http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 16  

PETITIONER: M. G. ABROL

       Vs.

RESPONDENT: M/S.  SHANTILAL CHHOTALAL & CO.

DATE OF JUDGMENT: 27/07/1965

BENCH: SUBBARAO, K. BENCH: SUBBARAO, K. DAYAL, RAGHUBAR BACHAWAT, R.S.

CITATION:  1965 AIR  197            1966 SCR  (1) 284

ACT: Imports  and  Exports (Control) Act, 1947 (13 of  1947),  s. 3(1)  and (2)-Exports (Control) Order, 1954-The Sea  Customs Act,  1878 (Ss. 19, 167(8) and 178-Scrap of iron and  steel- Prohibition   on  export  without  licence-Jurisdiction   of Customs authorities to see whether goods in accordance  with licence-Licence for ’steel skull scrap’ whether  description of   particular   variety   relevant   for    exportability- Jurisdiction of courts to interfere with decision of customs authorities.

HEADNOTE: In  exercise  of the power given in s. 3 of the  Import  and Export  (Control) Act, 1947, the Central  Government  issued the  Exports (Control) Order, 1954 providing that no  person shall  export  any  goods of the  description  specified  in Schedule  I annexed thereto except under and  in  accordance with  a licence granted by the Central Government or by  any officer  specified in Schedule 11 of the order.   Under  the provisions of the said order the respondents who were a firm carrying  on import and export business, obtained  from  the Iron  and  Steel  Controller a licence  permitting  them  to export a certain quantity of ’steel skull scrap’.  When  the goods  were  at the port they were examined  by  an  officer authorised  by  the Controller who certified  the  goods  as ’steel  skull  scrap’ fit for export under the  said  export licence.  The Customs authorities however took the view that a  part of the goods was not ’steel skull scrap’.  S. 3  (2) of  the  Imports and Exports Act 1947, provides  that  goods whose export or import is prohibited restricted or otherwise controlled  under s. 3(1) would be deemed to be goods  whose export  was restricted under s. 19 of the Sea  Customs  Act, 1878,  and  all the provisions of the said Act  would  apply accordingly.   Under  s.  178 of the  Sea  Customs  Act  the Customs  authorities ordered the confiscation of  the  scrap sought to be exported by the respondents, but allowed it  to be  shipped on the respondents’ giving a bank guarantee  for payment  of  fine in lieu of confiscation.  After  giving  a show  cause  notice  the  Additional  Collector  of  Customs imposed  a fine on the respondents in lieu  of  confiscation and  also  a  personal penalty of Rs.  35,000.   Instead  of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 16  

seeking  remedy  under the Sea Customs Act  the  respondents filed  a writ petition in the High Court.  It was heard  and dismissed by a single Judge who however reduced the personal penalty  to Rs. 1,000.  Both sides appealed to the  Division Bench.   It  was held by the Division Bench that  since  the satisfaction as to whether a particular consignment of scrap is capable of being used in India or not is to be, under the Statement  of  Export  Policy,  that of  the  Iron  &  Steel Controller  the  Customs authorities were  not  entitled  to consider afresh whether that scrap was or was not usable  in India.  On this and other grounds the High Court allowed the appeal  of the respondents and dismissed the appeal  of  the Customs Authorities in respect of the penalty.  The  Customs Authorities appealed to this Court by special leave. It  was contended on behalf of the appellants that  (1)  the Customs  Authorities were entitled to see whether the  goods sought  to be exported were in accordance with the  licence, and  (2)  the  High  Court should  not  have  exercised  its jurisdiction  under Art. 226 when alternative remedies  were provided in the Sea Act.                            2 8 5 HELD:(i) There is no conflict between the  jurisdiction of the licensing authority under the Exports (Control) Order and that of the Customs Authority under the Sea Customs Act. While under the Exports (Control) Order certain articles can be  exported only under a licence issued by the  appropriate authority  prescribed  thereunder, the  appropriate  Customs authority can prevent the export of the articles if they are not  covered by such licence.  To take an extreme  case,  if the licence issued permitted export of iron and the licensee seeks to export gold, the Customs authorities can  certainly prevent  the  export of gold, for it is not covered  by  the license. [291 C-D] (ii)However  in the present case it could not be said  that the goods were not covered by the licence. Under  the Exports (Control) Order iron and steel  scrap  is permitted  to be exported on a licence granted by  the  Iron and Steel Controller.  Under the Statement of Export  Policy iron  and  steel  scrap other than  sheet  cuttings  can  be exported if in the opinion of the Iron and Steel  Controller the  material is of no use in India.  The Exports  (Control) Order,  the schedules annexed thereto and the  Statement  of Export  Licensing Policy do not define skull scrap  at  all; ’skull  scrap’ is what the Officer thinks it is.   The  only restriction on the Controller giving a licence for export of scrap is that in his opinion it is not usable in India;  his opinion  is  final.  For the purpose of his opinion  he  may describe or categorize the scrap in the manner convenient to him; but that does not make it anytheless exportable  scrap. The  licence  is  meant only to cover scrap  not  usable  in India.  The description of the scrap has no relevance to its exportability. [292 B-F] A comparative study of other items in Schedule 1 annexed  to the  Exports (Control) Order shows that they  are  different items.   Obviously  the licensee cannot export  a  different item.   But  scrap is only one item and, therefore,  if  the appropriate authority issues a licence for the export of one variety of the same, it cannot be held that The licensee  by exporting a different variety is exporting some other  item. [292 G] In  the present case the Iron and Steel Controller  and  his subordinates examined the goods at the time the licence  was issued and at the time of loading the goods for export.  The licence was therefore issued in respect of particular  goods identified  by  the  appropriate authorities.   It  was  not

