http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 7  

PETITIONER: THE COLLECTOR OF CUSTOMS, BARODA

       Vs.

RESPONDENT: DIGVIJAYSINHJI SPINNING & WEAVING MILLS LTD

DATE OF JUDGMENT: 12/04/1961

BENCH: SUBBARAO, K. BENCH: SUBBARAO, K. DAYAL, RAGHUBAR

CITATION:  1961 AIR 1549            1962 SCR  (1) 896  CITATOR INFO :  RF         1973 SC1461  (325,1407,2105)  R          1982 SC 149  (588)

ACT: Import--Confiscation    of    goods    by    Collector    of Costoms--Penalty  substituted for confiscation by  Board  of Revenue, if can be realised by the Collector of Customs--Sea Customs Act, 1878 (VIII of 1878), ss. 167(8), 193.

HEADNOTE: The respondent imported goods of higher value than what  was granted under his licence.  The Collector of Customs ordered the  goods  to  be confiscated under s. 167(8)  of  the  Sea Customs Act, 1878 and in lieu of confiscation gave an option to the respondent to a fine.  On appeal the Central Board of Revenue set aside the order of the Collector of Customs  and instead of it imposed a penalty.  The respondent did not pay the  penalty and the Collector of Customs took  proceedings- under  s. 193 of the Act for the recovery of the penalty  in pursuance   of  which  a  Magistrate  issued   warrants   of attachment against the respondent holding that the Collector of Customs could validly realise the penalty under s. 193 of the  Act.   The  Sessions Judge  dismissed  the  respondents application in revision but the High Court held that as  the penalty  was  imposed by the Central Board  of  Revenue  the Collector  of  Customs could not realise the amount  of  the penalty under s. 193 of the Act and also held that the order of  the Central Board of Revenue commuting the  confiscation to  penalty  was  not without jurisdiction.   On  appeal  by special leave, Held, that the Central Board of Revenue which is the  "Chief Customs Authority" cannot be called an "officer of Customs", and  the  order of the Chief Customs  Authority  imposing  a penalty for the first time cannot be treated to be an  order of the Collector of Customs within the meaning of s. 193  of the  Sea  Customs Act, 1873, and as such  the  Collector  of Customs could not realise the penalty imposed by the Central Board of Revenue. Rangaswamy   v.  Alagayammal,  A.I.R.  (1915)   Mad.   1133, Kristnamachariar v. Mangammal, (1902) I.L.R. 26 Mad. 91  and Lachmeshwar  Prasad Shukul v. Keshwar Lal Chaudhuri,  (1940) F.C.R. 84, held not applicable.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 7  

JUDGMENT: CRIMINAL  APPELLATE  JURISDICTION: Criminal Appeal No. 74 of 1960. Appeal  by special leave  from the judgment and order  dated August 8, 1957, of the Bombay High 897 Court  at Rajkot in Criminal Revision Application No. 10  of 1956. B. K. Khanna and T. M. Sen, for the appellant. Rameshwar  Nath,  S.  N. Andley and P.  L.  Vohra,  for  the respondent. 1961.  April 12.  The Judgment of the Court was delivered by SUBBA  RAO, J.-This appeal by special leave is  against  the order  of the Bombay High Court at Rajkot setting aside  the warrants of attachment issued by the First Class Magistrate, Jamnagar,   for  enforcing  the  penalty  imposed   on   the respondent  under  s.  193 of the  Sea  Customs  Act,  1878, (hereinafter called the Act). The material facts may be briefly stated.  The respondent is Digvijavasinhji Spinning & Weaving Mills Limited,  Jamnagar. It  imported  275  cases  of  secondhand  looms  under   one consignment  and 175 cases of second-hand textile  waste  to plant machinery under another consignment from  Pondicherry. The respondent held licences for import of goods of a lesser value  than the value of these consignments.  The  Collector of Customs, Baroda, ordered the said goods to be confiscated under  s. 167(8) of the Act; and in lieu of confiscation  an option  was  given to the respondent to pay a  fine  of  Rs. 22,918  and Rs. 16,000 in respect of the  two  consignments. Further,  on the ground that the respondent had  understated the,   value   of  the  goods  imported  under   the   first consignment,  the  appellant imposed a penalty  of  Rs.  500 under s. 167(37)(c)of the Act.  Against the said order,. the respondent  preferred  two appeals to the Central  Board  of Revenue  and the said Board by its order dated  January  15, 1954,  set  aside the orders of the  appellant  and  instead imposed  a  penalty  of Rs. 22,918 in regard  to  the  first consignment  and Rs. 16,000 in regard to the other under  s. 167(8)  of the Act; but the penalty of Rs. 500  was  however maintained.   In revision the Government of  India  modified the order of the Central Board of Revenue by cancelling  the penalty of Rs. 500 and in 898 other  respects  it confirmed the order of the  said  Board. The  respondent  cleared the goods on executing  a  bond  in favour of the appellant.  As the respondent did not pay  the penalty,  the  appellant, acting under s. 193  of  the  Act, notified   the  default  in  writing  to  the  First   Class Magistrate  at  Jamnagar  so  that  the  penalty  might   be recovered in the manner prescribed by the said section as if the  said  penalty was a fine inflicted  by  the  Magistrate himself.   On  the said requisition  the  Magistrate  issued warrants  of  attachment  against the  respondent,  but  the latter  filed a petition before him for the cancellation  of the  said  warrants  on the ground that  the  order  of  the Central Board of Revenue was illegal and also on the  ground that the appellant had no jurisdiction to take action  under s.  193 of the Act.  The Magistrate, by his order dated  May 8,  1956, held that the appellant could validly realize  the said  amounts under the machinery provided under s.  193  of the  Act.   Against  the said order of  the  Magistrate  the respondent preferred an appeal to the Sessions Judge, Halar,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 7  

