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PETITIONER: ADDL.  COLLECTOR OF CUSTOMS, CALCUTTA & ORS.

       Vs.

RESPONDENT: BEST & COMPANY

DATE OF JUDGMENT: 23/10/1970

BENCH: SHAH, J.C. BENCH: SHAH, J.C. HEGDE, K.S. GROVER, A.N.

CITATION:  1971 AIR  170            1971 SCR  (2) 681  1970 SCC  (3) 136

ACT: Imports   &  Exports  (Control)  Act  18   of   1947-Imports (Control),  Order 1955 issued under ss. 3 and 4A of  Act-Sea Customs Act 8 of 1878-S. 3 of Act 18 of 1947 providing  that goods  to  which an order under S. 3 (1)  applied  would  be deemed  to be goods whose import & exports prohibited  under s. 19 of Act 8 of 1878-Contravention of s. 19 punish-able by confiscation  of goods and penalty under s. 167(8) of Act  8 of  1878-13  of 1955 Order prohibiting import  of  specified goods  except  under licence issued by  Central  Government- Contravention of conditions of licence punishable under s. 5 of Act 18 of 1947 as amended by Act 4 of 1960-Whether goods, imported  against conditions of licence can  be  confiscated and penalty imposed on the offender under s. 5 of Act 18  of 1947 read with s. 167(8) of Act 8 of 1879.

HEADNOTE: Under  s. 3 of Imports & Exports Control Act 18 of 1947  all goods  to which any order under sub-s. (1) applied shall  be deemed  to  be goods of which the Import & Export  has  been prohibited  under s. 19 of the Sea.  Customs Act 8 of  1878, and  all  the  provisions  of.that  Act  shall  have  effect accordingly.  In exercise of power conferred by ss. 3 and 4A of  the  Act 18 of 1947 the Central  Government  issued  the Imports  control)  Order  1955.   Clause  3  of  the   Order prevented  the importation of any goods of  the  description specified in Schedule  except under and in accordance with a licence or a customs clearance permit granted by the Central Government or by any officer specified in Sch.  II.  Section 5 of Act 18 of 1947 as originally enacted provided : "If any person  contravenes  any order made or deemed to  have  been made  under the Act, he shall without any prejudice  to  any confiscation or penalty to which he may be liable under  the provisions of the Sea Customs Act 1878, as applied by sub-s. 2@ of s. 3 be punishable with imprisonment for a term  which may extend to one year, or with fine, or with both." By  the Imports  &  Exports  (Control)  Amendment  Act  4  of   1960 contravention  of  any conditions of a  licence ranted  in accordance with The terms of any order passed under the  Act was also made punishable under s. 5.

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The  respondents  imported certain goods from  West  Germany under   licence  granted  by  the  Ministry   of   Commerce. According  to  the  Government the goods  imported  were  in excess  of  the  terms of the licence  and  accordingly  the respondents  were  charged with having  committed’  offences under s. 167(8) ’read with s. 3(2) of Act 18 of 1947 and the a good s imported by them were confiscated.  In lieu of  the confiscation, however, a fine of Rs. 20,000/- was imposed an the respondents.  A personal penalty of Rs. 25000/- was also imposed.  The respondents filed’ a writ petition in the High Court  which was dismissed by the Single Judge but  ’allowed by  the Division Bench.  With certificate the  Collector  of Customs  appealed.  The only question for consideration  was whether for breach of    a condition of the licence  penalty may be imposed under s. 5 of Act 18 of  1947  read  with  s. 167(8) of Act 8 of 1878. HELD:     The appeal must be dismissed. For  breach of any condition of a licence it is open to  the authorities.  under  s. 5 of Act 18 of 1947 as  amended,  to direct prosecution but no, 682 order  confiscating  goods  and  imposing  penalty  in  lieu thereof could be made.  The order of confiscation could only be made under s. 167 cl. 8 ,of Act 8 of 1878 : in terms  cl. 8  of  s.  167  provides  for  confiscation  of  the   goods importation  or exportation of which is for the  time  being prohibited  or  restricted by or under Ch.  IV  of  the  Sea Customs   Act,   1878.   The  notification  of   which   the contravention was alleged was not issued under s. 19 of the Sea  Customs  Act  1878  but under  the  Imports  &  Exports (Control)  Act 1947.  The High Court was therefore right  in holding  that the scope of power under the Sea  Customs  Act was  not enlarged by the amendment to s. 5 of the Imports  & Exports (Control) Act.  There is nothing in the amended s. 5 of  the imports & Exports (Control) Act which  warrants  the view  that the provisions of the Sea Customs Act, 1878,  may be invoked to punish the breach of a condition of a  licence granted  under the Imports & Export-, (Control)  Act,  1947. [686 B-C]