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 16  

possible  therefore  to say that goods other than  those  in respect  whereof  the licence was issued were sought  to  be exported. [293 A-B] What  is important is not the description but whether it  is scrap  of iron and steel in respect whereof the licence  was issued.   In  this  view, the  Customs  Authorities  had  no jurisdiction to confiscate the scrap on the ground that  the same was a misdescription.  The conclusion arrived at by the High Court was therefore correct. [293 C-E] (iii)If  the  goods  were  not  prohibited  goods,  the Customs  Authorities  had  no  jurisdiction  to  impose  the penalty. [293 E-F] (iv)The  existence of an alternative remedy does  not  oust the jurisdiction of the High Court but it is only one of the circumstances   that   the   High  Court   may   take   into consideration  in exercising its discretionary  jurisdiction under Art. 226 of the Constitution.  In the present case the High  Court  thought fit to exercise  its  jurisdiction  and there  were no exceptional circumstances that would  justify interference with its discretion. [293 G-H] Per  Raghubar Dayal, J. :-(i) The decision of the  Iron  and Steel  Controller  contemplated  by the  conditions  of  the licence is not about the identity of the scrap material  but is  only with respect to the possibility of the use  of  any portion  of the scrap within the country.  There is  nothing in  the  Imports and Exports Control Act or in  the  Exports Control Order up. Sup. CI/65-4 286 which  lays  down  among  the duties of  the  Iron  &  Steel Controller the duty to check that the material collected  at the docks for export tallied with the material for export of which the licence had been granted. [297 B-C] (ii)The statement of export licencing policy in laying down that  export of ferrous scrap other than sheet  cuttings  is allowed  by  the Iron and Steel Controller  provided  he  is satisfied  that the material is of no use in India does  not mean that if the licence is for the export of any particular type  of  steel  scrap it may still be considered  to  be  a licence  permitting export of steel scrap of any other  kind except scrap from sheet cuttings.  The Statement meant  only that  in respect of such scrap the authorities were free  to exercise  discretion to allow its export if it could not  be utilised in India. [298 G-H] (iii)The  fact  that  in the Order iron  and  steel  is mentioned  as one item and its varieties are  not  mentioned does not mean that a licence for one kind of scrap could  be utilised  to export other kinds of scrap.  Clause 5  of  the Order  empowers  the  licensing authority  to  impose  while granting a licence such conditions as it considers necessary to  impose  and be not inconsistent with the Act  or  Order. The  licensing  authority  could therefore  provide  in  the licence  that steel scrap of a particular variety  would  be exported.  The exported goods will be in accordance with the licence only if they come within the specified variety. [300 D-E] (iv)The  note  of  the Iron and  Steel  Controller  on  the shipping bill after inspection of the goods at the dock does not  amount to a licence.  Moreover in the present case  the goods  were not inspected by the Iron and  Steel  Controller himself  but by an officer who was not entitled to  issue  a licence  under Schedule 11.  The certification of the  goods by such an officer did not make them exportable. [301 G] (v)Section  3(2)  of  the Exports Control  Act  makes  the provisions  of the Sea Customs Act applicable in respect  of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 16  

goods  whose export or import is prohibited,  restricted  or controlled  by  an  order made under s.  3(1).   The  Export Control  Order  was  made under s. 3(1)  and  therefore  the Customs  Authorities could exercise their powers  under  the Sea  Customs  Act  in  respect of the  goods  sought  to  be exported  by the respondents.  They had power to  check  the goods  to see whether they were being exported under and  in accordance with the licence. [294 F-G; 300 F] (vi)Since the Additional Collector of Customs acted  within his  jurisdiction in checking and confiscating the goods  in question  on  the  ground that they were  not  ’steel  skull scrap’  which  alone was allowed to be  exported  under  the licence, the High Court or the Supreme Court did not have in exercising  writ jurisdiction, power to question, when  mala fides  was not alleged, his opinion about the nature of  the goods  sought to be exported.  The respondents  should  have pursued the remedies under the Act. [300 G-H] (vii)The  amount of penalty imposed by  the  Additional Collector  was legal and its reduction to Rs. 1,000  by  the single Judge was not correct. [303 D] Ranchoddas  Atmaram v. Union of India, [1961] 3 S.C.R.  718, relied on.

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 276,  377, 584-625 and 669 of 1963. Appeals by special leave from the judgment and order,  dated September 12, 1960 of the Bombay High Court in Appeals  Nos. 53.  56. 57 and 54, 51 and 58 of 1959 respectively.                             287 Niren  De,  Addl.  Solicitor-General, D. R. Prem and  R.  N. Sachthey,  for the appellants (in C.As. Nos. 376 and 377  of 1963). D.R.  Prem,  and R. N. Sachthey, for the  appellants  (in C.As. Nos. 584, 625 and 669 of 1963). S.T.  Desai, J. B. Dadachanji, O. C. Mathur and  Ravinder Narain,  for the respondents (in C.As. Nos. 376 and  377  of 1963). Poras A. Mehta, J. B. Dadachanji, O. C. Mathur and  Ravinder Narain,  for the respondents (in C.As. Nos. 584 and  625  of 1963). The Judgment of Subba Rao and Bachawat, JJ. was delivered by Subba  Rao,  J. Raghubar Dayal, J.  delivered  a  dissenting Opinion. Subba Rao, J. These five appeals by special leave were filed against the orders of a Division Bench of the High Court  of Judicature  at  Bombay setting aside the order of  a  single Judge  of  that Court quashing the order of  the  Additional Collector   of  Customs,  Bombay,  levying  fines   on   the respondents in lieu of confiscation of consignments of scrap iron  exported  to  foreign countries.  As  the  main  point raised in all the appeals is the same, it would be enough if we  state the relevant facts in one of the appeals,  namely, Civil  Appeal  No.  376  of  1963,  arising  out,  of  Misc. Petition No. 86 of 1958. Messrs.   Shantilal Chhotalal & Co., hereinafter called  the firm,, are a firm of Importers and Exporters of scrap  iron. The said’ firm obtained an export licence dated November  7, 1956, from the Iron and Steel Controller permitting them  to export from the port of Bombay 900 long tons of steel  skull scrap.   The licence was to hold good up to March 31,  1957, and   the  goods  had  to  be  shipped  to  Japan  by   s.s. "KUIBISHEV".   Between October 1956 and March 1957 the  firm

