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PETITIONER: NEW CENTRAL JUTE MILLS CO.  LTD.

       Vs.

RESPONDENT: THE ASSISTANT COLLECTOR OF CENTRAL EXCISE,ALLAHABAD & ORS.

DATE OF JUDGMENT: 08/09/1970

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

CITATION:  1971 AIR  454            1971 SCR  (2)  92  1970 SCC  (2) 820  CITATOR INFO :  D          1975 SC  17  (31)  R          1979 SC 789  (8)  RF         1989 SC 222  (3)  RF         1989 SC 516  (49)

ACT: Central  Excise  & Salt Act 18 of 1947--Section  12  whether void  for excessive delegation-Power under section to  alter provisions of Sea Customs Act, 1878 in applying them to  Act 18  of  1947  whether  includes power  to  make  changes  in legislative policy. General  Clauses Act, s. 8(1)-whether enables provisions  of Customs  Act, 1962 to be applied under s. 12 of Act  18.  of 1947 in place of the provisions of Sea Customs Act, 1878. Customs Act, 1962, S. 105(1)--Conditions for issue of search warrant.

HEADNOTE: The  appellant  company had a factory at Varanasi  at  which chemicals  including  ammonia  were  manufactured.   It  was considered by the Central Excise authorities that there  had been  evasion  of  duty  on ammonia  by  the  company.   The Assistant  Collector  Central Excise issued  a  warrant  for search and seizure of goods and documents, pursuant to which the  premises of the aforesaid factory were raided  in  May, 1968 and certain documents seized.  The company-filed a writ petition in the High Court which was dismissed by the Single Judge.   The Division bench upheld the order of  the  Single Judge.   In  appeal  to this Court  by  special  leave,  the questions  that fell for consideration- were (i) Whether  s. 12  of  the Central Excise Act was void because  the  powers delegated  to the Central Government thereby  including  the power to make alterations in the Act applied were excessive; (ii)  Whether  the  Sea Customs Act, 1875  having  been  re- pealed,  it  was open thereafter to the  Central  Government under s. 12 of the Excise Act to apply s. 105 of the Customs Act  1962; and (iii) Whether the Assistant Collector  issued the  warrants in the present case after due  application  of mind to relevant materials and ’facts in terms of s.   105(1) of the Customs Act, 1962.

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HELD  : (i) In the notifications issued inter alia  applying S.  105(1)  and s. 1 10 of the Customs Act,  1962,  no  such changes  had  been made as could possibly  fall  within  the meaning of the word ’alterations.  The power to restrict and modify does not import the power to make essential  changes. It  is  confined to alterations of minor  character  and  no change  in principle is involved.  The word ’alteration’  in s.  12 must be understood in the sense in which it was  open to  the  legislature  to employ it  legitimately  and  in  a constitutional  manner.   No question was thus  involved  of delegation either of any essential legislative functions  or any change of legislative policy. [96 B-D] In re Delhi Laws Act, 1912, [1951] S.C.R. 747, referred to. (ii)S. 8(1) of the General Clauses Act provides that  where any  Central  Act  repeals and  re-enacts  with  or  without modification  any  provision of the  former  enactment  then references  in any such enactment or in any  instrument,  to the  provisions  so  repealed  shall,  unless  a   different intention  appears,  be  construed  as  references  to   the provisions so re- 93 enacted.   By  virtue  of this provision  it  could  not  be disputed  that in s. 12 of the Central Excise and Salt  Act, 1947, the Customs Act, 1962 can be read in place of the  Sea Customs Act, 1878. [96 E] The contention that s. 12 of the Act empowers  incorporation of  the  provision of the Sea Customs Act, 1878 in  the  Act itself and, therefore, 8(1) of the General Clauses Act, does not apply could not be accepted.  Section 12 only  contained a  provision  delegating  limited  powers  to  the   Central Government  to draw upon the provisions of the  Sea  Customs Act,  1878 for the purpose of implementing s. 3 of the  Act. [96 F; 97 A] Secretary  of State for India in Council v.  Hindusthan  Co- operative Insurance Society, 58 I.A. 259, distinguished; The Collector of Customs Madras v. Nathella Sampatha  Chetty JUDGMENT: The  extension  of s. 105 could not be said  to  be  illegal merely because under s. 172 of the Sea Customs Act it was  a Magistrate  who  after applying judicial mind had  to  issue search warrant whereas under the present notification  after the enactment of the Customs Act, 1962, it was the Assistant Collector of Customs performing executive functions who  had been  empowered  to issue a search warrant.  By  the  latter notification   the   previous  notification   applying   the provisions  of  the Sea Customs Act was  superseded  and  no question  with  regard to the validity of  the  notification issued in 1963 and then amended in 1965 could survive. Collector  Custom  &  Excise Cochine & Ors, v.  A.  S.  Bava [1968] 1 S.C.R. 82, distinguished [98 A-C] (iii)On the facts of the case it could not be said that the Assistant Collectorhad no relevant material upon which the belief could be founded in termsof s. 105(1) of  the Customs Act, 1962. [98 D]

