Full Judgment Text
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PETITIONER:
UNION OF INDIA & ORS,
Vs.
RESPONDENT:
SECURITY AND FINANCE (P) LTD.
DATE OF JUDGMENT06/10/1975
BENCH:
KRISHNAIYER, V.R.
BENCH:
KRISHNAIYER, V.R.
GUPTA, A.C.
CITATION:
1975 AIR 2288 1976 SCR (2) 87
1976 SCC (1) 166
ACT:
Import controls-Power to determine the head or Entry
under which any particular commodity falls under sections
3(2) and 4 of the Import and Export (Control) Act (1947)
read with section 167 (entry 8) of the Sea Customs Act (Act
VIII) 1878.
Sea Customs Act (Act VIII) -Sections 20, 167, 183 &
184-whether an appropriate order under section 183 precludes
the authorities from levying duty under section 20-
Interpretation of two penal provisions of the import laws
and powers of the authorities
HEADNOTE:
The respondent company imported auto cycle parts under
the guise of motor vehicle parts, for which only he had a
valid license under the Import laws. In respect of certain
consignments of imports from U.K the customs authorities by
a single order dt. 14-11-1955 passed the following:
(i) acting under section 167(8) of the Customs Act it
gave an option to the respondent to pay fine in lieu of
confiscation of the goods under section 182 and (ii) acting
under sections 183 and 20 of the Customs Act to pay the
differential duty between auto parts and the motor parts.
The respondent challenged this order before the High
Court on the ground that once the power under section 183
has been exercised the authorities had no further-power to
levy the differential duty. The High Court while quashing
the order imposing penalty in lieu of confiscation directed
payment of the import duty ordinarily livable for the auto
cycle pedals imported. Against this view of the limitation
on the powers of the Collector, the Union came by way of
special leave, while allowing the appeal the Court,
^
HELD: (1) It is primarily for the Import Control
Authority to determine the head or entry under which any
particular commodity falls. Of course if a construction
adopted by the authority regarding the concerned entry were
per verse, or grossly irrational, then the Court could or
would undoubtedly interfere. [88 D].
"Ganga Setty’s case, A.I.R. 1963 S.C. 1319. followed".
(ii) The scheme of the Sea Customs Act reveals that
Import/export duty is an obligation/cast by section 20 of
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the Act. It is a tax, not a penalty; it is an innocent levy
once the eligible event occurs: it is not a punitive import
for a contravention of the law. Confiscation, penalty and
fine provided for under ss. 167 (Item 8) and 183 are of the
species of punishment for violation of the scheme of
prohibition and control [89 G].
(iii) Two legal consequences followed the importation
of pedals, uncovered by any license viz. (1) the importation
attracted duty which any importer licit or illicit had to
pay the moment customs barrier was crossed and (ii) the
commission of the offence of importing pedals without a
licence trapping the respondent in the coils of S. 167,
entry 8 inviting the jurisdiction of the authorities to
exercise their powers under ss. 182 or 183. [89 H, 90 A].
(iv) The order dual in character, although clubbed
together in a single document is valid and it does not
preclude the authorities levying duty under section 20,
since obligation under section 20 is independent of the
liability u/s 183. Non-felicitous and inept expressions used
in the order are perhaps apt to mislaid, but the intendment
is clear that what was done, was not confiscation, but
giving an option to pay a quantified fine in a places of
confiscation The order was a composite one, and is quite
legal. [90 D, 91 B-D].
7-L 1276SCI/75
88
Collector of customs v. H. S. Mehra A.I.R. 1964 Mad.
504: Shewpujanrai Indrasanrai Ltd. v. The Collector of
Customs, [1959] S.C.R. 821 referred to
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 897 of
1968.
Appeal by Special Leave from the Judgment & order dated
the 24th July, 1967 of the Delhi High Court in L.P.A. No. 54
of 1967.