Jamnagar, but it was later converted into a revision and was dismissed.   On  revision  to the High  Court  against  that order,  the High Court held that as the panalty was  imposed by  the  Central  Board Revenue,  the  appellant  could  not realize  the  said  amounts under 193 of the  Act;  it  also expressed  an opinion that the final order of the  appellate authority  was not without jurisdiction as it was not  shown that  consent  of  the  owner of the  goods  ordered  to  be confiscated  had not been obtained by the Central  Board  of Revenue  before  the  order commuting  the  confiscation  to penalty was passed.  In the result, the High Court set aside and  cancelled  the warrants of ’attachment  issued  by  the Magistrate.  Hence the appeal. Learned counsel for the appellant broadly contended that  s. 193 of the Act should be liberally construed with a view  to effectuate  the  intention  of the  legislature  and  if  so construed the order of the Central Board of Revenue made  in substitution  of  that  of an officer of  Customs  could  be enforced  by the latter officer under the said section.   On the other hand, 899 learned  counsel for the respondent argued that the  Central Board  of Revenue was not an officer of Customs  within  the meaning  of s. 193 of the Act and therefore its order  could not  be  enforced under the said section by  an  officer  of Customs; and that even if the Board, being the Chief Customs Authority, could be considered to be an "officer of Customs" within  the meaning of those words, the said  Chief  Customs Authority  only  could enforce the said order  and  not  the Collector of Customs. To  appreciate  the  rival  contentions  and  to  provide  a satisfactory  solution  to  the  problem  presented  it   is necessary  to read the relevant provisions of the  Act,  not only  to  understand  the  scheme of the  Act  but  also  to construe  the provisions of s. 193 thereof in the  light  of the  scheme disclosed by the said provisions.  It is one  of the  well  established rules of construction  that  "if  the words of a statute are in themselves precise and unambiguous no  more is necessary than to expound those words  in  their natural  and  ordinary sense, the words themselves  in  such case  best declaring the intention of the legislature".   It is  equally  well  settled principle  of  construction  that "Where  alternative  constructions  are  equally  open  that alternative  is to be chosen which will be  consistent  with the smooth working of the system which the statute  purports to  be  regulating; and that alternative is to  be  rejected which will introduce uncertainty, friction or confusion into the working of the system." With this background and  having regard to the aforesaid two principles of construction,  let us at the outset scrutinize the scheme of the Act.   Section 3  defines  "Chief Customs-authority" to  mean  the  Central Board of Revenue.  "Customs-collector" is defined to include "every  officer  of Customs for the time being  in  separate charge of a custom-house, or duly authorized to perform all, or any special, duties of an officer so in charge."  Section 19 confers a power on the Central Government to prohibit  or restrict  the importation or exportation of goods by sea  or by land.  Section 167 prescribes the various punishments for offences  under  the Act.  Section 167(8) says that  if  any goods, the 900 importation  or exportation of which is for the  time  being prohibited or restricted by or under Chapter IV of the  Act, be  imported into, or exported from India contrary  to  such prohibition  or restriction, such goods shall be  liable  to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 7  

