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PETITIONER: ASSISTANT COLLECTOR OFCUSTOMS (PREVENTIVE) BOMBAY

       Vs.

RESPONDENT: BABU MIYA SHEIKH IMAM AND ORS. ETC.

DATE OF JUDGMENT28/07/1983

BENCH: BHAGWATI, P.N. BENCH: BHAGWATI, P.N. MISRA, R.B. (J)

CITATION:  1983 AIR  974            1983 SCR  (3) 500  1983 SCC  (3) 447        1983 SCALE  (2)33

ACT:      Customs Act, 1962-Section 5(1) (a)(ii) -Scope of.      Section 135(1)(a)(ii) of the Customs Act, 1962 provides that if  any person  "is in relation to any goods in any way knowingly concerned  in any fraudulent evasion or attempt at evasion of any duty chargeable thereon or of any prohibition for the  time being imposed under any other law for the time being in  force with  respect to  such goods",  he shall  be punishable.

HEADNOTE:      In the  reasonable belief  that  the  respondents  were smuggling silver  out of  the country, the Customs officials apprehended the  respondents at  about midnight  while  they were going  in a  fishing vessel off the coast of Bombay and found 194  ingots of  silver  in  the  vessel.  I  hey  were prosecuted for  offences under  section 120-B  Indian  Penal Code, section  135(1) (a)  (ii) of  the Customs  Act,  1962, section 5 of the Imports and Exports (Control) Act, 1947 and section 23(1A)  of the  Foreign  Exchange  Regulations  Act, 1973. While  the Magistrate  found them  guilty of  all  the offences the  High Court  on appeal set aside the conviction under the  Customs Act and Foreign Exchange Regulations Act. The appellant accepted the acquittal Under section 23(1A) of the  Foreign  Exchange  Regulations  Act  but  impugned  the judgment of  the High  Court in  so far  as it set aside the conviction under  section 135  (1) (a)  (ii) of  the Customs Act.      It was  contended on behalf of the prosecution that the accused were  knowingly concerned with fraudulent evasion or attempt at  evasion of  the prohibition  imposed  under  the Export Trade  Control order  of 1968 on the export of silver without licence  and that  therefore they  were guilty of an offence under the Customs Act.      The respondents,  on the other hand, contended that the words "with respect to such goods" occurring in the section, refer to  goods on which duty was chargeable as contemplated in the  first part  of the  section and  since no  duty  was chargeable on  export of  silver it  did not fall within the words "with  respect to  such goods" and therefore there was no  fraudulent   evasion  or   attempt  at  evasion  of  the prohibition on  export of  silver without  a licence imposed

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under the  Export Trade  Control order,  1968  issued  under section 3  of the  Imports and  Exports (Control) Act, 1947, which was punishable under the Customs Act. 501      Allowing the appeal, ^      HELD: Where  goods are  chargeable with  duty  and  any person is  knowingly concerned  in any fraudulent evasion or attempt at  evasion of such duty, the case would fall within the first  part of  the section,  but where a prohibition is imposed with  respect to  any goods  under the  Customs Act, 1962 or  any other  law for  the time  being in force, then, irrespective of  whether duty is chargeable on such goods or not, any person who is knowingly concerned in any fraudulent evasion or  attempt at evasion of such prohibition, would be covered  by  the  second  or third  part as the case may be. [506 E]      In the  instant case  the Export  Trade Control  order, 1968 issued  under section  3 of  the  Imports  and  Exports (Control) Act, 1947, prohibited the export of silver without a licence.  On the  facts established by the prosecution the accused were  knowingly concerned  in fraudulent  evasion or attempt at  evasion of  such prohibition on export of silver and their  case was  therefore covered  by the third part of section 135(1)(a)(ii).      The  provision  enacted  in  section  135(1)(a)(ii)  is divisible into  three parts:  the first part postulates that goods in  respect of  which the offence is committed must be goods chargeable  with duty;  the second and third parts are not  concerned   with  the  question  whether  any  duty  is chargeable  on   the  goods  or  not.  They  speak  only  of fraudulent evasion  or attempt at evasion of any prohibition for the  time being  imposed under  the Customs  Act or  any other law  in force  in respect  of  any  goods.  What  they contemplate is  that in  respect of  goods in question there must be  a prohibition  imposed under the Customs Act or any other law  for the  time  being  in  force  irrespective  of whether duty  E is  chargeable on  such goods or not and the accused must  be concerned  in  any  fraudulent  evasion  or attempt at  evasion of  such  prohibition.  The  prohibition fraudulently evaded  or sought  to be  evaded might  be with respect to  "any goods":  it is not necessary that it should be with  respect to  goods on  which duty is chargeable. The expression "with  respect to  such goods": had to be used at the end  of the  section because  the second and third parts start with  the words  "if any  person is in relation to any goods knowingly  concerned  in  any  fraudulent  evasion  or attempt at  evasion". The  words "such  goods" have  clearly reference to "any goods" at the commencement of the section. These words  are not  descriptive of  the kind  of goods  to which the  first part  of the  section is  applicable. It is totally impermissible  on a  plain, natural  construction of the language  used in  the section  to read  these words  as importing the  requirement that the goods must be chargeable with duty  in order  to fall within the second or third part of the section. [505 E, 506 A-D]

