# THE COLLECTOR OF CUSTOM8, MADRAS v. K. GANGA SETTY

- **Citation:** [1963] 2 S.C.R. 277
- **Court:** Supreme Court of India
- **Decided:** 1963
- **Case number:** Civil Appeal No. 568 of 1960
- **Bench:** B. P. Sinha, 0. J .• P. B. Gajendragadkar, K. N. Wanchoo, N . .Rajagopala Ayyangar, T. L. Venkatarama Aiyar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-collector-of-custom8-madras-v-k-ganga-setty-2686
- **Pages:** 8

## Headnote

High, Oourt--Decision of Otl8toms A.utlwritits-Oonatruction of entiries in tariff Schedt1k-Jt1risdiction to interfere-
"Feed oats" u,sed horse feed-Whether falls withi,. "folder"
or "grain"-lmport Trade Control Schedule, Part JV.Item
Nos. 32 and 42-Specific Relief A.ct, 1877 (1 of 1877). •. 46
Item 42 of Part IV of the Import Trade Control Schedule
-permitted "fodder ..... " to be imported'Without a special import
licence from a soft Currency area ... Item 32 of the same Schedule related to "grain .... "and included oats;· and a licence
was necessary for importing goods covered by this item. The
respondent imported from Australia, without a liccncc,.goods
described as "feed·oats" for feeding race horses. He claimed
that the goods were covered by Item 42 and could be imported
without a licence. The customs authorities held that the goods
were "grains" within the meaning of Item 32 which could not
be imported without a licence, confiscated the goods and im;
posed a penalty in lieu of confiscation. The . respondent
moved the High Court for the issue of a writ of mandamus
under s, 45 specific Relief Act. The High Court held that the
11/U
---.
lfUloin</rJMd
c.wu.... ..
v. '
c-i•......,.,
.....,...,.,.
C..Wd Bomb111
8,.,,, J.
1952
A/Jf'il 19.
T"4 Coll~ oj
CuJloms1 M <.dr~
..
K. Conga S111t.1
278
SUPREME OOURT R.Jll>ORTS [1963J
goods we~c. covered by it':"' 42 and issued a writ prohibiting
the authormes from recovenng the penalty imposed.
ll.Zd, that the High Court had no jurisdiction to interfere with the decision of the customs authorities that the goods
fell within item 32. It is primarily for the Import Control
authorities to determine the head of entry under which any
particular commodity falls, and only when the construction
adopted is perverse arc the courts entitled to interfere. In the
present case the decision of the customs authorities was not
one which could not be supported on any reasonable basis and
could be called pcrvcne.
VenkalMvaran v. Wadluoani, A. I. R. 1961 S. C. 1506,
referred to.
Held, further that the goods imported fell within item 82
and not within item 42. Oats are undoubtedly grain. Any
particular species of grain cannot be excluded from the item
"grain" merely because it is capable of being used as cattle or
horse feed.
The matter is made clear by the reference to
"oats 11 in item 32 where grain is classified into two categories,
oats and ''other gains".

## Text

\
2 s.c.R.
SUPREME COURT REPORTS
277
declared. The Act does not contemplate an enquiry
whether the dividend is properly paid credited or
distributed before liability to pay· Tax attaches ,
thereto.
The answer to the second contention for
reasons already set out by us must be in the
negai;ive.
The appeals therefore fail and are . dismissed.
In the circumstances of the case there will be no
order as to costs.
AppeaJ,s dismiased.
THE COLLECTOR OF CUSTOM8, MADRAS
v.
K. GANGA SETTY
(B. P. SINHA, 0. J .• P. B. GAJENDRAGADKAR, K. N.
WANCHOO, N . .RAJAGOPALA AYYANGAR and
' T. L. VENKATARAMA AIYAR, JJ.)
