# M.G.ABROL v. M/S. SHANTILAL CHHOTALAL & CO

- **Citation:** [1966] 1 S.C.R. 284
- **Court:** Supreme Court of India
- **Decided:** 1965-07-27
- **Bench:** K. SUBBA RAo, Raghubar Dayal, R. S. Bachawat
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-g-abrol-v-m-s-shantilal-chhotalal-co-3547
- **Pages:** 20

## Headnote

B
Imports and Exports (Control) Act, 1947 (13 of 1947), s. 3(1) and
(2)-Expurts (Control) Order, 1954--The Sea Customs Act, 1878 (ss. 19,
167(8) und 178--Scrap of iron and steel-Prohibition on export without
licence-Jurisdiction uf c:usronLr authorities to see whether goods in
accordance K'ith licence-Licence for 'steel skull scrap' whether description
of particular l'ariety relevant for exportability-Jurisdiction of courts to
interfere \vith decision of custonis au1horities.
In exercise of the power given in s. 3 of the Import and Export (Control) Act, 1947, the Central Go•errunent issued the Exports (Control) Order,
1954 providing that no person shall export any goods of the description
specified in Sch-:dulc 1 annexed thereto except under and in accordance
wilh a licence granted by lhe unlral Government or by any oflicer specified in Schedule II of the order.
Under the provisions of the said order
the respondents who were a firm carrying on in1port and export business,
obi..incd from the Iron anu Steel Controller a licence permiuing them to
export a certain quantity of 's1eel skull scrap'. When the goods were at
the pon they were cxaminod by an officer authorised by the Controller
who certified the goods as 'gt.eel skull scrap' fit for export under the
said export licence.
The Customs authorities however took the view
that a part of the goods wa.• not 'steel skull scrap'.
S, 3(2) ol the
fmports and Exports Act 1947, provides that goods whooe export or
import is prohibited restricted or otherwise controlled under 1, 3( I) would
be deemed to be goods whoee expon was restricted undeT s. 19 of the
Sea Customs Act, 1878, Bild all the provision.• of the said Act would
apply accordingly.
Under s. 178 of the Sea Customs Act the Customo
authorities ordered the confiscation of the scrap sought to be exported
by the respondents, but allowed it to be shipped on the respondenta'
giving a bank guarantee for payment of fine in lieu of confiscation. After
gi\ing a show cause notice the Additional Collector of CUstoms imposed
a line on the respondents in lieu of confiscation and also a personal penalty
of Rs. 35,000.
InstC"ad of aeeking remedy under the Sea Customs Act
the r"'pondents 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.
Bolh 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 he,
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 apneal 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 (I) the Customo
Authorities w<:re entitled to aee whether the gooda sought to be exported
were in accordance with the licence, and (2) the High Court should not
have exercised its jurisdic!lon under Art. 226 when alternative remedies
were provided in the Sea Customs Act.
c
D
F
G
H
•
•
•
•
4
A
B
c
D
E
M. G. ABROL V. SHANTILAL
285
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 artkles can be exported only under a licence issued by
the appropriate authority prescribed thereunder, the appropriate Customs
authority can pre•vent 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

## Text

_Characters 0–39,732 of 55,368. This is a partial read: ask again with offset=39732 for what follows._

I
M.G.ABROL
A
v.
M/S. SHANTILAL CHHOTALAL & CO.
July 27, 1965
[K. SUBBA RAo, RAGHUBAR DAYAL AND R. S. BACHAWAT, JJ.]
B
Imports and Exports (Control) Act, 1947 (13 of 1947), s. 3(1) and
(2)-Expurts (Control) Order, 1954--The Sea Customs Act, 1878 (ss. 19,
167(8) und 178--Scrap of iron and steel-Prohibition on export without
licence-Jurisdiction uf c:usronLr authorities to see whether goods in
accordance K'ith licence-Licence for 'steel skull scrap' whether description
of particular l'ariety relevant for exportability-Jurisdiction of courts to
interfere \vith decision of custonis au1horities.
In exercise of the power given in s. 3 of the Import and Export (Control) Act, 1947, the Central Go•errunent issued the Exports (Control) Order,
1954 providing that no person shall export any goods of the description
specified in Sch-:dulc 1 annexed thereto except under and in accordance
wilh a licence granted by lhe unlral Government or by any oflicer specified in Schedule II of the order.
