of interna- tional trade where the seller and the buyer have no interest in  the  business of each other and the price  is  the  sole consideration for the sale or offer for sale. In the present case the 37 company  itself  had produced a copy of the  quotations  re- ceived by them from M/s. Shun Hing Technology Ltd., Hongkong in respect of the copiers and other items imported alongwith their application for approval of their phased manufacturing programme.  The company itself having produced these  quota- tions,  they  cannot dispute the correctness of  the  prices mentioned therein. The company has not only not disputed the correctness  of  these quotations but has not  produced  any other material on record to show that the value mentioned in the  invoices  was  the correct market value  of  the  goods

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imported at the relevant time. The adjudicating authority in these  circumstances was perfectly justified in  taking  the prices mentioned in the quotations as a basis for  determin- ing the correct value of the imported goods.     Mr. Dholakia next contended that the Tribunal itself had set  aside the finding of the adjudicating authority on  the question  of treating SKD/CKD packs of the copiers  imported comprised of all the 100% components of copiers. The company had tried to practice a fraud in defeating the import policy itself.  The intention and purpose of the import policy  was to give incentive and encouragement to the new entrepreneurs establishing  small scale industries and in the first  phase to  import  62%  of the components of the  copiers  and  the balance of 38% was to be manufactured by them  indigenously. According to the import policy this percentage of 62% was to be  reduced in the subsequent years. The import  policy  was not  meant for such entrepreneurs who instead  of  importing 62% of the components, imported 100% of the components of  a fully finished and complete goods manufactured by a  foreign country.  It  is an admitted position  that  fully  finished plain  paper copiers were a prohibited item for  import  and thus  the device adopted by the company in the present  case was a complete fraud on the import policy itself. Apart from the  above  circumstances in our view the Tribunal  was  not right  in  setting  aside the finding  of  the  adjudicating authority  and in taking the view that one has to look  into the  respective licence and not to the fact that if all  the consignments  covered  by all the bills of  entry  assembled together, there will be a full and complete machinery.     It  is  an admitted position that goods covered  by  the three bills of entry Nos. 2044, 2045 and 2046 were all dated 3.2.87  and had been shipped from Hongkong on the  same  day i.e.  on 21.1.87. The entire goods had arrived on  the  same day and by the same flight on 30th January, 1987. The  goods covered under the three bills of entry have been supplied by the same supplier viz. M/s. Paralax Industrial Corp.,  Hong- kong.  The  goods covered by these bills of  entry  are  ten numbers 38 copiers in SKD/CKD condition, accessories, spares,  consuma- bles and excess items. The goods covered by the 4th bill  of entry  are  four numbers  copiers in SKD/CKD  condition  and consumables.  the  licence  produced is  valid  for  certain components and is not valid for fully assembled copiers. The fully assembled copiers are the end products of the  import- ers and hence cannot be imported by them. Plain Paper  Copi- ers are electronic equipments.     The  case  Union of India v. Tara Chand  Gupta  &  Bros. (supra)  lends no assistance to the appellants in the  facts and  circumstances  of the present case. In the  above  case Tara  Chand  & Bros. held an import licence dated  July  10, 1956  permitting  them to import parts  and  accessories  of motorcycles and scooters as per Appendix XXVI of the  Import Policy Book for July-December, 1956. Under the said licence, the  respondents in that case imported certain  goods  which arrived in two consignments, each containing 17 cases by two different ships. According to the respondents, the goods  so imported  by them were motorcycle parts which their  licence authorised  them to import. The Customs authorities, on  the contrary  held, on the examination of the goods,  that  they constituted  51 sets of "Rixe Mopeds complete in  a  knocked down condition". After holding an inquiry the Deputy Collec- tor  directed confiscation of the said goods with an  option to the respondents to pay certain sums in lieu of  confisca- tion  and also personal penalties. That order was passed  on