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2003 of 1966. Appeal  from the judgment and order dated December 18,  1964 of the Calcutta High Court in Appeal No. 254 of 1963. Ram Janiavani and S. P. Nayar for the appellants. The respondent did not a pear. The Judgment of the Court was delivered by Shah,  J.  On March 31, 1959 the Ministry  of  Commerce  and Industry, Government of India, granted to the respondents  a licence permitting them to import from West Germany  certain machinery  described therein of the maximum C.I.F. value  of Rs. 45,000/-.  Condition No. 1 of the licence provided that:               "The . . . application is accepted and  import               licence is hereby granted having quantity  and               value as the limiting factors and is not valid               for clearance if the actual value of any  item               exceeds  the  C.I.F. value  indicated  in  the               licence by more than 5%." The  respondents  submitted a bill of entry  dated  July  1, 1960, disclosing the C.I.F. value of the consignment as  Rs. 45,179-92  inclusive  of landing charges,  and  cleared  the consignment  after  paying  duty  assessed  by  the  Customs authorities on the real value of the goods as disclosed  in

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the bill of entry. On  June  20, 1961 the Customs authorities issued  a  notice requiring  the  respondents to show cause why  penal  action should not be taken against them under s. 167(8) of ’the Sea Customs  Act,  1878,  as  being  persons  concerned  in  the unauthorised  importation  of the goods.   This  notice  was amended  by  notice ,dated September 21, 1961,  whereby  the respondents  were  charged with  having  committed  offences under S. 167(8) read with s.  3(2)   of  the   Imports   and Exports (Control) Act, 1947, for 683 illegally  importing the machinery.The  respondents  claimed that  no  breach  of  the  conditions  of  the  licence  was committed.   The Additional Collector of Customs,  Calcutta, by order dated March 17, 1962, directed confiscation of  the machinery  under S. 167(8) of the Sea Customs Act read  with s. 3 (2) of the Imports and Exports (Control) Act, 1947, and permitted  the respondents to pay a fine of Rs. 20,000/-  in lieu  of confiscation.  A personal penalty of  Rs.  25,000/- was also imposed on the respondents. The respondents then moved a petition before the High  Court of Calcutta under Art. 226 of the Constitution praying for a writ  quashing the adjudication order dated March 17,  1962. A  Single  Judge of the Calcutta High  Court  dismissed  the petition,  but in appeal under the Letters Patent  the  High Court reversed the decision and issued a Writ of  certiorari quashing  the  order dated March 17, 1962.   The  Additional Collector  of Customs, Calcutta, has appealed to this  Court with certificate granted by the High Court. The  only question which falls to be determined  is  whether for  breach  of a condition of the licence  penalty  may  be imposed under S. 5 of the Imports and Exports (Control) Act, 1947, read with the Sea Customs Act, 1878. The  relevant  statutory provisions may  first  be  noticed. Under  s.  167 of the Sea Customs Act,  1878,  the  offences mentioned in the first column of the Schedule are punishable to the extent mentioned in the third column of the same with reference to such offences respectively:-                       Section of this                     Act to which offence Offences.           has reference.          Penalties ------------------------------------------------------------ 8. If any goods, the importation or 18 & 19     such   goods shall be liable to be exportation of which is for the  confiscated ; and any person con-time being prohibited or resting-   herded in any such offence, shall acted by or under Chapter IV of     be liable to a penalty not exceed this Act, be imported into or axing  three  times  the  value of  the  ported  from  India contrary to    goods, or not exceeding one such  prohibition or restriction; or  thousand rupees, -------------------------------------------------------------- Chapter IV of the Sea Customs Act, 1878, contains three sec- tions : ss. 1 8, 19 & 19A.  By S. 18 an absolute prohibition is unposed in respect of importation of goods by land or  by sea specified therein.  Section 19 provides that the Central Government  may  from time to time, by notification  in  the Official Gazette prohibit or restrict the bringing or taking by’ sea or by 684 land goods of any specified description into or our of India across  any  customs  frontier as  defined  by  the  Central Government. The  Central  Legislature enacted the  Imports  and  Exports (Control)   Act,  1947,  with  the  object  of   authorising

