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PETITIONER: THE COLLECTOR OF CUSTOMS, MADRAS

       Vs.

RESPONDENT: K.   GANGA SETTY

DATE OF JUDGMENT: 19/04/1962

BENCH: AYYANGAR, N. RAJAGOPALA BENCH: AYYANGAR, N. RAJAGOPALA AIYYAR, T.L. VENKATARAMA SINHA, BHUVNESHWAR P.(CJ) GAJENDRAGADKAR, P.B. WANCHOO, K.N.

CITATION:  1963 AIR 1319            1963 SCR  (2) 277  CITATOR INFO :  F          1973 SC 194  (8)  D          1975 SC 769  (3,12)  R          1975 SC2288  (1)  D          1977 SC 597  (41)

ACT: High  Court-Decision of Customs Authorities-Construction  of entiries  in tariff Schedule-Jurisdiction to  interfere"Feed oats"  used  horse  feed-Whether falls  within  "folder"  or "grain"-Import  Trade Control Schedule, Part IV.  Item  Nos. 32 and 42-Specific Relief Act, 1877 (1 of 1877) 8. 45

HEADNOTE: Item  42  of Part IV of the Import  Trade  Control  Schedule permitted  "fodder.... . " to be imported without a  special import  licence from a soft Currency area... Item 32 of  the same Schedule related to "grain...... and included oats; and a licence was necessary for importing goods covered by  this item.   The  respondent imported from Australia,  without  a licence,  goods  described as "feed-oats" for  feeding  race horses.   He claimed that the goods were covered by Item  42 and  could  be  imported without  a  licence.   The  customs authorities  held  that the goods were "grains"  within  the meaning  of  Item 32 which could not be imported  without  a licence, confiscated the goods and imposed a penalty in lieu of  confiscation.  The respondent moved the High  Court  for the issue of a writ of mandamus under s. 45 specific  Relief Act.  The High Court held that the 278 goods were covered by item 42 and issued a writ  prohibiting the authorities from recovering the penalty imposed. Held, that the High Court had no, jurisdiction to  interfere with the decision of the customs authorities that the  goods fell within item 32.  It is primarily for the Import Control authorities  to determine the head of entry under which  any particular  commodity falls, and only when the  construction adopted  is perverse are the courts entitled  to  interfere. In the present case the decision of the customs  authorities was  not one which could not be supported on  any,reasonable

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basis, and could be called perverse. Venkatesvaran  v.  Wadhwani,  A.  I. R.  1961  S.  C.  1506, referred to. Held,  further that the goods imported fell within  item  82 and  not within item 42.  Oats are undoubtedly  grain.   Any particular  species of grain cannot be, excluded,  from  the item  "grain" merely because it is capable of being used  as cattle  or  horse  feed.  The matter is made  clear  by  the reference  to "coats" in item 32 where grain  is  classified into two categories, oats and "other gains".

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 568 of 1960. Appeal  from the judgment,  and order dated April  6,  1956, of the Madras High Court in 0. S, A. No. 147 of 1953. H.   N. Sanyal, Additional Solicitor-General of India, V. D. Mahajan and P. D. Menon, for the appellant. R.Ganapathy  Iyer, M. S. K. Sastri and M. S.  Narasimhan, for the respondent. 1962.  April 19.  The Judgment of the Court was delivered by AYYANGAR,  J.-The point involved in this appeal which  comes before us on a certificate of fitness under Art. 133  (1)(e) granted by the High, Court of Madras is a very short one and relates to the nature and extent of the jurisdiction posses- sed by the High Court in considering the validity 279 of  an  order of the Customs  Authorities  interpreting  the provisions of the entries in the Tariff Schedule as  regards the imposition of duties. The  respondent imported from Australia a quantity  of  oats which  was  described in the indent, contract  and  shipping documents as "’standard feed-oats".  The commodity  imported consisted  of  oats  in whole grain.   The  question  raised related  to the proper classification of the goods  imported under the Import Trade Control Schedules current during  the period  July to December 1952 when the  consignment  reached India.  The controversy centered round the point whether the "feed-oats"  fell  within item 42 or within item 32  of  the Circular.  Item 42 ran: "’Fodder, bran and pollards-O.G.L.-Soft" i.e., this item was covered by an open general licence and so no special  import licence  was necessary for the import of these goods from  a soft currency area, while as regards item 32 the entry ran:               "Graio,  not  otherwise  specified,  including               broken grain but excluding flour-               (a) oats               (b) others              --Ports -Nil---A.V." which meant that a licence was necessary for the importation of  the goods specified in it which would be granted by  the Joint Chief Controller of Imports or Exports at Calcutta and Bombay,  if they were the ports of entry, and by the  Deputy Chief Controller of Imports & Exports Madras if they were to be  imported  through  Madras; "nil"  that  no  quotas  were specified  limiting  the  quantity to be  imported,  &  that actual users (A.U.) could apply for the licence. 280 The  respondent who carried on business in fodder under  the name  and style of Balakrishna Flour Mills placed  an  order with an Australian firm for the supply of whole grain "feed- oats"  without  obtaining any licence for the  import.   The goods  arrived  in  Madras on August 1, 1952  and  when  the respondent  attempted  to  clear  the  goods,  the   Customs Authorities  insisted on the production of a licence  before