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 16  

purchased  scrap iron from various sources at rates  varying from  Rs.  95 to Rs. 207 per ton.  After  they  brought  the goods to the docks, the Officer authorized, by the Iron  and Steel  Controller  and the representative  of  the  Regional Joint  Scrap  Committee certified the goods as  steel  skull scrap  fit for export under the said export licence and  the necessary  endorsements  to  that effect were  made  on  the shipping  bills in respect of the said  goods.   Thereafter, the  goods  were taken to the customs  authorities  for  the purpose of exporting the same.  The customs authorities took the view that a part of the goods was not steel skull scrap; and   the  matter  was  referred  to  the  Iron  and   Steel Controller.   By  his order dated March 18, 1957,  the  said Controller   informed  the  customs  authorities  that   the rejected 288 buffers,  plungers  and  casings were  furnace  rejects  and formed  part of skull scrap etc.  By order dated  March  26, 1957,  the  customs authorities seized the entire  goods  on board the ship under s. 178 of the Sea Customs Act; but  the said  authorities  allowed  the  goods  to  remain  in   the temporary custody of the shippers and permitted the ship  to sail.   They  also retained the documents  relating  to  the goods, but later on released them on April 25, 1957, on  the firm furnishing a bank guarantee for a sum of Rs.  49,995.75 for  payment  of  fine  in  lieu  of  confiscation  if  such confiscation  was ultimately adjudged by them.  On  May  27, 1957, the customs authorities served a notice upon the  firm to  show cause why the said goods should not be  confiscated and  penal  action taken against them under s. 167  (8)  and (37)  of the ’Sea Customs Act.  By his order dated  December 21,  1957, the Additional Collector of Customs held that  of the  total quantity shipped 320 tons were  unauthorized  and directed confiscation thereof; but he imposed a fine of  Rs. 49,995.95 in lieu of confiscation and a personal penalty  of Rs.  35,000.   On  March  4, 1958, the  firm  filed  a  writ petition  under  Art. 226 of the Constitution  in  the  High Court  of Bombay for quashing the said order.  To that  writ petition  the Additional Collector of Customs,  Bombay,  and the  Union  of  India  were  made  parties.   In  the  first instance, the said petition was heard by Shelat, J., of that Court,  who  held  in effect that  the  firm  was  exporting something  which was not permitted to be exported  and  that while  the  licence authorized them to  export  steel  skull scrap  they were exporting non-skull scrap  and,  therefore, the customs authorities had acted within their  jurisdiction in  confiscating  the  said goods and  imposing  a  personal penalty  on the firm.  The learned Judge also expressed  the view that the firm had suppressed certain relevant facts and thus  disentitled  themselves  to  have  the   discretionary remedy.  However, the learned Judge gave a limited relief by reducing  the  penalty  of Rs. 35,000 to Rs.  1,000  on  the ground  that  under  s. 167(8) of the Sea  Customs  Act  the maximum  penalty leviable could not exceed Rs.  1,000.   The firm preferred Appeal No. 53 of 1959 against that order to a Division  Bench  of  the  said  Court;  and  the  Additional Collector  of Customs and the Union of India also  preferred an  appeal,  being Appeal No. 56 of 1959, against  the  said order of the single Judge raising the question of penalty in so far as it went against them. The  appeals came up for hearing before a Division Bench  of the  High  Court,  consisting  of  Mudholkar,  Acting  Chief Justice,,  and  S. M. Shah, J. The learned  Judges  held  in favour  of  the firm mainly on the following grounds  :  (1) "Since the satisfaction

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 16  

289, as  to whether a particular consignment of scrap is  capable of being used in India or not is to be, under the  Statement of export policy, that of the Iron and Steel Controller, the Customs  Authorities  were not entitled to  consider  afresh whether that scrap was or was not usable in India"; (2) "the licence  in question not having been granted by the  Customs Collector, but by the Iron and Steel Controller, it was  not open to the customs authorities to rely upon the  provisions of the Imports and Exports Control Act, 1947, or the Exports Control Order, 1954, for the purpose of making inspection of the  consignment which the petitioners were exporting";  and (3)  "if  what was being exported was not Skull  Scrap,  but still was something the export of which was permitted by the Iron and Steel Controller on the ground that that scrap  was not  usable  in India, there was nothing which  the  Customs Authorities  were  entitled to do".  On  those  grounds  the Division Bench allowed the appeal preferred by the firm, set aside  the  order of the learned single Judge and  made  the rule absolute.  The learned Judges also dismissed the appeal filed  by the customs authorities and the Union of India  on the around that, as the firm only exported the goods covered by  the  licence, the customs authorities had  no  power  to impose a personal penalty under s. 167(8) of the Sea Customs Act.   Civil  Appeal  No. 376 of  1963  has  been  preferred against  the former order and Civil Appeal No. 377 of  1963, against the latter order. The argument of the learned Additional Solicitor-General may briefly   be  stated  thus  :  There  is  no   conflict   of jurisdiction between the Iron and Steel Controller  issuing, a  licence  for  exporting  steel  skull  scrap  under   the provisions  of  the  Export Control  Order,  1954,  and  the customs  authorities prohibiting the export of the  same  on the  ground  that  they are not the  goods  covered  by  the licence : they exercise different functions.  In the present case,  the  Iron  and Steel  Controller  granted  an  export licence  dated November 7, 1956, permitting the  respondents to  export  900  tons of steel skull scrap  subject  to  the conditions  set  out  in the said export  licence,  but  the customs  authorities found, on the materials  placed  before them, that out of the total quantity shipped, 320 tons  were non-skull  scrap and on that finding they levied a  fine  in lieu  of  confiscation  of the goods as  they  were  already allowed to be exported.  The said order was well within  the jurisdiction  of  the customs  authorities  and,  therefore, whether  it  was right or wrong, the High Court  should  not have interfered under Art. 226 of the Constitution.  If  his contention was correct, the argument proceeded, as the  firm exported  goods  contrary to the terms of the  licence,  the customs authorities, in view of the recent -decision 290 of  this Court, had power to impose the penalty  within  the maximum  limits prescribed in s. 167 (8) of the Sea  Customs Act.  As that order also was within the jurisdiction of  the customs  authorities, the High Court should have  maintained it. The  argument of Mr. Desai, learned counsel for the  respon- dents,  may  be put thus: Under the  Export  Control  Order, 1954, the Iron and Steel Controller can issue a licence  for exporting iron skull scrap if he is of the opinion that  the said scrap is not usable in India.  The Schedule annexed  to the  said Order treats scrap of iron and steel as  one  unit and  it does not make a distinction between non-skull  scrap and skull scrap nor does that Order define what skull  scrap is.  In the circumstances when the Iron and Steel Controller