G. L. Sanghi and Girish Chandra for the Appellants.
S. S. Javali (Amicas Cariae) for the Respondent.
The Judgment of the Court was delivered by
KRISHNA IYER, J. The respondent imported Auto Cycle
Pedals under the guise of motor vehicle parts for which he
had secured the relevant licence. These two articles are
different from the point of view or the law controlling
imports. As laid down in Ganga Setty’s case(1) by the Court,
it is primarily for the Import Control Authority to
determine the head or entry under which any particular
commodity falls. Or course, if a construction adopted by the
authority regarding the concerned entry were perverse, or
grossly irrational, then the court could and would
undoubtedly interfere. In the present case the High Court
has held that the view of the Customs officials could not be
considered perverse and has declined to set aside the
impugned order on that score.
Even at this stage it is appropriate to quote the order
under challenge which runs:
"M/s. The Security and Finance Ltd., Delhi
imported from U.K. the above-mentioned goods for which
they did not possess a valid Import licence issued
under Serial No. 301/Pt.IV of Import Trade Control
Schedule. The importation was therefore considered as
unauthorised. The importers were therefore in this
Custom Memo No. S24C 1276/55A dated 30-9-55 called upon
to show cause why the goods should not be confiscated
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and penal action take under s. 167(8) Sea Customs Act
read with Section 3(2) of the Import & Exports
(Control) Act. In reply to the said show cause Memo,
the Clearing Agents of the importers produced a licence
for Motor Vehicles parts, and claimed release of the
goods against the said licence. They further stated
that similar consignment has been released in the past
against similar licence. Furthermore, no public Notice
has been issued to the effect that Auto Cycle Pedals
will not be allowed clearance against Motor Vehicle
Parts licence. The arguments so advanced are not accept
able. The importers did no, avail of the personal
hearing offered to them in the said show cause memo.
ORDER
The importation of the above goods without proper
licence is prohibited under sections 3(2) and 4 of the
Import & Export (Control) Act of 1947 and Notification
issued thereunder. I accordingly confiscate the goods
(1) A.I.R. 1863 S.C. 1319
89
under section 167(8) Sea Customs Act. In lieu of
confiscation I gave an option under section 183 ibid to the
importers to clear the goods on payment of a fine of Rs.
22,600/- (rupees twenty two thousand six hundred only).
Customs duty and other charges as leviable on the goods will
have to be paid in addition before these could be cleared
out of customs control.
... Dated 14-11-55. Sd/
Dy. Collector of Customs"
Even so, the Court quashed the latter limit of the order
under challenge which had imposed penalty in lieu of
confiscation and, on top or it, directed payment of the
import duty ordinarily leviable for the auto cycle pedals
imported.
The only ground which led to this fatal consequence was
that the authorities, acting under s 183 of the Sea Customs
Act, 1878 (Act VIII of 1878) (for short, the Act), had no
further power to direct the importer-petitioner i.e., the
respondent, to pay excess duty which represents the
difference between what is leviable for motor vehicles
spares and auto cycle pedals Aggrieved by this view of the
limitation on the powers of the Collector of Customs the
appellant i.e, the Union of India, has come up this Court,
after securing special leave to appeal. The respondent was
not represented by counsel and since the point involved was
one of law and the amount involved not inconsiderable, we
requested Shri Javali, Advocate, to serve as amicus curiae.
He has argued the case with ability and we record our
appreciation of his services to the Court. Indeed, but for
his close scrutiny of the order of the Deputy Collector of
Customs we would not have perceived the mix-up and other
defects he highlighted in his submissions.
We have already stated that a fine, in lieu of
confiscation, had been imposed by the Collector of Customs.
This he did, under s. 183 of the Act, but not content with
that imposition he also directed the payment of the full
duty on the goods imported as condition precedent to the
clearing of the goods out of the ’customs control’.