confiscation;  and any person concerned in any such  offence shall  be liable to a penalty not exceeding three times  the value  of the goods, or not exceeding one  thousand  rupees. Under  s.  167(37)(c), if it be found, when  any  goods  are entered at, or brought to be passed through, a custom-house, either for importation or exportation, that the contents  of such  packages  have  been  misstated  in  regard  to  sort, quality, quantity or value, such packages shall be liable to confiscation and every person concerned in any such  offence shall  be  liable to a penalty not  exceeding  one  thousand rupees.   Section 182, empowers the Collector of Customs  to adjudicate  whether  anything  is  liable  to  confiscation, increased rate of duty or any person is liable to a penalty. Section  183 enjoins on such authority to give the owner  of goods   so  confiscated  an  option  to  pay  in   lieu   of confiscation such fine as it thinks fit.  Section 188  gives a  right of appeal from such an order to the  Chief  Customs Authority  who is empowered to pass such order as he  thinks fit, confirming, altering or annulling the decision or order appealed against; but under the proviso to that section  the said appellate authority cannot make an order subjecting any person to any greater confiscation, penalty or rate of  duty than has been adjudged against him in the original  decision or  order.  Every order passed under this section  is  final subject to the power of revision conferred by s. 191 on  the Central  Government.   Section 190 confers a  power  on  the Chief Customs Authority to remit penalty, increased rate  or confiscation  in whole or in part; it also enables the  said authority,  with  the  consent of the  owner  of  the  goods ordered  to  be  confiscated to commute the  order  of  con- fiscation  to  a  penalty not exceeding the  value  of  such goods.  Section 190A gives a power of revision to the  Chief Customs Authority against an order of any officer of Customs passed  under  the  Act and enables it to  pass  such  order thereon as it thinks fit.  Then comes the 901 crucial  s. 193.  As the argument turns upon the  provisions of  this section, it would be convenient to read the  entire section at this stage.               Section 193: "When a penalty or increased rate               of  duty is adjudged against any person  under               this  Act  by  any officer  of  customs,  such               officer, if such penalty or increased rate  be               not  paid,  may levy the same by sale  of  any               goods  of the said person which may be in  his               charge  or in the charge of any other  officer               of Customs.               When an officer of Customs who has adjudged  a               penalty or increased rate of duty against  any               person under this Act is unable to realise the               unpaid  amount thereof from such  goods,  such               officer   may   notify  in  writing   to   any               Magistrate  within the local limits  of  whose               jurisdiction   such   person  or   any   goods               belonging  to him may be, the name  and  resi-               dence  of  the said person and the  amount  of               penalty or increased rate of duty unrecovered;               and such Magistrate shall thereupon proceed to               enforce  payment  of the said amount  in  like               manner  as if such penalty or  increased  rate               had been a fine inflicted by himself." Pausing here, let us recapitulate the gist of the  aforesaid provisions.   Under the Act the goods, whose importation  or exportation is prohibited or restricted by the provisions of the  Act, are liable to be confiscated and also  the  person

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 7  

concerned  is liable to a penalty.  Even a  misstatement  in regard  to sort, quality, quantity or value of the goods  so imported  or exported is an offence and the  packages,  with their contents, are liable to be confiscated and the  person concerned  in  any such offence is also liable  to  penalty. The Collector of Customs can make an order confiscating  the said  goods  as  well as imposing a penalty  on  the  person concerned.   In  an  appeal against that  order,  the  Chief Customs  Authority can modify the said order, but it has  no power to increase the burden.  It can remit such penalty  or confiscation,  in whole or in part, but it can also  commute the order of confiscation to penalty not exceeding the value of such goods.  A person desiring to file an appeal  against an order of 902 penalty  passed by an officer of Customs shall,  pending  an appeal, deposit in the hands of the Customs-collector at the port  where  the dispute arises the amount demanded  by  the officer  passing such decision or order; and if he  succeeds wholly  or in part, the whole or such part thereof,  as  the case  may be, shall be returned to him.  The result  of  the provisions,  therefore,  is  that there  would  never  be  a contingency  or  necessity  for  an  appellate  tribunal  to enforce  payment  of penalty impossed by it, for  no  appeal would  be  heard by it unless the penalty was  deposited  as aforesaid. With this background let us look at the relevant  provisions of  s.  193  of the Act.  Under the  said  section  only  an officer of Customs, who has adjudged a penalty or  increased rate  of duty, can realize the said penalty or rate  through the machinery of a Magistrate.  The question is whether  the Chief  Customs Authority is "an officer of Customs" who  has adjudged  a penalty or rate, as the case may be, within  the meaning  of  s.  193 of the Act.  Section  182  of  the  Act enumerates  the  different  officers  of  Customs  who   are empowered  to adjudge a question of penalty, but  the  Chief Customs Authority is not included in that list.  Indeed,  in s.  182(c)  the  Chief Customs  Authority  is  empowered  to nominate  the  subordinate officers of  Customs  to  adjudge questions  within certain pecuniary limits.  That apart,  s. 3(a)  of the Act defines "Chief Customs-authority"  to  mean the Central Board of Revenue.  The Central Board of  Revenue is  a statutory authority and, though it can  only  function through  officers  appointed  to  the  said  Board,  it   is inappropriate  to  call it an officer of Customs.   In  this situation, when under the provisions of the Act there is  no scope  for realization of any penalty imposed for the  first time  by  the Chief Customs Authority, it would be  more  in accord. with the scheme of the Act to construe the words "an officer  of  Customs" as an officer of the  Customs  who  is authorized  to  adjudicate  in the  first  instance  on  the question of confiscation, increased rate of duty or  penalty under  s.  182 of the Act.  This construction, it  is  said, would lead to ail anomaly of the statute conferring a  power on the Chief Customs Authority to 903 from  it a procedure to enforce its collection.  As we  have pointed  out,  such  an  anomaly  cannot  arise  under   the provisions  of  the  Act,  for there  is  no  section  which empowers  the  Chief Customs Authority to impose  a  penalty higher than that imposed by the Customs Officer. Assuming  that the Chief Customs Authority is an Officer  of Customs  within the meaning of s. 193 of the Act, it had  to initiate  proceedings  under the said section; but  in  this case  the  Collector of Customs notified in writing  to  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 7  