Under the provisions of the said order
the respondents who were a firm carrying on in1port and export business,
obi..incd from the Iron anu Steel Controller a licence permiuing them to
export a certain quantity of 's1eel skull scrap'. When the goods were at
the pon they were cxaminod by an officer authorised by the Controller
who certified the goods as 'gt.eel skull scrap' fit for export under the
said export licence.
The Customs authorities however took the view
that a part of the goods wa.• not 'steel skull scrap'.
S, 3(2) ol the
fmports and Exports Act 1947, provides that goods whooe export or
import is prohibited restricted or otherwise controlled under 1, 3( I) would
be deemed to be goods whoee expon was restricted undeT s. 19 of the
Sea Customs Act, 1878, Bild all the provision.• of the said Act would
apply accordingly.
Under s. 178 of the Sea Customs Act the Customo
authorities ordered the confiscation of the scrap sought to be exported
by the respondents, but allowed it to be shipped on the respondenta'
giving a bank guarantee for payment of fine in lieu of confiscation. After
gi\ing a show cause notice the Additional Collector of CUstoms imposed
a line on the respondents in lieu of confiscation and also a personal penalty
of Rs. 35,000.
InstC"ad of aeeking remedy under the Sea Customs Act
the r"'pondents 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.
Bolh 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 he,
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 apneal 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 (I) the Customo
Authorities w<:re entitled to aee whether the gooda sought to be exported
were in accordance with the licence, and (2) the High Court should not
have exercised its jurisdic!lon under Art. 226 when alternative remedies
were provided in the Sea Customs Act.
c
D
F
G
H
•
•
•
•
4
A
B
c
D
E
M. G. ABROL V. SHANTILAL
285
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 artkles can be exported only under a licence issued by
the appropriate authority prescribed thereunder, the appropriate Customs
authority can pre•vent 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) f!owever 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
tc> be exported on a licence granted by the Iron and Steel Controller. Under
the &atement 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 categorise the scrap in the manner
coo\-enient to him; but that does not make it anythcless exportable scrap.
The licence is meant only to cover scrap not usable in India. The descrip·
tion of the scrap has no relevance to its exportability. [292. B-F]
A comparative study of other items in Schedule I annexed to the Exports
(Control) Order shows that they are different items. Obviously the licencee
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 licencee 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 gocxls for export.
The licence was therefore issued in respect
of particular goods identified by the appropriate authorities. It was not
possible therefore to say that goods other than those in respect where(\{
the licence was issued were sought to be exported. [293 A-BJ
F
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 bad 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]
G
H
(iii) If the goods were not prohibited goods, the Customs Authorities
had no jurisdiction to impose the penalty. [293 B-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-HJ
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
L6Sup.Cl/6S~
286
SUPREME COUl.T REPORTS
[1966) 1 S.C.R.
which lays down among the duties of the Iron & Steel Omtrollcr the duty
A
to chock that the material oollccted at the docks for cxpon tallied with the
material for export of which the licence had been granted. [297 B-CJ
(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 .se.Wfic<l that the material i~ 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
B
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. [;!98 G-HJ
(iii) The fact that in the Order iron and steel is mentioned as one
item and its varie1ics are not mentioned docs not mean that a licence for
one kind of scrap could be ulilisc<l to export other kinds of scrap. Clause
5 of the Order empowers the licensing authority lo impose while granting
a licence such conditions a.co 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-EJ
(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.
Moreo\"er 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 II. The certification of the goods by such
an officer did not make them exportable. [301 GJ
(v) Section 3(2) of the Exports Control Act makes the provisions of
the Sea Customs Act applicable in respect of goods whose export or
import is prohibited, restricted or controlled by an order made under
s. 3(1). The Export Contwl 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 goqds sought to be exported by the respondents.
They had power to check the goods 10 see whether they were being exponed under and in accordance with the licence. [294 F-G; 300 FJ
(vi) Since the Additional Collector of Custom• 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, v.·hcn ma/a
fuJes 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-HJ
(vii) The amount of penalty imposed by the Additional Collector was
legal and its reduction to R•. 1,000 by the single Judge was not correct. (303
DJ
Ranclwddas Atmaram v. Union of India, [1961] 3 S.C.R. 718, retied
OD,
C1v11. APPELLATE JrJRISDICTION: Civil Appeals Nos. 276, 377,
584-625 and 669 of 1963.
Appeals by special leave from the judgment and order, dated
September I, 2, 1960 of the Bombay High Court in Appeals Nos.
53, 56. 57 and 54, 51 and 58 of 1959 respectively.
c
D
E
F
G
H
•
•.