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prohibition and control on imports and exports.  By s. 3  of that Act it was provided.               "(1) The Central Government may, by order pub-               lished   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               specified description;               (b)   the  bringing into any port or place  in               India  or 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 19 of the Sea Customs               Act, 1878, and all the provisions of that  Act               shall  have  effect accordingly,  except  that               section  183 thereof shall have effect  as  if               for  the word "shall" therein the  word  "may"               were substituted.               (3)               Section 5 of the Imports and Exports (Control)               Act, 1947, as originally enacted, provided :               "If  any person contravenes any order made  or               deemed  to have been made under this  Act,  he               shall,  without prejudice to any  confiscation               or penalty to which he may be liable under the               provisions  of the Sea Customs Act,  1878,  as               applied  by sub-section (2) of section  3,  be               punishable with imprisonment for a term  which               may extend to one year, or with fine, or  with               both"      6 85 In  exercise of the power conferred by ss. 3 and 4-A of  the Imports and Exports (Control) Act, 1947, the Central Govern- ment issued the Imports (Control) Order, 1955.  Clause 3  of the  Imports  (Control) Order prevented importation  of  any goods of the description specified in Sch.  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  Sch.   II.  By sub-cl. (2) of cl.  3  it  was provided  that if in any case, it was found that  the  goods imported under a licence did ’not conform to the description given  in the licence or were shipped prior to the  date  of issue  of the licence under which they were claimed to  have been  imported, then, without prejudice to any  action  that may be taken against the licensee under the Sea Customs Act, 1878, in respect of the said importation, the licence may be treated  as  having  been utilised for  importing  the  said goods.  By cl. 5 certain conditions could be imposed by  the Licensing Authority issuing a licence. It may be recalled that one of the conditions of the licence issued  by  the respondent was that the value  of  any  item shall  not exceed the C.I.F. value indicated in the  licence by  more  than  5  %. It was the,  case  of  the  Customs  I authorities  that the real value of the  machinery  imported exceeded  the  declared  value,  and  on  that  account  the respondents had infringed the conditions of the licence.  In East  India Commercial Company Ltd., Calcutta & Anr. v.  The

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Collector  of Customs, Calcutta(") this Court held  that  s. 167 cl. 8 of the Sea Customs Act, 1878, read with s. 3(2) of the Imports and Exports (Control) Act, 1947, authorised  the imposition  of  penalty,  if goods  were  imported  in  con- travention  of  any  order under  the  Imports  and  Exports (Control) Act, 1947 : but the section did not, expressly  or by  implication  authorise confiscation  of  goods  imported under a valid licence on the ground that a condition of  the licence not imposed by the order was’ infringed. This  view  was  reiterated by  this  Court  in  Boothalinga Agencies v.    T. C. Poriaswami Nadar (2). These cases  were decided  on the interpretation of s. 5, of the  Imports  and Exports  (Control)  Act,  1947, as it stood  before  it  was amended  by  Act  4 of 1960.  By  the  Imports  and  Exports (Control) Amendment Act 4 of 1960, in s. 5, after the  words ’,any  order  made or deemed to have been  made  under  this Act," the words "or any condition of a licence granted under any  such  order"  were  inserted.   Contravention  of   any condition of a licence granted under any order was therefore liable to be punished under S. 5 as amended. (1) L196313S.C.R.338. (2)  19591 1 S.C.R. 65. 686 In  the present case the Customs authorities did not  direct section  for  contravention of any condition  of  a  licence directed  confiscation of the machinery and imposed  penalty lieu  thereof.   But on the terms of S. 5  as  amended,  the right impose penalty for contravention of any condition of a may be exercised under the Sea Customs Act, 1878, and  under the Imports and Exports (Control) Act, 1947.  For are of any condition of a licence, it is open to the authorities direct prosecution,  but  no  order  confiscating  goods  and  ring penalty  in  lieu  thereof  could be  made.   The  order  of fiscal  could  only be made under s. 167 cl. 8  of  the  Sea atoms  Act,  1878 : in terms cl. 8 of S.  167  provides  for action  of the goods importation or exportation of which  is the time being prohibited or restricted by or under Ch.   IV the  Sea  Customs  Act, 1878.   The  notification  of  which contravention  is  said to have began made,  is  not  issued under  19 of the Sea Customs Act, but under the Imports  and (Control)  Act,  1947.  It has not been urged before  us,  a rightly, that penalty of confiscation is incurred under  the pro sons of the Sea Customs Act, 1878, for breach of the con lions of the licence. In  our  judgment, the High Court was right in  holding  the scope of power under the Sea Customs Act was not enlarged by the  amendment to S. 5 of the Imports and Exports  (Control) Act, and there is nothing in the amended s. 5 of the Imports and  Exports  (Control)  Act which warrants  the  view  that provisions  of  the Sea Customs Act, 1878,  may  be  invoked punish the breach of a condition of a licence granted  under Imports and Exports (Control) Act, 1947. The  appeal fails and is dismissed.  There will be no  order as to costs. G.C.                 Appeal dismissed 687