High, Oourt--Decision of Otl8toms A.utlwritits-Oonatruction of entiries in tariff Schedt1k-Jt1risdiction to interfere-
"Feed oats" u,sed horse feed-Whether falls withi,. "folder"
or "grain"-lmport Trade Control Schedule, Part JV.Item
Nos. 32 and 42-Specific Relief A.ct, 1877 (1 of 1877). •. 46
Item 42 of Part IV of the Import Trade Control Schedule
-permitted "fodder ..... " to be imported'Without a special import
licence from a soft Currency area ... Item 32 of the same Schedule related to "grain .... "and included oats;· and a licence
was necessary for importing goods covered by this item. The
respondent imported from Australia, without a liccncc,.goods
described as "feed·oats" for feeding race horses. He claimed
that the goods were covered by Item 42 and could be imported
without a licence. The customs authorities held that the goods
were "grains" within the meaning of Item 32 which could not
be imported without a licence, confiscated the goods and im;
posed a penalty in lieu of confiscation. The . respondent
moved the High Court for the issue of a writ of mandamus
under s, 45 specific Relief Act. The High Court held that the
11/U
---.
lfUloin</rJMd
c.wu.... ..
v. '
c-i•......,.,
.....,...,.,.
C..Wd Bomb111
8,.,,, J.
1952
A/Jf'il 19.
T"4 Coll~ oj
CuJloms1 M <.dr~
..
K. Conga S111t.1
278
SUPREME OOURT R.Jll>ORTS [1963J
goods we~c. covered by it':"' 42 and issued a writ prohibiting
the authormes from recovenng the penalty imposed.
ll.Zd, that the High Court had no jurisdiction to interfere with the decision of the customs authorities that the goods
fell within item 32. It is primarily for the Import Control
authorities to determine the head of entry under which any
particular commodity falls, and only when the construction
adopted is perverse arc the courts entitled to interfere. In the
present case the decision of the customs authorities was not
one which could not be supported on any reasonable basis and
could be called pcrvcne.
VenkalMvaran v. Wadluoani, A. I. R. 1961 S. C. 1506,
referred to.
Held, further that the goods imported fell within item 82
and not within item 42. Oats are undoubtedly grain. Any
particular species of grain cannot be excluded from the item
"grain" merely because it is capable of being used as cattle or
horse feed.
The matter is made clear by the reference to
"oats 11 in item 32 where grain is classified into two categories,
oats and ''other gains".
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 568 of 1960.
Appeal from the judgment and order dated
April 6, 1956, of the Madras High Court in 0 .. S. A.
No. 147 of 1953.
H. N. Sanyal, Additional &licitor..General of
India, l'. D. Mahajan and P. D. Menon, for the
appellant.
R. Ganapathy Iyer, M. S. K. 8CUJtri and M. S.
Narasimhan, for the respondent.
1962. April 19. The Judgment of the Court We.8
delivered by
AYYANGAR, J.-The point involved in this
appeal which comes before us on a certificate of
fitneBB under Art. 133 (l)(o) granted by the High
Court of Madras ia a very short one and relates
to the nature and extent of the jurisdiction poHe&-
Md by the High Court in considering the validity
·•
. .,r- •
•
I
-
•
2 s.c.R.
SUPREME COURT REPORTS
279
of an order of the Customs Authorities interpreting
the provisions of the entries .in the Tariff Schedule
as regards the imposition of duties.
The respondent imported from Australia a
quantity of oats which was described in the indent,
contract . and shipping documents as "standard
feed-oats". The commodity imported consisted
of oats in whole grain;
The
question raised
related to the proper classification of the goods
imported under the Import Trade Control Schedules current during the period July to December
1952 when the consignment reached India. The
controversy centered round the point whether
the "feed-oats" fell within item 42 or within item
32 of the Circular. Item 42 ran:
"Fodder, bran and pollards-0.G.L.-Soft"
i.e., this item was covered by an open general
licence and so no special import licence was necessary for the import of these goods from a soft
currency area, while as regards item 32 the entry
ran:
"Grain, not otherwise speqi.fied, including
broken grain but excluding flour-
(a) oats
(b) others
-Ports -Nil-A.V."
which meant that a licenue was necessary for the
·)t
importation
of the goods specified in it whfoh
would be granted by the Joint Chief Controller of
Imports or Exports at Calcutta and Bombay, if
they were the ports of entry, and by the Deputy
Chief Controller of Imports & Exports Madras iC
they were to be imported· through Madras; "nil"
that no quotas were specified limiting the quantity
\
to be imported, & that actual users (A.U.). could
apply for the lioonoe •
J961
TA• 0.1/t<Jl•r of
Cuatoms, M•dr••
••
K. Ganga s~tly
Ayyangar J.
