06 March 1964
Supreme Court


Case number: Appeal (civil) 318 of 1962






DATE OF JUDGMENT: 06/03/1964


CITATION:  1964 AIR 1519            1964 SCR  (7)  62  CITATOR INFO :  D          1971 SC1558  (6,16,18)  F          1973 SC 194  (9)

ACT: Sea  Customs Act, 1878(8 of 1878)-Prohibition on  import  of certain  article-Component parts of that article  if  within prohibition-Conclusions  of  Customs  authorities  based  on several items of Hand-book-Correctness thereof, whether  can be  considered  by  High Court-Constitution of  India,  Art. 226.  Evidence taken into consideration though not mentioned in notice to show cause-Natural justice, if violated.

HEADNOTE: The appellant who was granted a license to import "iron  and steel  bolts, nuts, set screws, machine screws  and  machine studs,  excluding bolts, nuts and screws adopted for use  on cycles",  imported nuts and bolts which were the  components of  "Jackson  Type Single bolt oval plate  belts  fasteners" which  were described in the bill of Entry as  "Stove  Bolts and Nuts." The importation of "Jackson Type Single bolt oval plate  belt fasteners" had been prohibited.  When the  goods were  attempted  to  be  passed  through  the  customs,  the collector  issued notice to the appellant to show cause  why penalties should not be imposed on him(a) for  misdescribing the  goods and (b) for attempting to import goods without  a proper  import  license.  After receiving  his  explanation, penalties  were imposed on the appellant.  One of the  facts which the Collector of Customs bad taken into  consideration in  arriving  at  the conclusion that  the  nuts  and  bolts imported  were  in  reality the  actual  components  of  the prohibited articles was that washers, the third component of the  prohibited  articles were imported by a firm  owned  or controlled  by close relations of the appellant.  An  appeal to  the  Central  Board of Revenue from  the  order  of  the Collector imposing the penalties was dismissed.  Thereafter, the  appellant filed a writ petition under Art. 226  of  the Constitution   in  the  High Court which  was  dismissed  in limine.  On appeal by    special leave: Held:     (i) A component part which has no use other than



as a component of an article whose importation is prohibited is  included  in  a  ban  or  restriction  as  regards   the importation,of that article. D.   P.  Anand v. M/s.  T. M. Thakore and Co., Appeal No.  4 of 1959 of Bombay High Court referred to. (ii) There was no force in the contention that the  decision of the Collector of Customs was vitiated by a patent  error, in  that he misconstrued the scope of Entry 22 of Part 1  of the Import Trade Control Hand-book. A  court  dealing with a petition under Article 226  is  not sitting   in  appeal  over  the  decision  of  the   Customs Authorities and therefore the correctness of the  conclusion reached  by  those authorities on the  appreciation  of  the several  items in the Hand-book or in the Indian Tariff  Act which  is referred to in these items, is not a matter  which falls within the writ jurisdiction of the High Court. 63 A.  V.  Venkateswaran,  Collector  of  Customs,  Bombay   v. Ramchand  Sobhraj Wadhiwani, [1962] 1 S.C.R.  753,  referred to. (iii)Taking into consideration the importation of washers by another  firm was merely evidence to confirm the  conclusion reached  by the Collector that the nuts and  bolts  imported were  in reality the components of the  prohibited  article. The charge which the importer was called upon to answer  did specify  the nature of offence which he was alleged to  have committed and if the evidence which the appellant could have rebutted  was  brought  on  record  and  considered  in  his presence  and  that evidence conclusively  proved  the  real nature   of  the  articles  imported,  there  could  be   no justifiable  complaint  of violation of  the  principles  of natural justice.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 318 of 1962. Appeal  by special leave from the judgment and  order  dated November  27, 1959 of the Punjab High Court (Circuit  Bench) at Delhi in Civil Writ Petition No. 545-D of 1959. Purshottam Trikamdas, M. V. Goswami and B. C. Misra, for the appellant. W.S. Barlingay and R. H. Dhebar, for the respondent. March 6, 1964.  The Judgment of the Court was delivered by AYYANGAR, J.--There are no merits in this appeal by  special leave  and  it  deserves to  be  dismissed.   The  appellant obtained, in November 1951, an import licence from the Joint Chief Controller of Imports at Calcutta, for importing "iron and  steel  bolts,  nuts, set  screws,  machine  screws  and machine studs, excluding bolts, nuts and screws adapted  for use  on cycles".  In purported conformity with this  licence the appellant imported from Japan through the Bedi port  221 cases  of bolts and nuts during the period April 4, 1952  to July  14,  1952.  The cases were described in the  Bills  of Entry  which  he  filed as "Stove Bolts  and  Nuts"  and  he produced  the  import  licence  of  November  1951  as   his authority to clear the goods.  One hundred and ninety-two of these cases were cleared out of the port customs but  before the  rest  of  the 89 cases could be  cleared,  the  Customs authorities got suspicious that the goods were mis-described and though called "Stove Bolts and Nuts" in the invoices and relative  documents they were really identifiable  parts  of bolts  and  nuts  of  the "Jackson  Type  single  bolt  oval platebelt  fasteners" whose importation had been  prohibited by a Notification of the Ministry of Trade issued in January