JUDGMENT:      CRIMINAL APPELLATE  JURISDICTION: Criminal  Appeal Nos. 416-18 of 1974.      Appeals by  Special leave  from the  Judgment and order dated the 23rd/24th August, 1973 of the Bombay High Court in Crl. Appeal Nos. 68,298 & 510 of 1972.

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502      N.C. Talukdar,  C. V. Subba Rao and R.N. Poddar for the Appellant.      O.P. Rana and M.N. Shroff for the State of Maharashtra.      S.R. Srivastava for Respondent No. 1 in Crl. A. 416.      The Judgment of the Court was delivered by      BHAGWATI,  J.   These  appeals  by  special  leave  are directed against  a common  judgment dated  27th August 1973 passed by a single e Judge of the High Court of Bombay in so far as  it acquitted the first respondent in Criminal Appeal No. 146  of 1978  respondent No.  1 and 2 in Criminal Appeal No. 147  of 1974 and the first respondent in Criminal Appeal No. 418  of 1974 (hereinafter referred to as the accused) of the offence under Section 135 (1)(a)(ii) of the Customs Act, 1965. The  entire controversy  between the  parties in these appeals turns on the true interpretations of section 135 (1) (a) (ii)  and it  is therefore  not necessary to set out the facts in detail, but in order to appreciate how the question arises for  consideration we  may briefly  reproduce  a  few relevant facts.      On 9th  June 1968  at about  2  p.m.  Shri  Mugve,  the Assistant Collector  of  Customs,  who  was  then  Principal Appraisar  in   the  Directorate  of  Revenue  Intelligence, Bombay, received information that a fishing vessel was going to load  silver at  Ghas Bunder after 9 p.m. On that day and it was  going to  take the  silver to  a spot  near Khanderi island in order to put it on an Arab Dhow for despatching it to Dubai.  On receipt of this information, Shri Mugve kept a watch in  a privately  owned motor launch in the stream near Ballard Pier  about four miles away from the shore. At about 11  p.m.   Shri  Mugve   and  the   other  customs  officers accompanying him  noted that a heavily loaded fishing vessel was  proceeding   towards  the   Khanderi   island   without navigational lights.  They immediately  chased  the  fishing vessel and asked the crew to stop it but instead of stopping the crew  increased the  speed and  tried to  run away.  The fishing vessel  was chased and eventually it was intercepted by Shri  Mugve and  the other  customs  officers.  On  being questioned the Tindel of the fishing vessel made a statement that 194  ingots of silver of the value of Rs. 92 lakhs were being taken  towards Khanderi  island for being loaded on an Arab Dhow  which was  going to Dubai. The fishing vessel was thereupon towed  to Ballard  Pier and  194 ingots  of silver found in  it were seized under a Panchnama in the reasonable belief 503 that they  were being smuggled out of India. The accused who were in the fishing vessel were also prosecuted in the Court of Additional  Chief Presidency  Magistrate 5th  Court Dadar for offences  under Section  120 of  the Indian  Penal Code, Section 135  (1) (a) (ii) of the Customs Act 1962, Section 5 of the Imports and Exports (Control) Act 1947 and Section 23 (1 A)  of the  Foreign Exchange  Regulation  Act  1973.  The Additional Chief  Presidency Magistrate  found  the  accused guilty  of   all  the  offences  charged  against  them  and sentenced them  to various  terms of  imprisonment including fine. The  accused there upon preferred three appeals in the High Court  of Bombay  against the  order of  conviction and sentence  passed   against  them  by  the  Additional  Chief Presidency Magistrate.  These appeals were heard by a single Judge of  the High Court and by a common Judgment dated 27th August  1973   the  learned   single  Judge   confirmed  the conviction of  the accused  under Section  120 of the Indian Penal  Code  and  Section  5  of  the  Imports  and  Exports (Control) Act  1947  but  set  aside  the  conviction  under