•
M. G. ABROL v. SHANTILAL (Subba Rao, J.)
287
A
Niren De, Addi. 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, 0. C. Mathur and Ravinder
B
Narain, for the respondents (in C.As. Nos. 376 and 377 of 1963).
Poras A. Mehta, J.B. Dadachanji, 0. 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.
C Opinion.
Sobba 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
D
Customs, Bombay, levying fines on the respondents in lieu of
confiscation of consignments of scrap iron exported t0 {Qreign.
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
E
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 Jong tons of steel skull scrap. The licence
F
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 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
G 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
H
was not steel skull scrap; and the matter was referred to the Iron
and Steel Controller. By his order dated March 18, 1957, the·
snid Controller informed the customs authorities that the rejected:
288
SUPllBMB COUllT ltl!PORTS
[ l 966J 1 S.C.R.
buffers, plungers and c·1sings were furnace rejects and fonncd
pan 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 rcm;1in in the temporary custody of the
shippers and permitted th~ ship to sail.
They also retained the
documents relating to t!1e goods, but later on released them oo
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 se~vcd a notice upon the firm to
show cause why the sa;d 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 fim
instance, the said petition was heard by Shel at, 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 authori7.ed 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
A
8
c
D
E
the view that the firm had suppressed certain relevant facts and
F
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 I 959, 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: (I) "Since the satisfaction
G
11
•
•
A
M. G. ABROL v. SHANTILAL (Subba Rao, J.)
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
B Controller, it was not open to the customs authorities to rely upon
the provisions of the Imports :md Exports Control Act, 194 7, 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
C 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
D
E
Judges also dismissed the appeal filed by the customs authorities
and the Union of India on the ground 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. 3 7 6 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
F
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
G 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
H
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
SU7UMB CXIURT llBPORTS
(1966) l S.C.R.
of this Court, had power to impose the penalty within the
A
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 respondents, may be put thus : Under the Export Control Order, 1954,
B
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
=ap of iron and steel as one unit and it docs not make a distinction between non-skull scrap and skull scrap nor docs that Order
define what skull scrap is.
In the circumstances when the Iron c
and Steel Controller described certain scrap as skull scrap and
gave the licence for exporting the same, it is not open lo 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
oulllet 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 foiiner.
D
The Iron and Steel Control Order, 1956, was issued by the
E
Central Government in exercise of the powers conferred on it
by s. 3 of the Essential Commodities Act aod 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
F
'·
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 ol
the description specified in Schedule I annexed thereto, except
under and in accordance with a licence granted by the Central
G
Government or by any officer specified in Schedule II 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 cus11
toms frontier as defined by the Central Government.
Under
s. 167(8) thereof the appropriate authority can confiscate the ~
•
-
M. G. ABROL v. SHANTILAL (Subba Rao, J.)
291
A 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
B
c
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
D 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.
E
F
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 description specified in Schedule I,
except under and in accordance with a licence granted by the
Central Government or by an officer specified in Schedule II.
Under the heading "Raw Materials and Articles Mainly Unmannfactured" in Part B of Schedule I, 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)
G thereof give different categories of that article.
Officers competent to grant a licence are mentioned in Schedule II and they
are (i) the Iron and Steel Controller; (ii) a Deputy Iron and Steel
Controller; and (iii) an Assistant Iron and Steel Controller. The
Statement of Export Licensing Policy issued by the Government
of India as on October 31, 1956, throws some more light on this
H 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
SUPREME COURT REPORTS
[1966] l S.C.R.
is "Iron and steel scrap".
Iron and steel scrap is divided into
two categories, namely, (a) sheet cuttings, and (b) othas. Against
the entry "sheet cuttings" certain conditions for issuing the licence
are mentioned; and against the entry "others",
the
following
remarks arc found: "Export of any other ferrous scrap is allowed
by th~ Iron "nd Stcci Controller provided he is satisfied that the
material is of no U>e 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 : 111c Exports (Control) Order recognizes scrap of iron
and steel ~" <lJl~ entity; it docs not recognize diff~rent categories
of scrap, such JS skull scrap or non-skull scrap; it permits export
of such scrap under a licence issued by the Iron and Steel Ccntrollcr, as he is the officer who regulates the trade in scrap under
A
R
c
the Iron and Steel Control Order: hut under the Policy Statement a distinction is mude between sheet cuttings and other
ferrous sc1ap; in the case of the export of the former more stringent conditi•.>ns arc imposed than in th~ cas" of the latter; and
D
in the case of the latter export is permitted if in the opinion of
the Iron and Steel Controller the mat-:rial is of no use in India.