& CIVIL APPELLATE JURISDICTION: Civil Appeal No. 460 of 1970. Appeal  by special leave from the judgment and  order  dated May  20, 1969 of the Allahabad High Court in Special  Appeal No. 1177 of 1968. M.   C. Chagla and R. Gopalakrishnan, for the appellant. V.   A. Seyid Muhammad, P. C. Chandi, B. D. Sharma and S.   P. Nayar, for the respondents.

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The Judgment of the Court was delivered by Grover,  J.  This  is  an appeal by  special  leave  from  a judgement  of  the Allahabad High Court  dismissing  a  writ petition by which the appellant challenged the validity of a warrant  issued by the Assistant Collector, Central  Excise, Allahabad,  authorising the Superintendent  Central  Excise, Varanasi,  to  enter certain premises, search the  same  and seize the documents therefrom. The appellant, which is a public limited company having  its registered office at Calcutta, owns and runs a factory known as   Sahu  Chemicals  and  Fertilisers  at  Varanasi   where chemicals such 94 as ammonia and soda ash are manufactured.  In February  1962 excise  duty  was fixed on manufacture of  ammonia  for  the purpose of fertilisers at Rs. 25/- per metric ton, the  rate being  Rs.  125/- per metric ton if it was  used  for  other purposes.  The notification by which the aforesaid duty  was payable was later withdrawn by means of another notification dated  March  1,  1964 and thereafter  no  excise  duty  was required to be paid on the manufacture of ammonia.  For  the period  from  May 1962 to the beginning of  March  1964  the appellant  had paid duty at the rate of Rs. 25/- per  metric ton  on  the ground that ammonia had been utilised  for  the purpose of manufacture of chemical fertiliser.  The  Central Excise  authorities, however, had received information  that part  of  the ammonia had been utilised for  purposes  other than the manufacture of fertilizers on which higher duty  of Rs.  125/-  per metric ton was payable.  It  was  considered that  there had been evasion of duty.  On May 11, 1968,  the Assistant  Collector  issued a warrant for  the  search  and seizure  of  goods  and  documents  pursuant  to  which  the premises of the factory at Varanasi were searched on May 11, 12 and 13, 1968 and various documents were seized. The  writ  petition was heard in the first instance  by  the learned  single  judge  who dismissed  it.   In  appeal  his judgment   was   upheld  by  the  Division   Bench.    Three contentions were raised before the Division Bench; the first was  that S. 1.2 of the Central Excises and Salt Act,  1944, hereinafter  called,  the  "Act"  was  void  as  the  powers delegated to the Central Government by the legislature  were excessive  and beyond permissible limits.  The second  point was  that the Sea Customs Act 1878 having been  repealed  it was  not open to the Central Government under s. 12  of  the Act  to apply s. 105(1) of the Customs Act 1962 to  the  Act and  the  notification dated May 4, 1963 by which  this  was done  was illegal and ultra vires.  The, third was that  the search  and  seizure  made  by  the  respondents  under  the impugned  authorisation  dated  August  11,  1968  and   the authorisation  itself  were  not  in  accordance  with   the provisions of s. 105 of the Customs Act 1962.               Section  12  of the Act is  in  the  following               terms:               S.  12. Application of the provisions  of  Act               VIII  of  1878 to Central  Excise  Duties.-The               Central Government may, by notification in the               official  Gazette  declare  that  any  of  the               provisions   of  the  Sea  Customs  Act   1878               relating  to  the levy on and  exemption  from               customs duties, drawback of duty,  warehousing               offences  and  penalties,  confiscation,   and               procedure  relating to offences  and  appeals,               shall, with such modifications and alterations               as  it may consider necessary or desirable  to               adapt them to the circumstances, be applicable

