# [1971] 2 S.C.R. 681

- **Citation:** [1971] 2 S.C.R. 681
- **Court:** Supreme Court of India
- **Decided:** 1971
- **Case number:** Civil Appeal No. 2003 .of 1966
- **Bench:** J. C. Shah, K. S. Hegde, A. N. Grover
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/1971-2-s-c-r-681-5223
- **Pages:** 6

## Headnote

Imports & Exports (Control) Act. 18 of 1947-Imports
(Co11tro{)
Order 1955 issued under ss. 3 and 4A of Act-Sea Custom.< Act 8 of
1878-S. 3 of Act 18 of 1947 providing llhat goods to which an order
under $. 3 ( 1 ) applied would be deemed to be goods whose import & export
is prohibited under·'· 19 of Act 8 of 1878--Contrnvention ·of s. 19 punish-
<1ble by confiscation of goods and penalty u11der s. 167(8) of Act 8 of
1878-CI. 3 of 1955 Order prohibiting Import of specified 1100</s except.
under licence issued by Central Government-Contravention of conditions
of licence punishable under s. 5 of Act 18 of 1947 as amended by Act 4
of 1960-Whether good.• imported against conditions of licence can be
confiscated a~d penalty imposed on the offender under s. 5 of Act 18 of
1941 read withs. 167(8) of Act 8 of 1878.
Under s. 3 of Imports & Exports Control Act 18 of 1947 all goods to
which any order under sub-s. (I) applied shalt be deemed tn be goods
of which the Import & Export has been prohibited under s. 19 of the Sea
Customs Act 8 of 1878, and all the provisions of that Act shall have effect
accordingly.
In exercise of power conferred by ss. 3 and 4A of the Act
18 of 1947 the Central Government issued the Imports (Control) Order
1955. Clause 3 of the Order prevented the importation of any goods of
the description specified in Schedule I. except under and in accordance
wit.h a licence or a customs clearance permit granted by the Central Government or \!}' any officer specified in Sch. II. Section 5 of Act 18 of
1947 as arig1nally. enacted provided: "If any person contravenes any
order made or deemed to have been made under the Act, he shall without
any prejudice to any confiscation or penalty to which he may be liable
under the provisions of the Sea Customs Act 1878. as applied by sub-s. ::
of s. 3 be punishable with imprisonment for a term which may extend to
one year, or with fine. or with both." By the Imports & Exports (Controll
.\mendment Act 4 of 1960 contravention of any conditions of a licence
granted in accordance With the terms of any order passed under the Act
was also made punishable under s. 5.
The respondents imported certain goods from West Germany un<ler
licence granted by the Ministry of Commerce.
According to the Government the goods imported were in excess of the terms of the licence
and accordingly the respondents were charged
with having committed
offences under s. 167(8) read with s. 3(2) of Act 18 of 1947 and the
goods imported by them were confiscated.
In lieu of the confiscation.
however, a fine of Rs. 20,000/ - was imposed on the respondenb.
A
personal penalty of Rs. 25000/ - was also imposed. The respondents filed
a writ petition in the High Court which was dismissed by the Single Judge
but .allowed by the Division Bench.
With certificate the Collector
of
Customs appealed. The only question for consideration was whether for
breach of a condition of the licence penalty may be imposed under s. 5 of
Act 18 of 1947 read withs. 167(8) of Act 8 of 1878.
HELD: The appenl must be dismissed.
Fo·r breach of any condition of a licence it is open to the authorities
under s. 5 of Act 18 of 1947 as amend"<!. te direct prosecution but no
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SUPREME COURT REPORTS
[1971 J 2 S.C.R.
order confiscating goods and imposing penalty in lieu thereof could be
made. The order of confiscatien could only be made under s. 167 cl. 8
-0f Act 8 of 1878 : in terms cl. 8 of s. 167 provides for confiscation of
the goods importation or exportation of which is for the time being' prohi·
bited or restricted by or under Ch. IV of the Sea Customs Act, 1878. The
notification of which the contravention was alleged was not issued under
s. 19 of the Sea Customs Act 1878 but under the Imports & Exports
(Coiltrol) Act 1947. The High Court was therefore right in holding
that the scope of power under the Sea Customs Act was not enlarged by
the amendment to s. 5 of the Imports & Exports (Control) Act. There
is nothing in the amended s. 5 of the Imports

## Text

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ADDL. COLLECTOR OF CUSTOMS, CALCUTTA & ORS.
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v.
BEST & COMPANY
October 23, 197 0
[J. C. SHAH, K. S. HEGDE AND A. N. GROVER, JJ.)