Magistrate for recovering the said penalty. Learned  counsel  for the appellant contends that  an  order made by the Chief Customs Authority imposing a penalty shall be  deemed  in  law  to be an order  made  by  the  original authority, that is, the Collector of Customs and, therefore, the  said  order  for the purpose of  enforcement  shall  be treated  as  the order of the Collector of Customs.   It  is said   that  this  legal  position  would  flow   from   the proposition that an appeal is a continuation of a suit.  The said  proposition  is  unexceptionable:  see  Rangaswamy  v. Alagayammal   (1),   Kristnamachariar  v.   Mangammal   (2), Lachmeshwar Prasad Shukul v. Keshwar Lal Chaudhuri (3).  But neither  the  said decisions nor the  principles  laid  down therein  can  have any bearing on the  question  whether  an order  made  for the first time by  an  appellate  authority could  in  law  be deemed to be one  made  by  the  original authority.   In the absence of any statutory fiction  giving rise  to  that result, it is not permissible  to  treat  the order  made  by  one  authority  as  that  made  by  another authority.   If so, it follows that the order of  the  Chief Customs  Authority  imposing a penalty for the’  first  time cannot be treated to be an order of the Collector of Customs within the meaning of s. 193 of the Act. As  we have pointed out, the Chief Customs Authority has  no power to impose a penalty for the first time under s. 188 of the Act; but it has power under (1) A.I.R. 1915 Mad. 1133. (2) (1902) I.L.R. 26 Mad. 91,95-96. (3) (1940) F.C.R. 84, 10.3. 904 s.190  of the Act to commute the order of confiscation to  a penalty  riot exceeding the value of the goods  confiscated. Though  the  Chief  Customs Authority  in  its  order  dated January  15, 1954, did not expressly rely on s. 190  of  the Act, it cannot be disputed that it has jurisdiction to  pass such an order thereunder subject to the conditions laid down therein.   The condition for the exercise of that  power  is that it should have obtained the consent of the party  whose goods  were  confiscated.   The  High  Court  in  its  order observed  that there was nothing before it to show that  the consent of the owner of the goods ordered to be  confiscated was  not  obtained  before the  order  of  confiscation  was commuted  to one of penalty by the Chief Customs  Authority. If  that  be taken as a finding the question  of  the  legal effect   of  an  order  of  commutation  would   arise   for consideration.  Would such an order be deemed to be made  in substitution of that of an original authority?  Could it  be said  that  the commuted sentence shall be deemed in  law  a sentence  imposed  by  the  original  tribunal?   But  these questions need not detain us, as we are not satisfied on the material placed before us that the condition of consent  has been fulfilled in this case.  The High Court in effect  drew a  presumption  in favour of the-regular performance  of  an official act.  But this presumption is only optional.  In  a case  like this when the validity of an order  depends  upon the  fulfilment of a condition, the party relying upon  ’the presumption should at least show that the order on the  face of it is regular and is in conformity with the provisions of the statute.  But in the present case the order of the Chief Customs  Authority ex facie does not show that it  was  made under  s.  190 of the Act.  Indeed it is purported  to  have been  made  under s. 167(8) of the Act.  If as a  matter  of fact  the said Authority made the order of commutation  with the  consent  of  the  owner of  the  goods  it  would  have certainly jurisdiction to make such an order under s. 190 of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 7  

the  Act.  Though there was no such recital, it  would  have been  open  to  the  appellant to  establish  that  fact  by necessary evidence.  In the absence of any such ’evidence we must hold that it has 905 not  been established that the Chief Customs Authority  made its  order under s. 190 of the Act with the consent  of  the respondent. This  will  not  preclude the  State  from  establishing  by relevant evidence that the penalty was imposed under s.  190 of the Act with the consent of the owner of the goods in  an appropriate proceeding. In the result the order of the High Court is correct and the appeal is dismissed.                                     Appeal dismissed.