1952.   Their suspicions got confirmed after examination  of the samples of the nuts and bolts imported and thereafter  a notice  was  issued to the appellant to show  cause  why  he should not be proceeded against (a) for mis-describing the 64 goods  as "stove  bolts and nuts" and (2) for importing  and attempting  to import goods without a proper import  licence this  being  an offence under s. 167(8) of the  Sea  Customs Act.   The appellant showed cause and in the  written  pleas which  he  filed,  he  raised two  defences;  (1)  that  the description  of the goods as "stove and nuts" was  merely  a description given by the manufacturers in their invoices and he  himself not being acquainted with the technical  details could  not be held responsible for the description given  in the invoices which was copied in the Bill of Entry not being precise  or  exact and (2) that even if the bolts  and  nuts which  he  imported were identifiable parts of  the  "single bolt belt fasteners" whose importation was banned, there had been,  on a proper construction of the import licence,  read in conjunction with the Import Trade Regulations under which it was issued, no contravention since the ban on importation by the notification was confined to a complete "Jackson type single  bolt  belt  fastener"  and did  not  extend  to  the importation of the component parts of such a belt fastener. These two defences were examined by the Collector of Central Excise.   As  regards  the  first he  found  from  the  cor- repondence  exchanged between the appellant and his  foreign suppliers  and produced by the appellant himself in his  de- fence  at the hearing, that the name "stove bolts and  nuts" had been decided upon by the appellant himself after samples of  the nuts and bolts which he desired to import  had  been received and examined by him.  Practically therefore  during the hearing before the Collector the appellant conceded that the name "stove bolts and nuts" was a misdescription of  the articles which he actually imported.  The next question  was whether the appellant was guilty of an offence of the nature described  in  s.  167(8)  of  the  Sea  Customs  Act.   The Collector  recorded a finding that the appellant was  guilty of a contravention of this provision which reads:               "If any goods, the importation or  exportation               of  which is for the time being prohibited  or               restricted by or under Chapter IV of this Act,               be  imported  into  or  exported  from   India               contrary to such prohibition or  restriction-,               or               if any attempt be made so to import or  export               any such goods;........" in  reaching this finding the Collector was  satisfied  from the samples which were forwarded to the appellant and  which were approved by him before finalising the indent, that  the appellant  was really ordering and importing nuts and  bolts which  were  identifiable components of  "Single  bolt  belt fasteners" whose importation was prohibited.  He arrived 65 at this conclusion because (1) the bolts and screws imported by  the appellant were those specially adapted by reason  of their  structure  and details for use as "single  bolt  belt fasteners" and (2) these nuts and bolts could not be put  to any  use other than as components of a belt fastener of  the type whose import was prohibited. In  further  support of his conclusion  that  the  appellant really  intended  to evade the prohibition  imposed  by  the Notification  of January 1952 by which the  importation  of" single  bolt belt fasteners" was prohibited,  the  Collector referred  to the fact that these single bolt belt  fasteners