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the basis that the goods imported were not parts and  acces- sories  of motorcycles and scooters presumably  under  entry 295  of the Schedule to the Import (Control) Order but  were motorcycles/scooters in completely knocked down  conditions, prohibited  under remark II against entry 294, a licence  in respect  of  goods covered by it would authorise  import  of motorcycles  and  scooters. The Deputy Collector  held  that though the goods were not in completely knocked down  condi- tion  it made no difference as the tyres, tubes and  saddles were  easily obtainable in India and their absence  did  not prevent the machines being otherwise complete. He also found that  there  was a trade practice under which  traders  were supplying  motorcycles  without  tyres,  tubes  and  saddles unless  the purchaser specially asked for these  parts.  Ac- cording  to  him the goods could not be  regarded  as  spare parts  but were "Moped in disassembled condition."  The  re- spondents  in  the  above case filed a civil  suit  and  the matter went in appeal to the High Court. The Letters  Patent Bench of the High Court held that the Collector’s  jurisdic- tion  was  limited  to ascertain whether or  not  the  goods imported by the respondents were spare parts and accessories covered  by entry 295 in respect of which  they  undoubtedly held the licence, and therefore, he could not have 39 lumped together the two consignments which. though  imported under  one licence, arrived separately and were received  on different  dates and could not have come to  the  conclusion that  the plaintiffs had imported 51 "Rixe" Mopeds  in  com- pletely  knocked down condition. The respondents were  enti- tled to import the said goods and therefore. Section  167(8) of  the  Sea Customs Act did not apply and  the  respondents consequently  could  not  have been held  guilty  of  breach either of that Section or Section 3 of the Imports & Exports (Control) Act. It was further held that the decision of this Court in Girdhari Lal Bansi Dhar v. Union of India, [1964] 7 SCR 62 did not over rule but only distinguished judgment  in D.P.  Anand  v.  Mls. T.M, Thakore & Co.,  C.A.  No.  4/1959 decided on August 17, 1960 (H.C.) and therefore, the binding force of that decision remained unshaken. The Union of India came  in appeal to this Court by grant of certificate.  This Court held as under: "Under  entry  295, except for rubber tyres  and  tubes  for whose  import  a separate licence could  be  obtained  under entry  41  of  Part V, there are no limitations  as  to  the number or kind of parts or accessories which can be imported under  a  licence obtained in respect of the  goods  covered thereunder.  Prime facie, an importer could import  all  the parts  and accessories of motor cycles and scooters  and  it would not be a ground to say that he has committed breach of entry  295 or the licence in respect of the goods  described therein, that the parts and accessories imported. if  assem- bled, would make motor cycles and scooters in CKD condition. 3There  are  no  remarks against entry  295.  as  there  are against  entry 294, that a licence in respect of goods  cov- ered  by entry 295 would not be valid for import  of  spares and accessories which, if assembled, would make motor cycles and scooters in CKD condition. Apart from that, the goods in question  did not admittedly contain tyres. tubes  and  sad- dles, so that it was impossible to say that they constituted motor  cycles and scooters in CKD condition. The  first  two could not be imported and were in fact not imported  because that could not be done under the licence in respect of goods covered by entry 295 which expressly prohibited their import and  a  separate licence under entry 41 of Part V  would  be necessary.  The third, namely. saddles were not amongst  the

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goods  imported. No doubt, there was, firstly, a finding  by the  Collector that a trade practice prevailed  under  which motor cycles and scooters 40 without  tyres, tubes and saddles could be  sold.  Secondly. the  tyres and tubes could be had in the market here and  so also saddles, so that if an importer desired, he could  have sold these goods as motor cycles and scooters in CKD  condi- tion. The argument was that since there was a restriction in entry  294 against imports of motor cycles and  scooters  in CKD  condition,  the  importer could not be  allowed  to  do indirectly what he could not do directly. The  argument apparently looks attractive. But the  question is what have the respondents done indirectly what they could not  have done directly. In the absence of any  restrictions in  entry  295, namely, that a licence in respect  of  goods covered by entry 295 would not be valid for import of  parts and accessories which. when taken together. would make  them motor cycles and scooters in C.K.D. condition. the  respond- ents could import under their licence all kinds and types of parts  and accessories. Therefore, the mere fact.  that  the goods  imported by them were so complete that when  put  to- gether  would make them motor cycles and scooters in  C.K.D. condition. would not amount to a breach of the licence or of entry 295. Were that to be so, the position would be  anoma- lous  as aptly described by the High Court. Suppose that  an importer  were to import equal number of various parts  from different countries under different indents and at different times,  and the goods were to reach here in  different  con- signments and on different dates instead of two consignments from the same country as in the present case. If the conten- tion  urged before us were to be correct, the Collector  can treat them together and say that they would constitute motor cycles  and scooters in C.K.D. condition. Such  an  approach would  mean that there is in entry 295 a limitation  against importation of all parts and accessories of motor cycles and scooters.  Under that contention, even if the  importer  had sold  away  the first consignment or part of  it,  it  would still  be  possible for the Collector to say  that  had  the importer desired it was possible for him to assemble all the parts  and make motor cycles and scooters in  C.K.D.  condi- tion.  Surely, such a meaning has not to be given  to  entry 295 unless there is in it or in the licenee a condition that a licensee is not to import parts in such a fashion that his consignments, different though they may be, when put togeth- er would make motor cycles and 41 Scooters in C.K.D. condition. Such a condition was advisedly not  placed in entry 295 but was put in entry 294 only.  The reason was that import of both motor cycles and scooters  as also  parts  and accessories thereof was permitted,  of  the first  under entry 294 and of the other under entry  295.  A trader having a licence in respect of goods covered by entry 294  could import assembled motor cycles and  scooters,  but not  those  vehicles in C.K.D. condition, unless  he  was  a manufacturer  and had obtained a separate licence  therefore from the Controller of Imports who, as aforesaid. was autho- rised  to issue such a licence on an ad hoc basis. Thus  the restriction  not  to  import motor cycles  and  scooters  in C.K.D.  condition was against an importer holding a  licence in  respect  of goods covered by entry 294  under  which  he could  import  complete motor cycles and  scooters  and  not against an importer had a licence to import parts and acces- sories under entry 295. If Dr. Syed Mohammad’s contention were to be right we  would