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 16  

described certain scrap as skull scrap and gave the  licence for  exporting the same, it is not open to  the  appropriate customs authority to hold that the said description is wrong and,  therefore,  the  scrap sought to be  exported  is  not covered by the licence. To  appreciate the rival contentions it is necessary at  the outset   to   ascertain   the  scope   of   the   respective jurisdictions  of  the Iron and Steel Controller  under  the Exports  Control Order and the Customs Collector  under  the Sea Customs Act qua the goods covered by the licence  issued by the former. The  Iron and Steel Control Order, 1956, was issued  by  the Central Government in exercise of the powers conferred on it by s. 3 of the Essential Commodities Act and in supersession of  all previous orders on the subject.  Under s. 3  of  the Imports and Exports (Control) Act, 1947 (Act 18 of 1947) the Central  Government may, by order published in the  Official Gazette,  make  provisions for prohibiting,  restricting  or otherwise  controlling the export of the goods specified  in the  order.   In  exercise of the  said  power  the  Central Government   issued  the  Exports  (Control)  Order,   1954, providing  that  no  person shall export any  goods  of  the description specified in Schedule I annexed thereto,  except under  and  in  accordance with a  licence  granted  by  the Central  Government or by any officer specified in  Schedule 11 to the said Order. Under  s. 19 of the Sea Customs Act, 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 land goods of any specified description into or out of India across any customs frontier as defined by the  Central Government.  Under s.    167(8)   thereof  the   appropriate authority can confiscate the pro-                             291 hibited  goods exported or imported and impose a penalty  on the person concerned, who illegally exported or imported  or attempted  to  export any goods, in  the  manner  prescribed thereunder.   It  is,  therefore,  clear  that  the  customs authorities   had   the  jurisdiction  to   confiscate   the prohibited goods if they were exported.  Under s. 178 of the said  Act, "Any thing liable to confiscation under this  Act may  be  seized in any place in India either  upon  land  or water,  or within the Indian customs waters, by any  officer of customs or other person duly employed for the  prevention of smuggling". Is  there any conflict between the two jurisdictions,  i.e., the  jurisdiction  of  the  licensing  authority  under  the Exports  (Control) Order and that of the  Customs  Authority under  the  Sea  Customs  Act  ?  While  under  the  Exports (Control) Order certain articles can be exported only  under a  licence, issued by the appropriate  authority  prescribed thereunder,  the appropriate Customs Authority  can  prevent the  export of the articles if they are not covered by  such licence.   To  take an extreme case, if the  licence  issued permitted  the  export  of iron and the  licensee  seeks  to export  gold, the Customs Authorities can certainly  prevent the  export of gold, for it is not covered by  the  licence. In this view, there is no conflict between the jurisdictions of   the  two  authorities;  indeed,  their  functions   are complementary to each other. Can  it  be  said,  as  it  was  contended  by  the  learned Additional  Solicitor General, that in the present case  the respondents sought to export goods that were not covered  by the licence ? We have noticed earlier that under the Exports (Control)  Order, 1954, no person shall export goods of  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 16  

description  specified  in Schedule 1, except under  and  in accordance with a licence granted by the Central  Government or  by  an  officer specified in  Schedule  11.   Under  the heading  "Raw Materials and Articles Mainly  Unmanufactured" in Part B of Schedule 1, item 3 is "scrap containing any  of the  metals  or  alloys  specified  in  entry  C-9  of  this Schedule".   C-9  of  the Schedule  enumerates  the  various metals; and C-9(a)(x) is "Iron and Steel".  The sub-headings (1)  to  (27)  thereof give  different  categories  of  that article.    Officers  competent  to  grant  a  licence   are mentioned in Schedule 11 and they are (i) the Iron and Steel Controller;  (ii)  a Deputy Iron and Steel  Controller;  and (iii) an Assistant Iron and Steel Controller.  ’Me Statement of Export Licensing Policy issued by the Government of India as  on  October  31, 1956, throws some more  light  on  this question.   Item 3 mentioned therein is  "Scrap  containing, any  of the metals or alloys specified in entry C-9 of  this Schedule; in the column under the heading "Other details, if any", item (ii) 292 is "Iron and steel scrap".  Iron and steel scrap is  divided into  two  categories, namely, (a) sheet cuttings,  and  (b) others.    Against  the  entry  "sheet   cuttings"   certain conditions  for  issuing  the  licence  are  mentioned;  and against the entry "others", the following remarks are found: "Export  of any other ferrous scrap is allowed by  the  Iron and  Steel  Controller  provided he is  satisfied  that  the material  is of no use in India." A combined reading of  the relevant  provisions of the Exports (Control) Order and  the entries in the Statement of Export Licensing Policy leads to the  following  position  :  The  Exports  (Control)   Order recognizes  scrap of iron and steel as one entity;  it  does not  recognize different categories of scrap, such as  skull scrap  or non-skull scrap; it permits export of  such  scrap under a licence issued by the Iron and Steel Controller,  as he is the officer who regulates the trade in scrap under the Iron and Steel Control Order; but under the Policy Statement a  distinction  is  made between sheet  cuttings  and  other ferrous scrap; in the case of the export of the former  more stringent  conditions are imposed than in, the case  of  the latter; and in the case of the latter export is permitted if in the opinion of the Iron and Steel Controller the material is  of no use in India.  We are not concerned in  this  case with sheet cuttings, but only with other ferrous scrap.  The Exports  (Control) Order, the Schedules annexed thereto  and the Statement of Export Licensing Policy do not define skull scrap at all; skull scrap is what the Officer thinks it  is. The only restriction on the Controller giving a licence  for export  of scrap is that in his opinion it is not usable  in India; his opinion is final.  For the purpose of his opinion he  may  describe  or categorize the  scrap  in  the  manner convenient  to him; but that does not make it anytheless  an exportable scrap.  In the circumstances it must be held that the licence covers only the scrap not usable in India.   The description   of   the  scrap  has  no  relevance   to   its exportability. A comparative study of other items in Schedule 1 annexed  to the  Exports (Control) Order shows that they  are  different items and if licence is given for the export of a particular item, obviously the licensee cannot export a different item. But   scrap  is  only  one  item  and,  therefore,  if   the appropriate authority issues a licence for the export of the same, it cannot be held that the licensee is exporting  some other item. A different approach leads to the same position.  The record