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             in regard to               95               like matters in respect of the duties  imposed               by section               3."               When  the  Act was enacted s. 172 of  the  Sea               Customs Act 1878 which could be applied to the               Act under s. 12 provided :               S.172.     "Any   Magistrate    may,    on               application  by a  Customs-Collector,  stating               his  belief that dutiable or prohibited  goods               (or any documents relating to such goods)  are               secreted in any place within the local  limits               of the, jurisdiction of such Magistrate, issue               a warrant to search for such goods.               Such warrant shall be executed in the same way               and  shall have the same effect, as  a  search               warrant  issued  under  the  law  relating  to               Criminal Procedure." It  may  be  mentioned that the words  "or  documents"  were inserted  by the Sea Customs Amendment Act 1955.  After  the enactment of the Customs Act 1962 by the notification  dated May 4, 1963 as amended by the Notification dated February 6, 1965 amongst other provisions of the Customs Act 1962,  sub- s.  (1)  of s. 105 and s. 1, IO were  made  applicable  with certain  modifications of a minor nature under s. 12 of  the Act.   The  material part of these sections  are  reproduced below ;-               "S.  105(1) Power to search  premises.-(1)  if               the Assistant Collector of Customs, or in  any               area adjoining the land frontier or the  coast               of  India  an  officer  of  Customs  specially               empowered by name in this behalf by the Board,               has reason to believe that any goods liable to               confiscation or any documents or things  which               in his opinion will be useful for or  relevant               to any proceeding under this Act are  secreted               in any place, he may authorise any officer  of               customs  to search or may himself  search  for               such goods, documents or things."               "S. 110(3).  The proper officer may seize  any               document or things which, in his opinion, will               be useful for, or relevant to, any  proceeding               under this Act." On  the  first  point it has been urged  on  behalf  of  the appellant  that  s.  12 of the  Act  gave  unrestricted  and unlimited power to the Central Government to modify or alter the provisions of the Sea Customs Act 1878 and to apply  the provisions   of  that  Act  with  such   modifications   and alterations   as  the  Central  Government  might   consider appropriate.  Modification, it has been pointed out, may  be permissible,  and may not fall within the vice of  excessive delegation  because the basic structure is not  changed  but alteration,  it is suggested, has a much  wider  connotation and it emm- 96 braces even the changing of the essential pattern of a thing or  object.  Such a power inherently involves the making  of changes even in regard to matters pertaining to  legislative policy. In  our opinion the above contention is purely  of  academic interest  in the present case.  In the  notifications  which were issued applying, inter alia, s. 105 (1) and S. 1 10  of the  Customs Act 1962 no such changes have been made as  can possibly fall within the meaning of the word  "alterations".

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It  has been pointed out in the previous decisions  of  this Court that the power to restrict and modify does not  import the  power  to make essential changes.  It  is  confined  to alterations of a minor character and no change in  principle is  involved.   See In re Delhi Laws Act,  1912.(1)  It  was conceded before the High Court and has not been urged before us that the word "modifications" could not be taken as  con- ferring  on  the Central Government  any  legislative  power which  was in excess of the permissible  limits.   Objection was  taken  only with regard to the word  "alterations"  but that  word must be understood in the sense in which  it  was open  to the legislature to employ it legitimately and in  a constitutional  manner.   No question is  thus  involved  of delegation either of any essential legislative functions  or any change of legislative policy. The second contention has hardly any merit.  Section 8(1) of the General Clauses Act provides that where any Central  Act repeals  and  re-enacts  with or  without  modification  any provision of a former enactment then references in any  such enactment or in any instrument to the provision so  repealed shall, unless a different intention appears, be construed as references  to  the provision so re-enacted.  By  virtue  of this  provision it cannot be disputed. that in s. 12 of  the Act  the  Customs Act 1962 can be read in place of  the  Sea Customs Act 1878.  An attempt has been made to argue that s. 12  of the Act empowers incorporation of the  provisions  of Sea  Customs  Act  1878 in the Act  itself  and  whenever  a notification  is issued under it such provisions of the  Sea Customs  Act as have been applied become incorporated as  in integral part of the Act.  Section 8 of the General  Clauses Act would not be applicable to a case of such  incorporation and it can only apply if s. 12 can be regarded as containing a  reference to the provisions of the Sea Customs  Act.   In Secretary  of  State  for Indian in  Council  v.  Hindusthan Cooperative Insurance Society Ltd. (2) it was accepted as  a settled  rule  of  construction  that  where  a  statute  is incorporated  by reference into a second the repeal  of  the first statute does not affect the second.  The law laid down by  the  Privy  Council can have  no  applicability  to  the present case.  Section 12 of the Act did not bodily lift, as it were, certain provisions of the Sea Customs Act 1878  and incorporate (1) [1951] S.C.R. 747. (2) 58 I.A.259. 97 them as an integral part of the Act.  It only empowered  the Central  Government  to  apply the  provisions  of  the  Sea Customs Act 1878 with such modifications and alterations  as might  be considered necessary or desirable by  the  Central Government for the purpose of implementation and enforcement of s. 3 of the Act.  No exception could be taken to the view of  the  High  Court  that  s.  12  contained  a   provision delegating limited powers to the Central Government to  draw upon  the  provisions of the Sea Customs Act  1878  for  the purpose of implementing s. 3 of the Act. in The Collector of Customs,  Madras  v. Nathella Sampathu Chetty  &  Another(1) this  Court  examined at length the meaning  and  effect  of incorporation  by reference of one statute into another  and discussed  the  Privy  Council case referred  to  before  in detail.   Section  8(1) of the General Clauses Act,  it  was pointed  out,  ’dealt  with reference  or  citation  of  one enactment  in another without incorporation.  The  usual  or recognised    formulae   generally   employed   to    effect incorporation  were considered; for instance the words  used in  s. 20 of 53 and 54 Vict.  Ch. 70-Housing of the  Working