Does the order under s. 183 preclude him from levying
duty under s. 20? This is the short issue before us. A close
study of the scheme of the relevant provisions, powers and
levies discloses a clear dichotomy which has escaped the
attention of the High Court. Import/export duty is an
obligation cast by s. 20 of the Act. It is a tax, not a
penalty; it is an innocent levy once the exigible event
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occurs. it is not a punitive impost for a contravention of
the law. Confiscation. penalty and fine provided for under
ss. 167 (item 8) and 183 are of the species of punishment
for violation of the scheme of prohibition and control. Once
this distinction and duality are remembered, the
interpretative process simplifies itself.
Admittedly, the respondent imported pedals uncovered by
any licence. Two legal consequences followed. The
importation attracted duty which any importer, licit or
illicit, had to pay the moment
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customs barrier was crossed. Secondly, the commission of the
offence of importing pedals without a licence caught the
offender in the coils of s. 167, entry 8, inviting the
jurisdiction of the authority prescribed under s. 182 to
confiscate the goods or, alternatively, to impose a fine in
lieu of confiscation, under s. 183, of course, if
confiscation is resorted to, the title vests in the State,
as provided in s. 184.
Import duty has to be paid inevitably in these cases,
by the importer. Confiscation or fine in lieu thereof is an
infliction on the offender or circle of offenders falling
within s. 167, Entry 8. Some times, the burden in both the
cases, falls on the same person. At other times, they may
fall on different persons. In some cases the importer as
well as the confiscate may be identified and so the duty and
the penalty may be imposed validly. In other cases it may be
difficult to get at the actual person who imported or was
concerned in the offence of importation contrary to the
prohibition or restriction clamped down by the law. In that
event, only confiscation and, alternatively, fine, may be
imposed.
Viewed in this perspective, the answer to the question
that arises for decision is simple. In the present case, as
held by the High Court, the respondent did import auto cycle
pedals outside the permit or licence. He is therefore liable
to pay import duty normally leviable from pedal importers.
He his admittedly transgressed the provisions of Entry 8 of
s. 167 by importing goods not covered by the licence and
therefore comes within the penal complex set out in ss. 182,
183 ; and 184. In the present case, the Deputy Collector,
the competent authority, has chosen to give the owner of the
goods, the respondent, option to pay, in lieu of
confiscation, a fine. He has not confiscated the goods and,
therefore, s. 184 is not operational in this context. In
short, the obligation under s. 20 is independent of the
liability under s. 183. The order, dual in character,
although clubbed together in a single document, is therefore
valid in entirety. Even so, the confusion has been caused by
the Deputy Collector failing to keep distinct the two powers
and the two liabilities and thereby leading to avoidable
jumbling.
Shri Javali rightly exposed the order impugned to the
actinic light of criticism by pointing out that this rolled
up order suffers from several infirmities, apart from its
unspeaking brevity. The Deputy Collector does not state that
he is levying duty on the importer qua importer under s. 20.
He does grievously err in the first breath confiscating the
goods (in which case the title vests in Government under s.
184) and in the very next directing payment of fine in lieu
of confiscation. Both cannot co-exist. Moreover, he forgets
that s. 167, entry 8, empowers, apart from confiscation of
the offending goods, a penalty also which is independent of
the fine in s. 183, in lieu of confiscation. This confused
and laconic order only highlights the need for some
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orientation course in law for officers who are called upon
to exercise judicial powers and write reasoned orders.
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However, we are prepared to gather from the order under
attack two levies imposed in exercise of two distinct
powers, as earlier explained. The import duty has been made
a condition for the clearance of the goods. This is right
and it is impossible to say that the said payment is not
justified by s. 20. Likewise, the authority, when it imposed
a fine, was exercising its power under s. 183. We can
readily see that he did not mean to confiscate the goods. He
only proposed to confiscate and proceeded to fix a fine in
lieu thereof. Non-felicitous and inept expressions used in
the order are perhaps apt lo mislead, but the intendment is
clear that what was done was not confiscation but giving an
option to pay a quantified fine in place of confiscation.