were  composed of three components (1) a bolt (2) a nut  and (3)  washers.   The washers to fit into the bolts  and  nuts imported by the appellant were found to have been separately imported  by a firm called Nawanagar Industries  Ltd.  which was owned or controlled by close relations of the appellant. Having  thus received confirmation about the real  intention of  the appellant to evade the prohibition contained in  the Notification and thus contravene the provisions of s. 167(8) of the Sea Customs Act, the Collector imposed the penalty of confiscation of the goods and gave the owner under s. 183 of the Sea Customs Act the option to pay a fine of Rs. 5  1,000 to redeem the confiscated goods.  He also imposed a personal penalty of Rs. 1,000 on the appellant under s. 167(37)(c) of the Sea Customs Act for misdescribing the goods in the Bills of  Entries  which  he had filed.  The  appellant  filed  an appeal to the Central Board of Revenue which was dismissed. The  argument before the appellant authority again was  that what  was prohibited was an assembled "Jackson  Type  single belt  oval plate belt fasteners" but that this  notification could  not be read as imposing a ban on the  importation  of the parts of such a belt fastener though these parts may  be identifiable  and the parts could have no use other than  as components of the article whose importation was  prohibited. This  submission  was rejected, and  appeal  was  dismissed. Thereafter the appellant applied to the High Court of Punjab for the issue of a writ of certiorari under Art. 226 of  the Constitution and this having been dismissed in limine, moved this Court for special leave which was granted.  That is how the appeal is before us. Two  points  were urged by Mr. Purshottam on behalf  of  the appellant.   The  first was that the appellant  having  been granted  a licence to import "nuts and bolts" falling  under item 22 of Part 1 of the Import Trade Control Hand-book  for the relevant year, the appellant was entitled to import iron and steel bolts and nuts, whatever be the purpose they 66 served.   The only limitation imposed upon the appellant  by the  import licence which was granted to him and  which  re- produced the terms of Entry 22 in the Hand-book was that  he could  not import bolts and nuts adapted for use on  cycles. The  limitation thus imposed, it was urged,  also  indicated that if the nuts and bolts were adapted for use on  articles other than on cycles they could still import them unless the importation  not merely of the other article but its  compo- nents was also prohibited or restricted.  In this connection our  attention was drawn to item 28 of Part II in  the  same Hand-book reading ’Belting for machinery, all sorts, includ- ing belt laces and belt fasteners’.  The Notification  dated January  12, 1952 was a clarification issued in  respect  of licensing  policy  for  January-June,  1952.   Dealing  with serial  No. 28 of Part 11 which we have extracted just  now, the notification stated:               "Jackson type oval plate belt fasteners (other               than  single bolt).  General licences will  be               granted  freely subject to the  provisions  of               Public  Notice No. 189-ITC(PN)/51,  dated  the               28th December, 1951.               Jackson  type  oval  plate  single  bolt  belt               fasteners.   No imports will be  granted  from               any source." It  was not disputed that having regard to the terms of  the import  licence issued to the appellant the Notification  as regards the prohibition against the importation of  "Jackson Oval  Plate Single Bolt belt fasteners" would apply  to  the appellant’s  licence and these belt fasteners could  not  be



imported  after  January  1952.   For  the  import   licence specifically stated:               "This  licence is granted under Government  of               India, Ministry of Commerce, Notification  No.               23-ITC/ 43, dated the 1 st July, 1943, and  is               without  prejudice to the application  of  any               other prohibition or regulation affecting  the               importation of the goods which may be in force               at the time of their arrival." The  point,  however,  sought  to  be  made  was  that   the components  of such a belt fastener could still be  imported because  it  was said that the scheme of  the  Import  Trade Control Hand-book was to specify wherever it was so intended "component  parts"  along with the articles  of  which  they formed  components,  when a restriction or  prohibition  was intended  to  be imposed upon them also.  It is,  no  doubt, true that in some cases component parts are specifically in- cluded in some of the items in the Hand-book.  It might very well be that this feature might be explained on the ground 67 of  the specification being by way of abundant  caution,  or possibly  because in them the component parts might have  an independent  use  other than as components of  the  articles specified.   It  appears  to us that it does  not  stand  to reason that a component part which has no use other than  as a component of an article whose importation is prohibited is not included in a ban or restriction as regards the importa- tion  of that article.  Expressed in other terms. we  cannot accede to the position that it is the intention of the  rule that importers are permitted to do indirectly what they  are forbidden   to  do  directly,  and  that  it   permits   the importation separately of components which have no use other than  as  components  of an  article  whose  importation  is prohibited,  and  that  an importer is  thereby  enabled  to assemble them here as a complete article though if they were assembled  beyond the Customs Frontiers the  importation  of the  assembled  article into India is  prohibited.   Learned Counsel, however, relied upon an unreported judgment of  the Bombay High Court delivered by Mr. Justice Mudholkar when  a judge  of that Court, in Appeal No. 4 of 1959 (D.  P.  Anand v.  M/s.  T. M. Thakore & Co.) in support of his  submission that  a  ban on a completed article, having  regard  to  the phraseology  employed in the Hand-book cannot be read  as  a restriction  or prohibition of the separate  importation  of the  component  parts  which when assembled  result  in  the article  whose  import is prohibited.  We do  not  read  the judgment  in the manner suggested by learned  Counsel.   The learned Judge in the judgment recorded an admission that the articles imported which were components of a  motor-bicycle, would not when assembled form a complete cycle which was the article  whose  importation was restricted, because  of  the lack  of certain essential parts which were  admittedly  not available in India and could not be imported. The  next  submission of the learned Counsel  was  that  the decision  of the Customs Collector was vitiated by a  patent error, in that he misconstrued the scope of Entry 22 of Part 1 of the Import Trade Control Hand-book.  In support of this submission the learned Counsel invited our attention to  the decision  of this Court in A. V. Venkateswaran Collector  of Customs.   Bombay v. Ramchand Sobhraj Wadhwani and  Anr.(1). We  see  no force in this argument.  The  decision  of  this Court referred to proceeded on the basis set out on page 757 of the Report where this Court said:               "The  learned Solicitor-General appearing  for               the  appellant argued the appeal on the  basis