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 16  

discloses,  and it is not disputed, that the Iron and  Steel Controller  and his subordinates examined the goods  at  the time  the licence was issued and at the time of  loading  of the goods in the                             293 ship  for  export.  The licence was,  therefore,  issued  in respect  of particular goods identified by  the  appropriate authorities who were authorised to issue the licence and  to inspect the goods.  The name given by the authorities to the goods  was,  therefore, the name by  which  the  appropriate authorities identified the goods.  The licence was issued in respect of the specified goods identified by the appropriate authorities.   It  is not possible, therefore, to  say  that goods  other than those in respect whereof the  licence  was issued were sought to be exported. In  this view, can it be said that the  Customs  Authorities had  jurisdiction to confiscate the scrap of iron and  steel certified  to  be  not usable in India and  covered  by  the licence  granted  by the Iron and Steel  Controller  on  the ground  that the scrap exported was, in their view,  not  of the  description  given  in  the  licence  ?   The   Customs Authorities  would  have  such  jurisdiction  if  under  the Exports  (Control) order scrap of  iron and steel was  dealt with  under different heads.  But, as we have  pointed  out, for  the purpose of satisfaction of the Controller  and  for the purpose of issuing a licence for export, the said  scrap was  one unit and the description of it in the  licence  was only  that given to it by the Iron and Steel Controller  for identifying  the  goods.   What  is  important  is  not  the description  but  whether it is scrap of iron and  steel  in respect  whereof the licence was issued.  In this view,  the Customs  Authorities  had no juridiction to  confiscate  the scrap  on  the ground that the same was  a  mis-description. The  conclusion  arrived at by the Court is,  in  our  view, correct. If  the goods were not prohibited goods, the Customs  Autho- rities had no jurisdiction to impose the penalty. Lastly,  it was argued that the High Court should  not  have exercised   its   jurisdiction  under  Art.   226   of   the Constitution, as the respondents had an effective remedy  by way  of appeal to Higher Customs Authorities.  But the  High Court  rightly  pointed  out that  the  respondents  had  no effective remedy, for they could not file an appeal  without depositing  as  a condition precedent the  large  amount  of penalty  imposed on them.  That apart, the existence  of  an effective remedy does not oust the jurisdiction of’ the High Court,  but  it is only one of the  circumstances  that  the Court  should  take  into consideration  in  exercising  its discretionary   jurisdiction   under   Art.   226   of   the Constitution.   In this case, the High Court thought fit  to exercise its jurisdiction under Art. 226 of the Constitution and we do not see any exceptional circumstances to interfere with its discretion.  In the result, Civil Appeals; Nos. 376 and 377 of 1963 are dismissed with costs. 2 94 Now  coming  to  the other appeals,  though  there  is  some ,difference  in the matter of details between the  aforesaid appeals and the other appeals, the broad facts are  similar. The  view  we have expressed in the  aforesaid  two  appeals governs the other appeals also.  The other appeals are  also dismissed with costs.  One hearing fee. Ragbubar  Dayal, J. I regret I have to come to  a  different conclusion. I need not repeat the facts leading to these appeals as they have  been stated in the judgment of brother Subba  Rao,  J.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 16  

The  main  question for determination in  these  appeals  is whether  the  Collector of Customs had power  to  check  the scrap for the purposes of satisfying himself that the  scrap to  be  exported answered the description  of  the  material which  was to be exported under the licence granted  to  the exporter.    The  appellant  claims  such  a   right.    The respondent  denies  it and urges that the decision  -of  the Iron and Steel Controller contemplated by the conditions  of the licence was final and the scrap in regard to which  that -decision  is  given could be exported without  any  further check by the Collector. It  is  necessary,  before  determining  this  controversial point, to first refer to the various provisions relating  to the powers and jurisdiction of the Collector of Customs with respect  to  the export of iron and steel for  whose  export there exists some prohibition or restriction. Section  (3) 1 of the Imports & Exports (Control) Act,  1947 (Act.   XVIII of 1947) empowered the Central  Government  to make  provision  for prohibiting  restricting  or  otherwise controlling  the  import, export of goods of  any  specified description.   Sub-s. (2) of s. 3 provides inter  alia  that all goods to which any order under sub-s. (1) applies  shall be deemed to be goods of which the import or export has been prohibited or restricted under s. 19 of the Sea Customs Act, 1878,   hereinafter  called  the  Act,  and  that  all   the provisions of that Act shall have effect accordingly. By virtue of the power conferred by sub-s. (1) of s. 3,  the Central Government issued the Exports (Control) Order, 1954. Clause  3  of  this Order provides that  save  as  otherwise provided  in the Order, no person shall export any goods  of the description specified in Schedule 1, except under and in accordance with a licence granted by the Central  Government or  by any officer -specified in Schedule II.  The  officers specified in Schedule II                             295 include the Iron & Steel Controller, the Deputy Iron & Steel Controller  and  the  Assistant  Iron  &  Steel  Controller. Clause  5(1)  of the Exports Order provides that  a  licence granted  under  the Order may contain  such  conditions  not inconsistent  with  the Act or the Order  as  the  licensing authority may deem fit.  Sub-cl. (3) of cl. 5 provides  that the licensee shall comply with all the conditions imposed or deemed to be imposed under the clause. Schedule  1 mentions the commodities subject to export  con- trol.  Group B-3 mentions scrap containing any of the metals or alloys specified in entry C-9 of that schedule.  Entry C- 9  mentions many metals which include iron and  steel.   The export of iron and steel scrap is subject to control and, in view  of cl. 3 of the Exports Order, it cannot  be  exported except  under and in accordance with the licence granted  by the  competent  authority referred to in cl. 3. In  view  of sub-s. (2) of s. 3 of the Imports and Exports (Control) Act, iron  and  steel  scrap would be deemed to  be  goods  whose export has been prohibited or restricted under s. 19 of  the Act  and  all the provisions of that Act would  have  effect accordingly. Now,  s.  19 of the Act empowers the Central  Government  to prohibit  or  restrict the bringing or taking by sea  or  by land goods of any specified description into or out of India across  any  customs  frontier as  defined  by  the  Central Government.  Section 167(8) provides inter alia that if  any goods exportation of which is for the time being  prohibited or restricted by or under Chapter IV of the Act be  exported dfrom  India contrary to such prohibition or restriction  or if  any attempt be made so to export any such  goods,  those