The order was a composite one, when read in the sense we
have explained, and is quite legal. Therefore we reach the
conclusion that the appellant is entitled to win and the
High Court was in error.
The line of reasoning which has appealed to us is
echoed in a decision of the Madras High Court reported as
Collector of Customs v. S. Mehra(1). Ramachandra Iyer, C.J.,
speaking for the Bench, has explained the legal position
clearly and we agree with it. Two decisions of this Court
were referred to before the High Court and, indeed, the
decision of the High Court proceeded on the footing that
those two decisions concluded the matter. The Madras
decision distinguishes-and for right reasons, if we may say
so with respect-those two rulings of this Court. They do not
apply to the facts of the situation before us. On the other
hand, both those cases deal with quantities of gold seized
from persons as smuggled goods. How they were imported, who
were involved in the import, and who could, therefore, be
made liable for import duty, were left blank in those two
cases. Therefore, the conditions imposed by the customs
authorities for payment of import duty could not be
supported. We will go into a little more detail to explain
those two decisions and their non-applicability to the point
we are discussing. We may state that neither of them decides
that once a find in lieu of confiscation is imposed, the
power to levy duty under s. 20 is deprived if. It is not as
if the authorities could not exercise both‘the powers, where
the facts attracted both s. 20 and ss. 182 to 184.
In Shewpujanrai Indrasanrai Ltd. v. The Collector of
Customs(2) this Court had to consider an order passed by the
Collector under the Sea Customs Act in respect of smuggled
gold. An option to pay a fine of Rs. 10,00,000/- was ordered
but the Collector tied it up with ‘ two conditions for the
release of the ’confiscated gold’. One was the production of
a permit from the Reserve Bank of India in respect of the
gold and the other was the payment of proper customs duties
in respect of the gold. Both the conditions were held to be
illegal by this Court. It was conceded-in that case by the
learned Solicitor General that there was no provision in the
Foreign Exchange Regulation Act or the Sea Customs Act under
which the Reserve Bank could give permission in respect of
smuggled gold with retrospective effect. What
(1) A.I.R. 1964 Mad, 504.
(2) [1959] S.C.R. 821.
92
is more, if it could, there would be no offence under s.
167, entry 8, and the order of confiscation itself would be
bad. As to the second condition of payment of customs duty,
there was no finding by what. means the gold was smuggled-by
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sea or by land-and therefore ii was difficult to see how s.
88 which was sought to be pressed into service could be of
any help. Indeed, the decision of the Bombay High Court in
Hormasji Elavia v. The Union of India(1) had been brought to
the notice of the learned Judges, where customs duty was
held payable under s. 88 of the Sea Customs Act, but it was
distinguished on the score that in that case the goods had
been tracked down as smuggled through the port of Kantiajal
without payment of any duty and, in those circumstances, it
was held that s. 88 applied. the manner of import, once
identified the power to levy duty could be exercised under
the appropriate Act. Therefore, Shewpujanrai (supra) is no
authority for the proposition that import duty cannot be
levied once fine in lieu of confiscation is imposed.
The later decision in Amba Lal v. Union of India(1)
also is of no. assistance. That also related to smuggled
gold. The Collector of Customs imposed conditions for the
release, in that case, of the confiscated gold. Though the
order was struck down on a concession by the learned
Additional Solicitor General, on the facts as disclosed in
that case, the contraband goods. were recovered by search
from the appellant’s house, but the authorities could not
establish by any evidence that the seized articles were
imported into India after the customs barrier was put up for
the first time between India and Pakistan. It is obvious,
therefore, that import duty could not be levied from tale
person from whom the seizure was effected.
The case before us stands clearly on a different
footing and the order imposing fine in lieu of confiscation
and also levying import duly is good. We allow the appeal
but. in the circumstances of the case. there will be no
order as to costs
S.R. Appeal allowed.
(1) Cr. Appl. 1296 of 1953 decided on 18-8-1953.
(2) [1961] 1 S. C. R. 933.
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