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have to import remark (ii) against entry 294 into entry 295, a thing which obviously is not permissible while  construing these entries. further, such a condition, if one were to  be implied in entry 295, would not fit in, as it is a  restric- tion  against import of motor cycles and scooters in  C.K.D. condition  and  not their parts and accessories.  There  is, therefore,  no question of a licensee under entry 295  doing indirectly  what he was not allowed to do directly. What  he was  not allowed to do directly was importing  motor  cycles and scooters in C.K.D. condition under a licence under which he  could  import complete motor cycles and  scooters  only. That restriction, as already observed,’ applied to a  licen- see  in  respect of goods described in entry 294 and  not  a licensee in respect of goods covered by entry 295. The result is that when the Collector examines goods import- ed under a licence in respect of goods covered by entry  295 what he has to ascertain is whether the goods are parts  and accessories,  and  not whether the goods, though  parts  and accessories, are so comprehensive that if put together would constitute  motor cycles and scooters in  C.K.D.  condition. Were  he to adopt such an approach, he would be acting  con- trary to and beyond entry 295 under 42 which he had to find out whether the goods imported were  of the  description in that entry. Such an approach  would,  in other words, be in non-compliance of entry 295."     This Court distinguished the case of Girdhari Lal  Bansi Dhar (supra) by making the following observation: "It will be noticed that the Bombay decision in D.P. Anand’s case  was  not dissented from but  only  distinguished,  and therefore, the High Court in the present case was  justified in  following it. It is true, however, that counsel for  the appellant  there relied on that decision in support  of  his proposition  that a ban on completed article cannot be  read as a ban on the importation of its constituents, which, when assembled, would result in the prohibited article, and  this Court  pointed out in answer that in D.P. Anand’s case,  the imported  components could not have when assembled, made  up the completed article because of the lack of certain  essen- tial parts which admittedly were not available in India  and could  not be imported. The real distinction,  however,  be- tween  the two cases was that the decision of the  Collector in  D.P. Anand’s case was not, as was the decision in  Gird- bari Lal’s case under which of the two competing entries the imported goods fell but that the imported goods in question, if assembled together, would not be the goods covered by the entry, and therefore, not the goods in respect of which  the licence was granted. Further, the articles in question, even when assembled together, were not prohibited articles as  in Girdhari  Lal’s case. Girdhari Lal  case is clearly  distin- guishable because it is not as if motor cycles and  scooters are prohibited articles as was the case there. The  restric- tion  is  not against licensees importing motor  cycles  and scooters  under  entry 294 and parts and  accessories  under entry 295 but against the licensees under entry 294  import- ing motor cycles and scooters in CKD condition. The question in the instant case was not under which of the two  entries, 294 or 295, the goods fell, but whether the goods were parts and accessories covered by entry 295."     In  our  view the Tribunal was not  correct  in  placing reliance  on the case Union of India v. Tara Chand  Gupta  & Bros. (supra) in the facts and circumstances of the  present case. In the case before us the 43 import of fully assembled copiers was prohibited. The appel-

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lant  was only entitled to import 62% of the components.  As already mentioned above, the device adopted by the appellant in  the  present  case was a complete fraud  on  the  Import Policy  and the appellant was doing indirectly what  he  was not  permitted  to do directly. We are further of  the  view that the facts in the present case are more akin and similar to the facts of the case Girdhari Lal Bansi Dhar v. Union of India, (supra) which was distinguished in the case of  Union of India v. Tara Chand Gupta & Bros. (supra).     Mr.  Dholakia also tried to assail the finding  recorded by the Collector and upheld by the Tribunal and argued  that the  components imported by the appellant tallied  with  the parts which were permitted under the licence. We do not find any  force in this submission. The Collector has  given  de- tailed reasons for holding that the imported goods were  not covered by the valid licence and the Tribunal having  upheld such finding, the same cannot be challenged by the appellant before this Court.     Mr.  Dholakia also submitted that in the facts and  cir- cumstances of the case the order confiscating the goods  and imposing fine and penalty both on the company and Sh.  Sada- nand,  the  Managing Director was too high and ought  to  be reduced.     We  find no force in this submission as well. This is  a case where the appellant had not only violated the terms and conditions of the licence but also committed a fraud on  the Import  Policy itself. Thus we find no ground or  justifica- tion to reduce the penalty or fine.     In the result we find no force in these appeals and  the same are dismissed with one set of costs. P.S.S.                                Appeals dismissed. 44