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Classes Act, 1890, the words used were               "  shall, for that purpose, be deemed to  form               part of this Act in the same manner as if they               were enacted in the body thereof."               In  54  and  55 Vict.  Ch. 19,  s.  1(3),  the               language employed was,:               "The provisions of s. 134 of the said Act (set               out  in the schedule) shall apply as  if  they               were herein enacted." It is unnecessary to mention the other provisions because  a comparison of the recognised formulae with the text of s. 12 of the Act shows that the provisions of the Sea Customs  Act 1878  were not meant to be incorporated in the Act and  were only to be applicable to the extent notified by the  Central Government for the purpose of the duty leviable under s. 3. Another  aspect  which has been presented under  the  second contention  is  that the impugned notification  is  bad  and stands  vitiated  because under  the  previous  notification which  applies s. 172 of the Sea Customs Act 1878 it  was  a Magistrate who had to bring his judicial mind to bear on the expediency  or desirability of issuing a warrant for  search whereas  under the present notification after the  enactment of  the  Customs Act 1962 it is the Assistant  Collector  of Customs  who performs executive functions and who  has  been empowered to issue the warrant for search and seizure.   The decision  of  this Court in Collector of Customs  &  Excise. Cochin & Ors. v. A. S. Bava(2) has been sought to be pressed into service in support of the argument that extension of s. 105 (1), (1) [1962] (3) S.C.R. 786. (2) [1968] 1 S.C.R. 82. 98 is  illegal.  In that case the provisions of S. 129  of  the Sea  Customs  Act 1878 had been applied under S. 12  of  the Act.   Section  129  dealt with the  procedure  relating  to appeals  and  required an appellant to deposit  pending  the appeal  the  duty  or  penalty  imposed  and  empowered  the appellate  authority,  in its discretion, to  dispense  with such  deposit  pending the appeal in  any  particular  case. There  was a provision in the Act itself, s. 35, which  gave an  unfettered right of appeal to a person aggrieved by  any decision  or  order  made under the Act.  It  was  in  these circumstances  that  it  was held that s.  129  of  the  Sea Customs  Act  1878  could not be made applicable  so  as  to whittle down the substantive right of appeal conferred by s. 35  of  the Act.  The ratio of that decision can  afford  no assistance  to  the appellant in the present case.   By  the notification  issued  under  s.  12 of  the  Act  after  the enactment  of  Customs Act 1962, the  previous  notification under  the  Sea  Customs Act 1878 stood  superseded  and  no question  survives  with  regard  to  the  validity  of  the notification issued in 1963 and amended in 1965. On  the  third point an attempt was made to argue  that  the Assistant  Collector, while issuing the, warrant for  search and  seizure  did  not apply his mind to  the  relevant  and necessary  facts.   Our attention has been  invited  to  the warrant  itself  in  which  the  documents  have  not   been particularised or specified but the words certain documents" have  been used.  The learned single judge dealt  with  this matter  fully and repelled the contention that there was  no relevant material before the authority upon which the belief could  be founded in terms of s. 105(1) of the  Customs  Act 1962  by the Assistant Collector.  We find no merit in  this contention. The appeal fails and it is dismissed with costs.

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G.C.                     Appeal dismissed. 99