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Section 135 (1) (a) (ii) of the Customs Act 1962 and Section 23 (1  A) of  the Foreign  Exchange Regulation Act 1973. The Assistant Collector  of Customs accepted the judgment of the learned single  Judge in  so far as it acquitted the accused of the  offence under  Section  23  (1  A)  of  the  Foreign Exchange Regulation  Act 1973  but he  was aggrieved by that part of  the judgment  which set  aside the conviction under Section 135  (1) (a)  (ii) of  the Customs  Act 1962  and he accordingly preferred the present three appeals with special leave obtained from this Court.      Before we  set out the rival arguments addressed before us, it  would be convenient to reproduce Section 135 (1) (a) (ii) of the Customs Act 1962. That section reads as follows:           135.  Evasion  of  duty  or  prohibitions-(1)      Without prejudice  to any action that may be taken      under this Act, if any person-           (a) is  in relation  to any  goods in any way      knowingly concerned  in any  fraudulent evasion or      attempt at  evasion of any duty chargeable thereon      or of  any prohibition  for the time being imposed      under this Act or any other law for the time being      in force  with respect  to such goods, he shall be      punishable- 504           (ii) in any other case, with imprisonment for      a term  which may  extend to (three years) or with      fine, or with both. The argument of the prosecution was that on the facts proved in  the   case  the  accused  were  knowingly  concerned  in fraudulent evasion  or attempt at evasion of the prohibition on the  export of silver without a licence imposed under the Export Trade  Control  order  1968  issued  by  the  Central Government under  section  3  of  the  Imports  and  Exports (Control) Act  1947 and  they were  therefore guilty  of the offence falling  under section  135 (1) (a) (ii) which makes it penal  if any  person "is in relation to any goods in any way knowingly concerned in any fraudulent evasion or attempt at evasion  of any  prohibition for  the time  being imposed under any other law for the time being in force with respect to such goods." This argument was sought to be met on behalf of the accused by contending that the words "with respect to such goods" occurring at the end of Section 135 (1) (a) (ii) referred  to   goods  on   which  duty   was  chargeable  as contemplated in  the first part of that section and since no duty was  chargeable on  export of  silver, it  did not fall within the  words "with  respect to  such goods"  and  hence fraudulent evasion  or attempt at evasion of the prohibition on export  of silver  without a  licence imposed  under  the Export Trade  Control order  1968 issued  under section 3 of the  Imports   and  Exports   (Control)  Act  1947  was  not punishable under  section 135  (1) (a)  (ii).  It  was  this contention urged  on behalf of the accused which appealed to the learned  single judge  of the  High Court  of Bombay and resulted in  the acquittal of the accused. The sole question which therefore  arises for  consideration  on  these  rival arguments  is  as  to  what  is  the  true  meaning  of  the expression "with  respect to such goods’. Is it limited only to goods  falling within  the first  part of section 135 (1) (a) (ii),  that is goods on which duty is chargeable or does it refer  to any  goods in  respect of  which prohibition is imposed under  the Customs Act 1962 or any other law for the time being in force. The answer to this question does not in our opinion  admit of  any doubt,  because the  language  of section 135  (1) (a)  (ii) is clear and explicit and one has merely to  read the  words of the section according to their