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 16  

goods  would be liable to confiscation and that  any  person concerned  in any such offence would be liable to a  penalty not  exceeding  three times the value of the  goods  or  not exceeding  Rs.  1,000.  It follows that scrap  of  iron  and steel  is  liable to confiscation if it is exported  or  any attempt is made to export it contrary to the prohibition  or restriction imposed by the Central Government.  Section  178 of  the Act empowers any officer of Customs to seize in  any place  in  India either upon land or water,  or  within  the Indian Customs waters, anything liable to confiscation under the Act.  It is clear therefore that the officers of Customs have  power  to seize steel scrap if it be  liable  to  con- fiscation,  that is, if it is being exported or any  attempt is  being made to export it contrary to the  prohibition  or restriction  imposed.  If steel scrap is not exported  under and  in  accordance with the licence issued  by  the  proper authority,  it would be liable to confiscation.  It  becomes the duty of the Customs Authorities 296 to  check the steel scrap which is exported  for  satisfying themselves that it is being exported under and in accordance with  the licence issued by the proper authority.   Such   a right   of  the  Customs Authorities under the  Act  is  not seriously disputed for the respondent.     What is really contended for the respondent and what has been  held by the High Court is that the decision  given  by the Iron & Steel Controller in view of the conditions of the licence  is  final and that this finality  of  the  decision impliedly  takes  away  the power and  jurisdiction  of  the Customs authorities, which they have under the provision  of the Act to check whether the goods to be exported tally with those  mentioned  in  the licence.  The  conditions  of  the license on which reliance is placed for the respondent are:     "1.  The materials specified overleaf will be  inspected at  the  Docks  by  representatives  of  the  Iron  &  Steel Controller  and also by representatives of such  parties  as the Iron & Steel Controller may direct.  To enable the  Iron &  Steel Controller to arrange for the inspection  at  least two clear days’ notice is required. The Customs  Authorities have  been  informed not to permit loading of  scrap  before such  inspection is carried out and the  material  certified for  shipment by an officer authorised by the Iron  &  Steel Controller.     2.  If it is found as a result of this  inspection  that the scrap in question can be utilised in India the  exporter will have to remove the materials from the docks at his  own expense  and sell it to consumers in India nominated by  the Iron  &  Steel Controller at the price to be  fixed  by  the latter.   Exports  will be permitted only if  the  materials cannot be used in India.     3.  The  Iron  & Steel  Controllers  decisions  in  this respect shall be final.  Government will not be  responsible for   any  claim  for  loss  due  to  demurrage,   wharfage, frustration of contract or any other reasons whatsoever."     These  conditions to which the licence is  subject  mean that  despite the scrap answering the description  of  steel skull  scrap  whose export was allowed by the  licenee,  the Iron  & Steel Controller could disallow the export  of  such scrap  which upon inspection appears to be such which  could be  utilised in this country. Condition 3 gives finality  to the decision of the Iron & Steel Con-                             297 troller  in  this  respect, i.e., in respect  of  the  scrap determined to be such which could be utilised in India. The  decision contemplated by these conditions is not  about

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 16  

the identity of the scrap material with the scrap  described and  loaded under the licence for export, but is  only  with respect to the possibility of the use of any portion of  the scrap within the country.  This is the clear  interpretation of the conditions, according to the language used. It  is  to be noted that there is nothing in the  Imports  & Exports  Control Act or in the Exports Control  Order  which lays  down among the duties of the Iron &  Steel  Controller the  duty to check that the material collected at the  docks for export tallied with the material for export of which the licence  had  been granted.  Neither the Import  and  Export Control  Act nor the Export Control Order contains any  such express  provision  which debars or  prohibits  the  Customs Authorities  from exercising, their powers of  checking  the goods  sought to be exported for satisfying themselves  that they  were  being exported in accordance  with  the  licence granted for the export of the material.  On the other  hand, sub-s.  (2)  of  s. 3 makes all the provisions  of  the  Act effective in regard to the goods whose export is  prohibited or restricted under the Control Order as those are deemed to be  goods  whose export had been  prohibited  or  restricted under s. 19 of the Act. Further,  the  conditions  are  imposed  by  the   licensing authority  under  cl.  5  of the Order.   They  have  to  be consistent  with the Imports & Exports Control Act  and  the Order and cannot therefore take away directly or  indirectly the  powers of the Customs Authorities under the  provisions of  the  Act to satisfy themselves that goods sought  to  be exported are in accordance with the licence. It  is  also  urged that the grant of a  licence  lifts  the prohibition  or restriction imposed on the export  of  steel scrap  with the result that the scrap for which the  licence is  granted  becomes  goods  for  the  export  of  which  no prohibition or restriction exists.  I do not agree with this contention.   The  prohibition or restriction  imposed  over certain types of goods continues so long as that restriction is  imposed under a valid notification of the Government  of India.   The effect of the granting of the licence  is  that the licencee is permitted to export those goods whose export is  permitted under the licence.  Those goods do not  become goods  which are not subject to the controls imposed by  the Export  Control Orders.  The goods to be exported by  virtue of that licence 298 are  subject  to the condition that they  answer  fully  the description of the goods for the export of which the licence is granted.  The export is not to be only under the licence, but to be in accordance with it also.  That is what cl. 3 of the  Exports  Control Order requires.  It is  therefore  not correct  to say that the mere grant of the licence  for  the export  of  certain  goods whose  export  is  prohibited  or restricted  takes those goods out of the category  of  goods whose export is prohibited or restricted. Much  stress has been laid for the respondent on the  export policy  of the Government which, it is urged,  supports  the contention  that  steel  scarp of  any  description  can  be exported  except  such scrap which can be  utilised  in  the country.   It is urged that the prohibition  or  restriction under  cl. 3 of the Exports Control Order really applies  to the steel scrap which cannot be used in India. The  policy of the Government laid down for the guidance  of the  Central  Government  and  the  officers  specified   in Schedule  11 of the Export Control Order and to some  extent for  the  guidance  of  the would  be  exporters  in  making requests for the grant of licences cannot have the effect of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 16  