11181
Th. C.U,.t.rof
CusC•s, MMros
v.
X.Oanp S.tl)I
A_,,.., .. J.
280
SUPREME COURT &EPORTS [1963]
The respondent who carried on bueinees in
fodder under the name and style of BalakriAhna
Flour Mills placed an order with an Australian
firm for the supply
of whole
grain "feed-oats"
without
obtaining any licence for the import.
The goods arrived in Madras on August 1, 1952
and when the respondent attempted to clear the
goods, the Customs Authorities insisted on the
production of a licence before he would be permitted to do so.
The ABBistant Collector hold that
the goods imported foll within item 32 and 8.11
admittedly the respondent held no licence from
the Deputy Chief Controller of Imports & Exports,
Madras covering the import, there had ooen a
contravention of e. 19 of tho Sea Customs Act
read with s. 3 (2) of the Import & Export Control
Act, 194 7 and so proceeded to deal with tho violation under s. 167(8) of thl' Sea Customs Act. He
directed the confiscation of the goods and impGsed
a fine of Rs.fi,000/- in lieu of confiscation, if the
respondent desired to clear the goods.
An appeal
filed to the Collector of Customs was rejected aorl
ther~after the 1eepondent moved the High Court
for the issue of a writ of mandamus under s. 45 of
the Specific Relief Act.
In his affidavit in support of the application
the respondent besides contending that oats in
full-grain fell within
the head •fodder' under
item 4:!, set out earlier, because (1) he had imported them for being made available solely for
feeding race-horses at
Bangalore, (2) that in
South India oats was not used as human foods but
only as feed for horses, and (3) that in any event1
he had been misled by an answer that he reeeiveci
from tho Deputy Chief Controller of Importa,
Madras of whom he had made an enquiry as to
whether feed-oats could he imported under an
open general licence under serial No. 42 and had
received an aff'mnative answer
The lea.med
•
'
2 S.C.R.
SUPREME COURT REPORTS 281
~ Single Judge who heard the application dismissed it
;·.
on the ground that the order of the Customs Authorities classifying uncrushed feeds-oats as grain and
not as fodder could not be said to be either perverse or malafide and that consequently the Court
could not interfere with the decision of the autho.
rities. An appeal was perferred therefrom to a
Division Bench and the learned Judged allowed
the appeal and iBBued a direction prohibiting the
~· Collector and his subordinates from collecting or
· taking . steps to recover the fines and ptnalties
imposed on the respom'imt. It is the correctness
of this order of the Di vision Bench that is challenged in this appeal.
Shortly stated, the ground on which the learned Judges allowed the respondent's appeal were :
(1) that the decision of the Customs authorities ;is
regards the entry of the Tariff claBBification within
which an imported commodity fell was not final but
_.
was open to judicial review and had ultimately to
be decided by the Courts, ( 2) In the case before
the Court, entry 32 reading "grain" had, in the
absence of any specific entry regarding oats to be
read as excluding all grains which would be '.'fodder"
i.e., which were usually used as cattle or animal
feed, and that as the respondent had imported the
oats for use as horse-feed the proper item within
which the goods imported fell was item 42-Fodder
etc.
In arriving at this conclusion the learned
Judges referred to the answer of the Deputy Chief
Controller to the query by the respondent to which
we have adverted earlier, as a circumstance indicative of the doubts entertained by the departmental
authorities themselves on this matter.
"',
With very great respect to the learned Judges
we are unable to agree with them both as regards
the fupctio? apd jurisdictio.-i of the Court ip 111atterf!
11111
T/,. Co/U<tor of
CUHtums. Madr41
v.
K. Gai ga SlllJ
1962
Th< C.11"1" •f
Ciul•m~, N.Uru
v.
K. Gago Sett;•
A,,,,..,.,. J.
282 SUPREME COURT REPORTS [1963]
of this type, as well a.a in their actual construction
of the relevant entries in the Import Trade Circular.