             that  the  view of the learned Judges  of  the               Bombay               [1962] 1 S.C.R. 753.               L/P(D)-3(a)               High    Court   that   on    any    reasonable               interpretation   of the items in the  Schedule               to the Tariff Act the consignment imported  by               the respondent could have been liable only  to               a  duty  of 30 per cent under item  45(3)  was               correct." Learned  Counsel  cannot therefore derive any  support  from this  decision.  Besides, what we have said  earlier  should suffice,  to  show  that  the  conclusion  reached  by   the authority  that  the offence under s. 167(8) has  been  made out, is not incorrect.  This apart, we must emphasise that a court dealing with petition under Art. 226 is not sitting in appeal  over  the decision of the  Customs  authorities  and therefore the correctness of the conclusion reached by those authorities on the appreciation of the several items in  the Hand-book  or in the Indian Tariff Act which is referred  to in these items, is not a matter which falls within the  writ jurisdiction  of  the  High  Court.   There  is,  here,   no complaint  of any procedural irregularity of the kind  which would  invalidate the order, for the order of the  Collector shows  by  its  contents that there has  been  an  elaborate investigation and personal hearing accorded before the order now impugned was passed. Learned Counsel next submitted that the Collector of Customs had taken into consideration the importation of the  washers by  the  Nawanagar  Industries  Ltd.  in  arriving  at   the conclusion that the appellant had violated s. 167(8) of  the Sea  Customs Act and that as in the notice that  was  served upon  him to show cause this was not adverted to, the  order adjudging  confiscation was illegal and void for the  reason that there had been a violation of the principles of natural justice and procedural irregularity in the hearing.  We  are not  impressed by this argument.  This  submission  proceeds upon  a  total misapprehension of the  significance  of  the separate import of the washers by the sister concern.   That import  was not and could not be the subject of  any  charge against the appellants, and the appellants were not punished for that importation.  It was merely evidence to confirm the conclusion reached by the Collector that the nuts and  bolts imported were in reality the actual components of the  Jack- son  type  belt fastener whose importation  was  prohibited. The  charge which the appellant was called on to answer  did specify  the nature of the offence which he was  alleged  to have contravened, and if evidence which the appellant  could have  rebutted was brought on record and considered  in  his presence  and  that evidence conclusively  proved  the  real nature of the articles imported, there could certainly be no justifiable  complaint  of violation of  the  principles  of natural justice.  The misdescription of the article imported in  the Bill of Entry having practically been  admitted  and there being 69 not  much dispute that the goods imported were  really  com- ponents  of the Jackson type single belt fasteners,  nothing more  was needed to establish a contravention of s.  167(8). The  reference  therefore to the Nawanagar  Industries  Ltd. -which  imported the washers merely confirmed  the  finding. In these circumstances we do not consider that there is  any substance in this objection. The  result is that this appeal fails and is dismissed  with costs.



Appeal dismissed. 70