Imports & Exports (Control) Act. 18 of 1947-Imports
(Co11tro{)
Order 1955 issued under ss. 3 and 4A of Act-Sea Custom.< Act 8 of
1878-S. 3 of Act 18 of 1947 providing llhat goods to which an order
under $. 3 ( 1 ) applied would be deemed to be goods whose import & export
is prohibited under·'· 19 of Act 8 of 1878--Contrnvention ·of s. 19 punish-
<1ble by confiscation of goods and penalty u11der s. 167(8) of Act 8 of
1878-CI. 3 of 1955 Order prohibiting Import of specified 1100</s except.
under licence issued by Central Government-Contravention of conditions
of licence punishable under s. 5 of Act 18 of 1947 as amended by Act 4
of 1960-Whether good.• imported against conditions of licence can be
confiscated a~d penalty imposed on the offender under s. 5 of Act 18 of
1941 read withs. 167(8) of Act 8 of 1878.
Under s. 3 of Imports & Exports Control Act 18 of 1947 all goods to
which any order under sub-s. (I) applied shalt be deemed tn be goods
of which the Import & Export has been prohibited under s. 19 of the Sea
Customs Act 8 of 1878, and all the provisions of that Act shall have effect
accordingly.
In exercise of power conferred by ss. 3 and 4A of the Act
18 of 1947 the Central Government issued the Imports (Control) Order
1955. Clause 3 of the Order prevented the importation of any goods of
the description specified in Schedule I. except under and in accordance
wit.h a licence or a customs clearance permit granted by the Central Government or \!}' any officer specified in Sch. II. Section 5 of Act 18 of
1947 as arig1nally. enacted provided: "If any person contravenes any
order made or deemed to have been made under the Act, he shall without
any prejudice to any confiscation or penalty to which he may be liable
under the provisions of the Sea Customs Act 1878. as applied by sub-s. ::
of s. 3 be punishable with imprisonment for a term which may extend to
one year, or with fine. or with both." By the Imports & Exports (Controll
.\mendment Act 4 of 1960 contravention of any conditions of a licence
granted in accordance With the terms of any order passed under the Act
was also made punishable under s. 5.
The respondents imported certain goods from West Germany un<ler
licence granted by the Ministry of Commerce.
According to the Government the goods imported were in excess of the terms of the licence
and accordingly the respondents were charged
with having committed
offences under s. 167(8) read with s. 3(2) of Act 18 of 1947 and the
goods imported by them were confiscated.
In lieu of the confiscation.
however, a fine of Rs. 20,000/ - was imposed on the respondenb.
A
personal penalty of Rs. 25000/ - was also imposed. The respondents filed
a writ petition in the High Court which was dismissed by the Single Judge
but .allowed by the Division Bench.
With certificate the Collector
of
Customs appealed. The only question for consideration was whether for
breach of a condition of the licence penalty may be imposed under s. 5 of
Act 18 of 1947 read withs. 167(8) of Act 8 of 1878.
HELD: The appenl must be dismissed.
Fo·r breach of any condition of a licence it is open to the authorities
under s. 5 of Act 18 of 1947 as amend"<!. te direct prosecution but no
oG82
SUPREME COURT REPORTS
[1971 J 2 S.C.R.
order confiscating goods and imposing penalty in lieu thereof could be
made. The order of confiscatien could only be made under s. 167 cl. 8
-0f Act 8 of 1878 : in terms cl. 8 of s. 167 provides for confiscation of
the goods importation or exportation of which is for the time being' prohi·
bited or restricted by or under Ch. IV of the Sea Customs Act, 1878. The
notification of which the contravention was alleged was not issued under
s. 19 of the Sea Customs Act 1878 but under the Imports & Exports
(Coiltrol) Act 1947. The High Court was therefore right in holding
that the scope of power under the Sea Customs Act was not enlarged by
the amendment to s. 5 of the Imports & Exports (Control) Act. There
is nothing in the amended s. 5 of the Imports & Expor:s (Control) Act
which warrants the view that the provisions of the Sea CU&toms Act, 1-878,
may be invoked to punish the breach of a condition of a licwce granted
•under the Imports & Exports (Control) Act, 1947. (686 B-C]
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2003 .of
1966.
Appeal from the judgment and order dated December 18,
1964 of the Calcutta High Court in Appeal No. 254 of 1963.
Ram Jan;ava~ and S. P. Nayar for the appellants.
The respondent did not appear.
The Judgment of the Court was delivered by
.
Sbab, J.
On March 31, 1959 the Ministry of Commerce
and Industry, Government of India, granted to the respondents
.a licence permitting them to import from West Germany c.ertain
machinery described therein of the maximum C.I.F. value of
Rs. 45,000/-.