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plain grammatical  construction to  come to  the  conclusion that the  view taken  by the  M learned  single Judge of the High Court  is plainly  erroneous. We  proceed to  give  our reasons for saying so, but we may point out straightway that this view taken by the learned single judge of 505 the High Court has been subsequently overruled by a Division Bench of  the same High Court in the State of Maharashtra v. Kassam(1).      If we  analyse and  break up  the provision  enacted in section 135(1)  (a) (ii), it will be clear that structurally it is divisible into three parts, namely:      1.    If any person is in relation to any goods in           any way knowingly concerned in any fraudulent           evasion or  attempt at  evasion of  any  duty           chargeable thereon,  he shall  be  punishable           with imprisonment for a term which may extend           to three years or with fine or both.      2.    If any person is in relation to any goods in           any way knowingly concerned in any fraudulent           evasion  or   attempt  at   evasion  of   any           prohibition for  the time being imposed under           the Customs  Act 1962  with respect  to  such           goods,   he    shall   be   punishable   with           imprisonment for  a term  which may extend to           three years or with fine or both.      3.    If any person is in relation to any goods in           any way knowingly concerned in any fraudulent           evasion  or   attempt  at   evasion  of   any           prohibition for  the time being imposed under           any other  law for  the time  being in  force           with respect  to  such  goods,  he  shall  be           punishable with imprisonment for a term which           may extend  to three  years or  with fine  or           both. The ingredients of the offence under section 135(1) (a) (ii) would clearly  be satisfied if the case falls within any one of these  three parts. Each of these three parts is distinct and independent  of the  other two  and whether a case falls within any  one part or not has to be judged by reference to the ingredients  of that part and not of any other part. The ingredients of one part cannot be projected in the other two parts. The first part deals with a case where in relation to any goods  a person is knowingly concerned in any fraudulent evasion or attempt at evasion of any duty chargeable on such goods. Obviously, therefore, the first part. postulates that the 506 goods in  respect of  which the offence is committed must be goods chargeable  with duty.  But the second and third parts are not  concerned with  the question  whether any  duty  is chargeable on  the goods  or not. These two parts speak only of  fraudulent   evasion  or   attempt  at  evasion  of  any prohibition for the time being imposed under the Customs Act 1962 or any other law for the time being in force in respect of any  goods. What  these two  parts contemplate is that in respect of the goods in question there must be a prohibition imposed under  the Customs Act 1962 or any other law for the time being in force it being totally irrelevant whether duty is chargeable  on such goods or not, and the accused must be knowingly concerned  in any fraudulent evasion or attempt at evasion of  such prohibition.  The prohibition  fraudulently evaded or  sought to  be evaded  may be with respect to "any goods" and  it is  not necessary  that  it  should  be  with respect to goods on which duty is chargeable. The expression

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"with respect to such goods" had obviously to be used at the end of the section because the second and third parts of the section start  with the  words "if any person is in relation to any  goods ....  knowingly concerned  in  any  fraudulent evasion or  attempt at evasion". The words "such goods" have clearly reference  to "any goods" at the commencement of the section. These  words are  not descriptive  of the  kind  of goods to  which the first part of the section is applicable. It is totally impermissible, on a plain natural construction of the  language used  in section,  to read  these words  as importing the  requirement that the goods must be chargeable with duty  in order  to fall within the second or third part of the section.      We are  therefore of  the view  that  where  goods  are chargeable to  duty and any person is knowingly concerned in any fraudulent  evasion or  attempt at evasion of such duty, the case  would fall  within the  first part of the section, but where there is a prohibition imposed with respect to any goods under  the Customs  Act 1962  or any other law for the time being  in force,  then, irrespective of whether duty is chargeable on  such  goods  or  not,  any  person  knowingly concerned in any fraudulent evasion or attempt at evasion of such prohibition,  would clearly be covered by the second or third part  as the  case may  be. Here  there was  clearly a prohibition on  export of  silver without a licence, imposed by the  Export Trade Control order 1968 issued under section 3 of  the Imports  and Exports (Control) Act 1947 and on the facts established  by the  prosecution-facts which could not be  and   were  not   disputed-the  accused  were  knowingly concerned in fraudulent evasion or attempt 507 at evasion of such prohibition on export of silver and their case was  therefore plainly  and indubitably  covered by the third part  of section A 135(1) (a) (ii). The learned single Judge of  the High Court was consequently in error in taking the view  that the  accused were  not guilty  of the offence charged under 135(1) (a) (ii).      We accordingly  allow these  appeals preferred  by  the Assistant Collector  of Customs,  set  aside  the  order  of acquittal passed  by the  learned single  Judge of  the High Court and  restore the  order passed by the Additional Chief Presidency Magistrate  convicting the  accused under section 135(1) (a)  (ii) of the Customs Act 1962 and sentencing them to various terms of imprisonment and fine. P.B.R.                                      Appeals allowed. 508