affecting the provisions of the Import & Export Control  Act or  the  Control Order issued under it. Reference  has  been made  to  Part II of the Hand Book of Export  Trade  Control published   by  the  Ministry  of  Commerce   and   Consumer Industries of the Government of India in October 1956.   The statement  of the export licensing policy as on October  31, 1956, states with reference to export of all iron and  steel scrap except scrap, presumably from sheet cuttings :               "Export of any other ferrous scrap is  allowed               by the Iron & Steel Controller provided he  is               satisfied  that the material is of no  use  in               India." This  may  be the general policy for the  granting  or  non- granting of a licence for the export of iron and steel scrap other than from iron sheet cuttings, but this does not  mean that if the licence is for the export of any particular type of steel scrap, it may still be considered to be the licence permitting  export of steel scrap of any other  kind  except scrap  from sheet cuttings.  If this policy statement  meant that  the  licence  granted would have  just  mentioned  the quantity of iron and steel scrap other than scrap from sheet cuttings, instead of specifying the nature of the scrap  for the  export  of which the licence is  granted.   The  policy stated  in  this statement is really a  restriction  on  the exercise  of the discretion of the authorities empowered  to grant the licence, the restriction being that no licence  be granted for the export of iron 299 and  steel scrap other than scrap from sheet cuttings if  it could  be utilised in India.  The authorities were  free  to exercise the discretion with respect to the export of  scrap which  could not be utilised in India.  The mere  fact  that certain  scrap could not be utilised in India does not  mean that  its export is freely allowed.  What may not be  usable in the country at a certain point of time may become  usable after a lapse of time. I am therefore of opinion that neither the policy  statement nor the provisions about the granting of the licence justify the  conclusion that scrap which could not be used in  India could  be exported irrespective of the terms of the  licence or  that the moment a licence is granted for the  export  of certain scrap that scrap gets the status of material for the "port  of which there exists no prohibition  or  restriction with  the  result that it would not come  within  the  goods which  could be checked by the Customs authorities  for  the purpose  of satisfying themselves whether those  goods  were being exported in accordance with the terms of the licence. Reference  may  also be made to Chapter VI, Part  1  of  the aforesaid Handbook of Export Trade Control.  This deals with customs   and  foreign  exchange  procedure.   Paragraph   1 mentions the shipping bill and the export licence among  the documents  to be submitted to the export department  of  the Custom House at the port of export.  Para 2 provides for the scrutiny of these documents in the department inter alia for the  purpose  of  verifying  that  the  proposed  "port   is permissible  and the consignment satisfies the  requirements under the Export Control Order.  It further provides :               "If the Customs authorities are satisfied that               the documents are in order, an endorsement  is               made on the shipping bill giving directions to               the  Preventive Officer, Examining Officer  or               the  Appraiser at the docks or jetties  as  to               the physical examination to be carried out  in               respect of the value, description etc., of the               consignment  and  according sanction  for  its

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 16  

             export." This  provision concerning the procedure to be  followed  by the  Customs Authorities makes it clear that the  Preventive Officer,  the  Examining  Officer or the  Appraiser  of  the Customs  Department  at the docks have to  do  the  physical examination in respect of the description of the consignment to be exported and to sanction the export if satisfied  that the  consignment  is  in accordance with the  terms  of  the licence.  This is in accordance with the 300 requirements  of the provisions of the Act as  stated  above and  goes against the contention for the respondent  on  the basis of the conditions in the licence about the finality of the  decision of the Iron & Steel Controller  about  certain goods sought to be exported to be usable in the country. It is also urged that scrap of ’iron and steel’ is one  unit under  .the  Export Control Order, that the Order  does  not contemplate  any different varieties of such scrap and  that therefore  the granting of the licence for  exporting  steel skull scrap amounts, in law, to the granting of the  licence or  exporting  any steel scrap, even if that is  not  ’steel skull scrap’ Which is not defined under the Export  ’Control Act or the Order.  I do not agree.  It is not disputed  that steel  scrap can be of different varieties.  The Order  need not  specify all the varieties.  Special specification of  a variety could be necessary if it was to be excepted from the scope  of  the Order.  Clause 5 of the  Order  empowers  the licensing authority to impose, when granting a licence, such conditions  as it considers necessary to impose and  be  not inconsistent with the Act or Order. The        licensing authority could therefore provide in the licencethat steel scrap  of  a  particular variety  would  be  exported.   The exported  goods will then be in accordance with the  licence if  they come within the specified variety.  I am  therefore of  opinion  that the licensing authority was  competent  to allow  export  of  any  particular  variety  and  that   the respondents  could not under the licence export steel  scrap of any variety other than that stated in the licence. I therefore hold that the officers of the Customs Department had power and jurisdiction to examine the steel scrap  which the  respondent was seeking to export to satisfy  themselves that  that scrap was really steel skull scrap  whose  export had been permitted under the licence. The Additional Collector of Customs acted within his  juris- diction  in  checking  the  scrap  to  be  exported  by  the respondent.   It was for him to decide whether the scrap  to be exported was of the kind for which the licence was given. We,  in  the exercise of writ  jurisdiction,  cannot  enter, unless mala fides are alleged, into the question whether his opinion  about  the nature of the goods to be  exported  was right  or not.  The Act contains provisions for  the  person aggrieved with the order of the Officer of Customs under  s. 167(8)  to appeal against that order.  It is for the  autho- rities  provided by the Act for determining the  correctness of  the orders of the Customs Officers with respect  to  the confiscation of goods and penalty imposed to decide on being properly moved                             301 the orders of the customs officers were correct or  required some modification. It is urged that there was no evidence before the Additional Collector   to  come  to  the  conclusion  that  the   scrap confiscated  was not steel skull scrap.  The  contention  is not sound.  The Additional Collector took into consideration certain  survey  reports of competent  surveyors  about  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 16  