Condition No. 1 of the licence provided that:
"The . . . application is accepted
and
im pDrt
licence is hereby granted having quantity and value as
the limiting factors and is not valid for clearance if the
actual value of any item exceeds the C.I.F. value indicated in the licence by more than 5%."
The respondents submitted a bill of entry dated July 1, 1960,
disclosing the C.I.F. value of the consignment as Rs. 45,179-92
inclusive of landing charges, and cleared the consignment after
paying duty assessed by the Customs authorities on the real value
<Of the goods as disclosed in the bill of entry.
On June 20, 1961 the Customs authorities issued a notice
requiring the respondents to show cause why penal actioo should
not be taken against them under s. 167 ( 8) of 'the Sea Customs
Act, 18'18,
as . being persons concerned in the unauthorised
importation of the goods.
This notice was ame11ded by notice
dated September 21, 1961, whereby the respon'dents were charg-
~d with having committed offences under s. 167(8) read with
s. 3(2) of the Imports and Exports (Control) Act, 1947, for
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C:,"OLLECTOR CUSTOMS v. BEST & CO. (Shah. ]. )
683
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illegally linporting the machinery., The respondents claimed that
no breach of the conditions of the licence was committed. The
Additional Collector of Customs, Calcutta, by order dated March
I 7, I 962, detected confiscation of the machinery under s. I 67 ( 8)
of the Sea Customs Act read with s. 3 (2) of the Imports a.nd
Exports (Control) Act, 1947, and permitted the respondents
8
to pay a fine of Rs. 20,000/- in lieu of confiscation.
A personal
penalty of Rs. 25,000/-
was also imposed on the respondoots.
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The respondents then moved a petition before the High Court
of Calcutta under Art. 226 of the Constitution praying for a writ
quashing the adjudication order dated March 17, 1962.
A
Single Judge of the Calcutta High Comt dismisesd the petition,
but in appeal under the Letters Patent the High Court reversed
the decision and issued a Writ of certiorari quashing the order
dated March 17, 1962.
The Additional Collector of Customs,
Calcutta, has appealed to this Court with certificate granted by
the High Court.
The only question which falls to be determmed is whether for
breach of a condition cf the licemce penalty may be imposed
under s. 5 of the Imports and Exports (Control) Act, 194'1,
read with the Sea Customs Act, 1878.
The relevant statutory provisions may first be noticed. Under
s. 167 of the Sea Customs Act, 1878, the offences mentioned
in the first column cf the Schedule are punishable to tl\e extent
mentioned in the third column of the same with reference to
such offences respectively :-
Section of this
Act to which offence
Offences.
has reference.
~- If any goods, the importation or
18 & 19
exp('lrtation of which is for the
time being prohibitc:d or restricted by or under Chapter IV of
this Act, be imported into or exported from India contrary to
such prohibition or restriction; or
•
•
•
•
Penalties
such goods shall be liable to be
cohfiscated; and any person concerned in any such offence, shall
be liable to a penalty'not exceeding three dmes the value of the
goods, or not exceeding one
thousand rupees,
<;hapter IV of the Sea, Customs Act, 18 7 8, contains three sec-
!tons: ss. 18, 19 & 19A.
By s. 18 an absolute prohibition "is
1mp~sed in re~pect of ,importation of_ goods by land or by sea
specified therem.
Section 19 provides that the Central Government may from time to time,
by notification ~ the Official
Gazette prohibit or restrict the bringing or taking by sea or by
684
SUPREME COURT REPORTS
[1971] 2 S.C.R.
land goods of any specified description into or our of lnciia across
any customs frontier as defined by the Central Government.
The Central Legislature enacted the Imports· ~
Exports
(Control) Act, 1947, with the object ot authorising prohibition
and control on imports and exports.
By s. 3 of that Act it was
provided:
" (I) The Central Government may, by order published in the Official Gazette, make provisions for prohibiting, restricting or otherwise controlling in all cases
or in specified classes of cases, and subject to such
exceptions if any, as may be made by or under the
order:-
(a) the import, export, carriage coastwise or shipment
as ships stores of goods of any specified description;
·
(b) the bringing into any port or place in India or
goods of any specified description intended to be
taken out of India without being removed from the
ship or conveyance in which they are being carried.
-
( 2) All goods to which any order under sub-section ( 1 ) applies shall be deemed to be goods oi which
the import or export has been prohibited under section
19 of the Sea Customs Act, 1878, and all the provisions of that Act shall have effect accordingly, except
that section 183 thereof shall have effect as if for the
word "shall" therein the word "may" were substituted.