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he  would  be permitted to do so.  The  Assistant  Collector hold  that.  the goods imported fell within item 32  and  as admittedly  the respondent held no licence from  the  Deputy Chief  Controller of Imports & Exports, Madras covering  the import,  there had been a contravention of a. 19 of the  Sea Customs Act read with s. 3(2) of the Import & Export Control Act, 1947 and so proceeded to deal with the violation  under s.  167  (8)  of  the Sea  Customs  Act.   He  directed  the confiscation  of the good sand imposed a fine of  Rs.5,000/- in lieu of confiscation, if the. respondent desired to clear the goods.  An appeal filed to the Collector of Customs  was rejected and thereafter the respondent moved the High  Court for  the  issue  of a writ of mandamus under s.  45  of  the Specific Relief Act. In   his  affidavit  in  support  of  the  application   the respondent  besides contending that oats in full-grain  fell within  the  head fodder’ under item 42,  set  out  earlier, because  (1) he had imported them for being  made  available solely  for  feeding race-horses at Bangalore, (2)  that  in South  India  oats was not used as human foods but  only  as feed  for  horses, and (3) that in any event,  he  had  been misled  by an answer that he received from the Deputy  Chief Controller of Imports, Madras of whom he had made an enquiry as  to  whether feed-oats could be imported  under  an  open general  licence  under serial No. 42 and  had  received  an affirmative answer, The learned  281 Single  Judge who heard the application dismissed it on  the ground that the order of the Customs Authorities classifying uncrushed feeds-oats as grain and not as fodder could not be said to be either perverse or malafide and that consequently the  Court  could  not interfere with the  decision  of  the authorities.   An  appeal  was  perferred  therefrom  to   a Division Bench and the learned Judged allowed the appeal and issued  a  direction  prohibiting  the  Collector  and   his subordinates from collecting or taking steps to recover  the fines  and penalties imposed on the respondent.  It  is  the correctness  of  this order of the Division  Bench  that  is challenged in this appeal. Shortly  stated,  the  ground on which  the  learned  Judges allowed the respondent’s appeal were : (1) that the decision of  the  Customs  authorities as regards the  entry  of  the Tariff  classification  within which an  imported  commodity fell  was not final but was open to judicial review and  had ultimately  to  be decided by the Courts, (2)  In  the  case before  the  Court,  entry 32 reading "grain"  had,  in  the absence  of any specific entry regarding oats to be read  as excluding  all  grains which would be "fodder"  i.e.,  which were usually used as cattle or animal feed, and that as  the respondent  had imported the oats for use as horse-feed  the proper  item within which the goods imported fell  was  item 42-Fodder etc. In  arriving at this conclusion the learned Judges  referred to the answer of the Deputy Chief Controller to the query by the  respondent  to  which we have adverted  earlier,  as  a circumstance  indicative  of the doubts entertained  by  the departmental authorities themselves on this matter. With very great respect to the learned Judges we are  unable to  agree  with  them  both  as  regards  the  function  and jurisdiction of the Court in matters 282 of this type, as well as in their actual construction of the relevant  entries in the Import Trade Circular.  As  regards the limits of the jurisdiction of the Court it is sufficient to  refer to the decision in Venkatesvaram v. Wadhwani.  (1)