We arc not concerned in this case with sheet cuttings, hut only
with other ferrous scrap.
The Exports (Control) Order, the
Schedules annexed thereto and the Statement of Export Licensmg
Policy do not define skull scrap at all; skull scrap i> what the
Officer think~ it i.5.
The only restrictim1 ;in the Controller giving
a licence for exp:irt of scrap is that in his opinion i: 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 Jocs not make it anytheless an exportable scrap. In
E
the circumstances it must be held that the licence covers only the
Ii'
scrap not usable in India.
The description of the scrap has no
relevance to its exportability.
A comparative study of other items in Schedule I 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 s:ime, it cannot be held that the licensee is
exporting some other item.
A different approach leads to the same position. The record
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
G
ff
M. G. ABROL V. SHANTILAL (Subba Rao, l.)
29J:
A ship for export.
The licenGe 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 id~ntified.
• B
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
c 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
D
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
E
Customs Authorities had no jurisdiction to confiscate the scrap
on the ground that the same was a mis-description.
The conclusion arrived at by the High Court is, in our view, correct.
F
G
H
If the goods were not prohibited goods, the Customs A uthorities had no jurisdiction to impose the penalty.
Lastly, it was argued that the l:figh 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.
294
SUPIU!MB COURT lll!PORTS
[1966] l S.C.R
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 w.:
have expressed in the aforesaid two appeals governs the other
appeals also.
The other appeals are also dismissed with costs.
One hearing fee.
Raghubar Dayal, J.
I regret I have to come to a different
conclusion.
A
B
I need not repeat the facts leading to these appeals as they
have been stated in the judgment of brother Subba Rao, J.
The
main question for determination in these appeals is whether the c
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
D
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 varioll' provisions relating to the powers and
I!:
jurisdiction of the Collector of Customs with respect to the export
of iron and steel for whose export there exists some prohibition
or re.striction.
· Section (3) l of the Imports & Exports (Control) Act, 1947
(Act. XVIII of 1947) empowered the Central Government to make 1
provision for prohibiting restricting or otherwise controlling the
import, export of goods of any specified description.
Sub-s. (2)
of s. 3 provide.s inter alia that all goods to which any order under
sub-s. (I) 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. (I) 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 I, 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
G
H
•
l
A
B
c
D
M. G. ABROL v. SHANTILAL (Dayal, J.)
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 I mentions the commodities subject to export control.
Group B-3 mentions scrap containing any of the metals
or ::;!;oys 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 cusE toms 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 from India contrary to such prohibition or restriction or if any attempt be made so to export any
such goods, those goods would be liable to confiscation and that
J:I
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
G ollicer of Customs to seize in any place in India either upon land
or water, or within the Indian Customs waters, anything liable to
con&.!cation under the Act. It is clear therefore that the officers
of Customs have power to seize steel scrap if it be liable to conli,,cation, that is, if it is being exported or any attempt is being
made to export it contrary to the prohibition or restriction imH posed.
U 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
SUPREME COURT REPORTS
[1966] ! S.C.R
t!J check the steel scrap which is exported for satisfying themA:
selves that it is being exported under and in accordance with the
licence issueQ. by the proper authority. Such a right of the
Customs Authof1ties. under the Act is not seriously disputed for
the respondent.
What is really contended fQr the respondent and what has been
B
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
r
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
C
licence on which reliance is placed for the respondent are :
"l. 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
D
& Steel Controller to arrange for the inspection at least
two clear days' notice is required. The Customs Antho-
,rii'ies have been informed not to pelfllit loading of scrap
before such inspection is carried out and the material
certified for shipment by an officer authorised by the
Iron & Steel Controller.
E
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 nonnnated 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 Controller's 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."
F
G
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 licence, the Iron & Steel Controller could disallow the export of such scrap which upon inspec•
HI
tion appears to be such which could be utilised in this country.
Condition 3 gives finality to the decision of the Iron & Steel ·eon-
..
~
•
•
M. G. ABROL v. SHANT!LAL (Dayal, !.)
'.!97
A troller in this respect, i.e., in respect of the scrap determined to
be such which could be utilised in India.
B
c
D
E
The decision contemplated by these conditions is not about
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 Jays 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 goods 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
F 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
G for the export of which no prohibition or restriction exists.