(3)
Section 5 of the Imports and Exports (Control) Act, 194 7, as
originally enacted, prividcd :
"If any person contravenes any order made or deemed to have been made u.nder this Ac't, he shall, without prejudice to any confiscation or penalty to which
he may be liable under the provisions qf. the Sea Customs Act, 1878, as
applied by sub-section (2) of
section 3, be punishable with imprisonment for a term
which may extend· to one year, or with fine, or with
both."
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COLLECTOR CUSTOMS v. BEST & CO. (Shah. J.)
685
In exercise of the power conferred by ss. 3 and 4-A of the
hnports aind Exports (Control) Act, 194 7, the Central Government issued the Imports (Control) Order, 1955. Clause 3 of
the Imports (Control) Order prevented importation of any goods
of the description specified in Sch. I, except under,
and in
accordance with, a licence or a customs clearance permit granted by the Central Government or by aiUy officer specified in
Sch. TI.
By sub-cl. (2) of cl. 3 it was provided that if in any
case, it was found ·that the goods imported under a licence did
not conform to the description given in the licence or were shipped prior to the date of issue of the licence under which fuey
were claimed to have been imported, then, without prejudice·to
a.ny action that may be taken again.st the licensee under the Sea
Customs Act, 1878, in respect of the said importation, the
licence may be treated as having been utilised for importing the
said good>.
By cl. 5 certain conditions. could be imposed by the
Licensing Authority issuing a licence.
It may be recalled that one of the conditions of the licence
issued by the respondent was that the value .of any item shall not
exceed the C.I.F. value indicated in the ltcence by more than
5%. It was the case of the Customs authorities that the real
value of the machinery imported exceeded the aeclared value,
and on that account the respondents had infringed the conditions
of the licence.
In East India Commerclal Company Ltd., Calcutta & Anr. v. The Collector of Customs, Calcutta(1) this Court
held that s. 167 cl. 8 of the Sea Customs Act, 1878, read with
s. 3(2) of the Imports and Exports (Control) Act, 1947, authorised the imposition of penalty, if gcods were imported in co.ntravention of any order under the Imports and Exports (Control)
Act, 1947 : but the section did not, expressly or by implication
authorise confiscation of goods imported under a valid licence
on the ground that a condition of the licence not imposed by
the order was infringed.
This view was reiterated by this Court in Boothalinga Agencies
v. T. C. Porfaswami Nadar( 2 ). These cases were decided on
the tnterpretation of s. 5, of the Imports and Exports (Control)
Act, 194 7, as it stood before it was amended by Act 4 of 1960
By the Imports and Exports (Control) Amendment Act 4 of
1960, in s. 5, after the words 'any order made er deemed to
have been made under this Act,." the words "or any condition
of a licence granted under any such order" were inserted.
Contravention of any condition of a licence granted under any order
was therefore liable to be punished under s. 5 as amended.
(1) t1963) 3 S.C.R. 338.
(2) [1959] 1 S.C.R. 65.
686
SUPREME COURT REPORTS
(197 J J 2 S.C.R.
fu the present case the Customs authorities did not direct pro·
secution for contravention of any condition of a licence : they
directed confiscation of the machinery and imposed penalty in
lieu thereof. But on the terms of ~. 5 as amended, the right to
impose penalty for contravcintion of any condition ·of a liccDCe
may be exercised under the Sea Customs Act, 1878, and not
under the Imports and Exports (Control) Act, 1947. For breach
of any condition of a licence, it is open to the authorities to
direct prosecution, but no order confiscating goods and imf.OS·
ing penalty in lieu thereof could be made.
The order of confiscation could only be made under s. 167 cl. 8 of the Sea Customs Act, 1878 : in terms cl. 8 of s. 167 provides for confis·
cation of the goods importation or exportation of which is for
the time beiag prohibited or restricted by or under Ch. IV of
the Sea Customs Act, 1878.
The notification of which the
contravention is said to have been made, is not issued under s.
19 of the Sea Customs Act, but under the Imports and Export5
(Control) Act, 1947. It has not been urged before us, and
rightly, that penalty of confiscation is incurred under the provisions oi the Sea Customs Act, 1878, for breach of the conditions of the licence.
In our judgment, the High Court was right in holding that
the scope of power under the Sea Customs Act was lliot enlarged
by the amendment to s. 5 of the Imports and Exports (Control)
Act
and there is nothinl( in the amended s. 5 of the Imports
. and' Exports (Control) Act which warrants the vi~w that the
provisions of the Sea Custo~~ Act,, 1~78, may be mvok-ed. to
puhlsh the breach of a condition of a lic~ce grq,nted under the
Imports and Exports (Cotttrol) Act, 1947.
The appeal fails and is dismissed.
Th.ere will be no order
as to costs.
G.C.
Appeal dismissed.
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