As regards the limits of the jurisdiotion of the
Court it is s1'1fioient to refer to tho decision in
Venkatesvamm v. Wadhwani. (1)
That was a oase
where a party moved the High Court under Art.226
of the Constitution, and not as here under s. 45 of
the Spooifio Relief Act under whioh the power of
the Court to interfere is certainly narrower and
not wider. This Court proceeded on the basis that
it is primarily for tho Import Control authorities
to determine the head or Plitry under which any
particular commodity fell; but that if in doing so,
these authorities adopted a construction which no
reasonable person could adopt i.e., if the construotion was perverRe then it was a case in which tho
Court was compet{lnt to interfere. In other words,
if there wore two constructions which an entry
could reasonably bear, and one of them which was
in favour of Revenue was adopted, the Court has
no jurisdiction to interfera merely because the other
interpretation favourable to the subject appeals to
the Court as the better one to adopt.
In the present case it could not be
cont~nded
that uncrushed oats did not answer the desoription
of "grain" and therefore the deoision of the Customs authorities holding that the oats imported
fell within item 32 could not be said to be a view
which on no reasonable interpretation could bo
entertained.
In other words, the conclusion or
decision of the Customs authorities was rationally
supportable.
Wo consider that even if there was
no specific reference to "oats" in entry 32, any
particular species of grain cannot be excluded
merely because it is capable of being used as cattle
or horse feed. The word "fodder" is defined in
the Oxford dictionary as "dried food, hay, straw
eto. for stall feeding cattle". Without resorting to
(I) 4J.ll. [1961] s.c. IS06t
-·--
•
J
2 s.c.R.
SUPREME COURT REPORTS
283
Johnson's famous definition of "oats" in his Diotionary, it is suffioient to point out that oats, though
they may serve as food. for horses, is also used
as human food; in other words it is not by its
nature or characteristic capable of serving solely
as food for animals and incapable of use in the
human dietary. For instance, all coarse grainslike Ragi. and Khambu-.serve as food for man as
well as for cat tie. The mere fact therefore that a
grain is capable of being used as horse or other
cattle feed does not make it "fodder" excluding it
from the category of grain to which it admittedly
belongs. The decision of the Assistant Collector
and of the Collector on appeal holding the oats
imported by the respondent to be grain cannot
therefore be characterised as perverse or malafide
and in . the circumstances we consider that the
learned Judges of the High Court erred in interfering with the order of the appellant.
In this particular case however, the matter is
placed beyond the pale of controversy by the specific reference to "oats" in entry 32 where "grain" is
classified into two categories "oats" and '•other
grains". It is apparent that unfortunately .the
attention of the learned Judges was not drawn to
the entry in full, because, in the course of the
judgment they point out that the construction of
entry 42 would be different if there had been a
specific reference to oats in entry 32.
Learned CounKel for the respondent laid some
stress on the respondent having been misled by the
answer of the Deputy Chief Controller of Exports
to a query as regards the scope of entry 42. The
answer which was stated to have misled was in
these terms ;
"Feed oats classifiable under serial 42 of
Part IV can be imported under Open Genera.I
License No .. XXIII"
1111
Thi Colltctor o_f
Cuatmru, JI dri11
v.
K. Ga11g• Set!JI
1'62
Tht C.l/".'or of
CusWM, Ma,r.i11
••
K. Gonga Seliy
A:1.1""1or J.
284 SUPREME OOURT REPORTS [1963]
an anRwer b} no means a model of clarity. This
letter is dated September 14, 1951, and it is the
case of the respondent that he placed an order for
the import of "feed-oats" because he was led to
believe that for its import no licence was necessary.
The contract for the purohase of the goods for
import was entered into in the beginning of June,
J 052, but before that date the Deputy Chief Controller wrote a further letter to the rP.spondent on
January l, 1952, clarifying the answer he gave in
his eii.rlier letter, and pointing out that whereas if
the oats were in wholegrain it would fall within
item 32, but if the same was crushed, it would be
«fodder" within item 42. The respondent however,
denied having received this letter and there is no
specific finding on this point by the learned Judges
of the High Court.
Wo do not propose to record
any finding either. We are drawing attention to
this matter merely for pointing out that it is a
matt~'r which the authorities could properly take
into account in modifying, if they consider that the
rcspondt:nt haR really been misled, the quantum of
penalty imposed on the respondent.
The appeal is accordingly allowed and the
order of the Division Bench of the High Court set
aside.
The applica.tion filed by the respondent
under s. 45 of the Specific Relief Act will stand
dismissed. In the circumstances of the ease we
din·ct that the parties bear their own costs in
this Court.
Appeal allowed.
•·
..