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That  was  a case where a party moved the High  Court  under Art.226 of the Constitution, and not as here under s. 45  of the  Specific Relief Act under which the power of the  Court to  interfere  is certainly narrower and  not  wider.   This Court  proceeded on the basis that it is primarily  for  the Import  Control authorities to determine the head  or  entry under  which any particular commodity fell; but that  if  in doing so, these authorities adopted a construction which  no reasonable person could adopt i.e., if the construction  was perverse then it was a case in which the Court was competent to   interfere.    In  other  words,  if  there   were   two constructions which an entry could reasonably bear, and  one of  them  which was in favour of Revenue was adopted  ,  the Court  has no jurisdiction to interfere merely  because  the other  interpretation favourable to the subject  appeals  to the Court as the better one to adopt. In the present case it could not be contended that uncrushed oats did not answer the description of "grain" and therefore the  decision  of the Customs authorities holding  that  the oats imported fell within item 32 could not be Raid to be  a view   which  on  no  reasonable  interpretation  could   be entertained. In other words, the conclusion or decision of the  Customs  authorities  wag  rationally  supportable.  We consider  that  even if there was no specific  reference  to "oats"  in entry 32, any particular species of grain  cannot be  excluded merely because it is capable of being  used  as cattle or horse feed.  The word "’fodder" is defined in  the Oxford’ dictionary as ’dried food, hay, straw etc. for stall feeding Cattle".  Without resorting to (1)  A.I.R. [1961] S.C. 1506,        283 Johnson’s famous definition of "’oats" in his Dictionary, it is sufficient to point out that oats, though they may  serve as  food  for horses, is also used as human food;  in  other words  it is not by its nature or characteristic capable  of serving solely as food for animal,% and incapable of use  in the  human  dietary.  For instance, all coarse  grains  like Ragi  and  Khambu-  serve as food for man  as  well  as  for cattle.  The mere fact therefore that a grain is capable  of being  used as horse or other cattle feed does not  make  it "fodder" excluding it from the category of grain to which it admittedly   belongs.    The  decision  of   the   Assistant Collector.  and of the Collector on appeal holding the  oats imported  by the respondent to be grain cannot therefore  be characterised   as   perverse  or  malafide   and   in   the circumstances  we  consider that the learned Judges  of  the High  Court  erred  in interfering with  the  order  of  the appellant. In this particular case however, the matter is placed beyond the pale of controversy by the specific reference to  "oats" in entry 32 where "grain" is classified into two  categories "oats"   and   "other.  grains".   It   is   apparent   that unfortunately  the attention of the learned Judges was  ’not drawn  to the entry in full, because, in the course  of  the judgment  they point out that the construction of  entry  42 would be different if there had been a specific reference to oats in entry 32. Learned  Counsel for the respondent laid some stress on  the respondent  having been misled by the answer of  the  Deputy Chief Controller of Exports to a query as regards the  scope of entry 42.  The answer which was stated to have misled was in these terms :               "Feed  oats  classifiable under serial  42  of               Part  IV  can be imported under  Open  General               License No. XXIII".

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284 an  answer by no means a model of clarity.  This  letter  is dated  September  14,  1951,  and it  is  the  case  of  the respondent that he placed an order for the import of  "feed- oats"  because he was led to believe that for its import  no licence was necessary.  The contract for the purchase of the foods for import was entered into in the beginning of  June, 1-952,  but  before that date the  Deputy  Chief  Controller wrote a further letter to the respondent on January 1, 1952, clarifying  the  answer he gave in his earlier  letter,  and pointing out that whereas if the oats were in whole grain it would  fall within item 32, but if the same was crushed,  it would  be "fodder" within item 42.  The respondent  however, denied having received this letter and there is no  specific finding  on  this point by the learned Judges  of  the  High Court.  We do not propose to record any finding either.   We are drawing attention to this matter merely for pointing out that  it  is a matter which the authorities  could  properly take  into account in modifying, if they consider  that  the respondent  has really been misled, the quantum  of  penalty imposed on the respondent. The  appeal  is  accordingly allowed and the  order  of  the Division Bench of the High Court set aside.  The application filed  by the respondent under s. 45 of the Specific  Relief Act will stand dismissed.  In the circumstances of the  case we  direct  that the parties bear their own  costs  in  this Court. Appeal allowed. 285