description of the cargo exported by the respondent as steel skull  scrap.   Such  survey reports were  produced  by  the respondent.   It  is  therefore not the case  in  which  the Additional  Collector proceeded on no evidence  for  holding that  the quantity of scrap confiscated was not steel  skull scrap. It  is not really disputed that the entire qantity of  scrap exported  by  the respondent came within the  definition  of skull  scrap  as given in ’Metals Hand Book’ by  Taylor  and Lyman (American Institute of Metals, 1948 Ed) which reads :               "A film or dross remaining in a pouring vessel               after the metal has been poured-A frozen shell               of metal sometimes remaining in the bottom  of               the ladle." The  respondent however urges that a wider meaning is  given to  this  expression  in India.   There  is  not  sufficient material  on  record to substantiate  this  allegation.   In matters  of international trade, it appears a bit  difficult to  expect  that  the expression ’skull  scrap’  would  have different  meanings  in different countries  or  that  India alone  would put a wider meaning on the expression with  the result that there might be disputes between the exporters of this country and the importers of countries abroad. It  has been urged that as the Iron & Steel  Controller  had power  to grant the licence for the export of  steel  scrap, his order on the shipping bill after inspecting the scrap on the  docks that it was passed for export, be treated as  the requisite  licence for the export of the actual scrap  which had  been  inspected  at  the docks.  Such  a  note  on  the shipping  bill does not amount to licence granted under  the relevant  provisions  of the Act and the  Import  &  -Export (Control)  Act.   The Export Control Order  could  not  have contemplated  such  a report of the  Inspecting  Officer  to amount  to the granting of a licence for the export.  If  it contemplated  so,  the entire procedure for the grant  of  a licence would have been different.  Further, the person  who inspected  the scrap at the docks and passed it  for  export was  not an officer mentioned in Schedule 11 of  the  Export Control  Order.   The  materials taken to the  dock  by  the exporter  are  not necessarily inspected  by  the  specified officer but by any representative of the Sup.Cl/65-5 302 Iron  & Steel Controller and the representative too  has  to inspect the material along with the representatives of  such parties  as the Iron & Steel Controller might  direct.   The various shipping bills for the materials taken to the  docks show that the material was inspected ,on behalf of the  Iron &  Steel  Controller by the Deputy Assistant  Controller  of Iron  &  Steel,  an officer who is not  included  among  the officers  mentioned  in Schedule II of the  Exports  Control Order. Another  contention  raised for the respondent is  that  the Additional  Collector could not confiscate the  goods  after they  had left the country and that therefore his  order  of confiscation  of  the scrap which according to him  was  not steel  skull scrap was bad in law.  The affidavit  filed  by the  Additional  Collector, appellant No.  1,  mentions  the circumstances in which the scrap exported by respondent  was allowed  to leave the country.  It was allowed to leave  the country after the Collector had formally seized it and after the  agents  of the shipping company had undertaken  not  to release  the  documents  in  respect of  the  cargo  to  its consignees.   This  undertaking meant that the  cargo  would remain  under  the  control of the  customs  authorities  as

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 16 of 16  

seized  cargo  till  further  orders  from  the   Additional Collector releasing the cargo and making it available to the consignees  by  the delivery of the necessary  documents  to them.  The documents were allowed to be delivered to them on the  application of the respondents praying for the  passing on of the necessary documents to the purchasers of the goods in Japan and on the respondents giving a bank guarantee that the  full  f.o.b. value to be released from the  said  parch would be paid to the customs authorities towards penalty  or fine in lieu of confiscation that might be imposed upon  the respondents  by  the adjudicating  authority.   The  customs authorities had seized the goods when they were within their jurisdiction.   It is immaterial where the seized  goods  be kept.   In the circumstances of the case, the  seized  goods remained on the ship and were carried to Japan.  The seizure was  lifted  by  the  Additional  Collector  only  when  the respondents  requested and gave bank guarantee.  ’Me  effect of  the guarantee was that in case the Additional  Collector adjudicated  that  part  of the goods exported  was  not  in accordance  with the licence and had to be confiscated,  the respondents,  would, in lieu of confiscation of  the  goods, pay the fine equivalent to the of the bank guarantee. Section  183 of the Act provides that whenever  confiscation is authorised by the Act the Officer adjudging it would give the owner of the goods option to pay in lieu of confiscation such fine 303 as the officer thinks fit.  This option was extended to  the respondent at the stage before the goods were released  from seizure.  The formal order of confiscation had to be  passed after the necessary enquiry and therefore when passed in the present case after the goods had actually left this  country cannot  be said to be an order which could not be passed  by the Customs Authorities. I, therefore, do not agree with this contention. There  now  remains the question of the  amount  of  penalty which can be imposed under s. 167(8) on the person concerned in the export of prohibited or restricted goods contrary  to the  prohibition  or restriction.  This Court  has  held  in Ranchoddas  Atmarwn v. Union of India(1) that it is open  to the  Customs  Authorities to impose any of  the  alternative penalties  under  s.  167(8) even though the  amount  of  it exceeds the amount of the maximum in the other  alternative. The amount of penalty was therefore not limited to Rs. 1,000 only.  The penalty imposed is not said to exceed three times the value of the goods exported unauthorizedly.  It  follows that  the  amount  of  penalty  imposed  by  the  Additional Collector of Customs was legal and that its reduction to Rs. 1,000 by the High Court was not correct. 1,   therefore,  hold  that  the  impugned  orders  of   the Additional  Collector  were correct  and  would  accordingly allow  the  appeals, set aside the orders under  appeal  and restore  the  orders  of  the  Additional  Collector   dated December  21,  1957, but, in the  circumstances,  order  the parties to bear their own costs.                        ORDER BY COURT In accordance with the opinion of the majority, the  appeals are dismissed with costs.  One hearing fee. (1) 3 S.C.R. 718. 304