(1) This is an appeal by the Union of India against the decree of the City Civil Court which declared the penalty imposed by the Customs Collector upon the respondent-plaintiff to be invalid and directed refund of the fine recovered from the plaintiff. The plaintiff exported some semi-precious stones outside India to which restrictions under S. 12 of the Foreign Exchange Regulation Act applied. In terms of this section he was required to make certain declarations. These declarations were made by the plaintiff in the invoices dated April 6, 1956; April 9, 1956 and April 20, 1956. He declared in the first invoice that the full export value of the articles was Rs. 52,291-3-0 though the correct value was Rs. 63,305-5-0. Similarly, in the second invoice he declared the full export value as Rs. 39,256-10-0 though the correct value was Rs. 41,968-7-0, while the third invoice he declared the full export value as Rs. 30, 291-1-9 though the correct was Rs. 32, 446-10-9. On some information received by the Customs authority the premises of the plaintiff were searched on March 30, 1956. In this search, certain papers were seized under a panchnama by the Customs authority. From the papers it was discovered that invoices' value shown in the declarations was less than the real full value of the articles exported. A show-cause notice was issued to the plaintiff in March 7, 1957 alleging that he had exported his consignments in contravention of the notification issued under Section 12 (1) of the Foreign Exchange Regulation Act and that an offence under S. 167 (8) of the Sea Customs Act was committed by him. After an enquiry at which he was heard, the Collector of Customs found that in each of the cases covered by the invoices the value was understated and therefore, an offence was committed under S. 167 (8) of the Sea Customs Act read with S. 12(1) of the Foreign Exchange Regulation Act. He imposed a penalty of Rs. 9,000/- on the plaintiff. The plaintiff filed an appeal to the Revenue Board which appeal failed. Thereafter, he instituted the present suit.
(2) In the plaint, he alleged that the order of the Collector of Customs was without jurisdiction or in excess of jurisdiction the contention being that no offence is committed under S. 167(8) of the Sea Customs Act on the assumption that the declarations made by the plaintiff were untrue. In any event, he contended that the Collector had no right to impose a penalty of more than Rs. 1000 and, therefore even if he had jurisdiction, he had exceeded his jurisdiction. Apart from this, he also alleged that the rules of natural justice were violated. The last contention was negatived by the learned Judge. However, following a judgment of K. T. Desai, J. in Misc. Appln. No. 376 of 1957, D/- 3-3-1958 (Bom), the learned trial Judge held that even if the declarations made by the plaintiff were untrue, the export of the goods under such declarations would not amount to an offence under Section 167(8) of the Sea Customs Act and the question of excess jurisdiction in this view did not arise. He, therefore decreed the suit.
(3) The question relates to one of construction of the relevant provisions of the Foreign Exchange Regulation Act, 1947 (hereinafter referred to as the Act of 1947) and the Sea Customs Act, 1878 (hereinafter referred to as the Act of 1878). The relevant provisions of the Act of 1947 are Ss. 12, 22, 23 and 23A of the Act of 1947. S. 12 (1) provides:
'(1) The Central Government may, by notification in the Official Gazette, prohibit the taking or sending out by land, sea or air of any goods or class of goods specified in the notification from India directly or indirectly to any place so specified unless a declaration supported by such evidence as may be prescribed or so specified is furnished by the exporter to the prescribed authority that the amount representing the full export value of the goods has been or will within the prescribed period be paid in the prescribed manner.'
Sub-section (2) of the said section so far as it is relevant provides:
'Where any export of goods has been made to which a notification under sub-section (1) applies no person entitled to sell, or procure the sale of, the said goods shall, except with the permission of the Reserve Bank do or refrain from doing anything or take or refrain from taking any action which has the effect of securing that (b) payment for the goods .......................... does not represent the full amount payable by the foreign buyer in respect of the goods, subject to such deductions, if any, as may be allowed by the Reserve Bank, or is delayed to such extent as aforesaid..........' Sub-section (6) of the above section provides:
'For the purpose of ensuring compliance with the provisions of this section and any orders or directions made thereunder, the Reserve Bank may require any person making any export of goods to which a notification under sub-section (1) applies to exhibit contracts with his foreign buyer or other evidence to show that the full amount payable by the said buyer in respect of the goods has been, or will within the prescribed period be, paid in the prescribed manner' Section 22 of the Act of 1947 provides:
'No person shall, when complying with any order or direction under S. 19 ............................. or when making any application or declaration to any authority or person for any purpose under this Act, give any information or make any statement which he knows or has reasonable cause to believe to be false, or not true in any material particular' Section 23 of the Act provides for prosecution and penalty for contravention of the provisions of Ss. 4, 5, 9, 10, sub-section (2) of S. 12 Ss 17, 18A and 18B or of any rule, direction or order made thereunder. Sub-section (1A) makes it an offence the contravention of any provisions of the Act of 1947 or of any rule, direction or order made thereunder and prescribes punishment for the same. Sub-section (1-B) enables the court trying a contravention under sub-section (1) or sub-section (1A) and the authority adjudging such contravention to direct that any currency, security, gold or silver or goods in respect of which the contravention has taken place shall be confiscated. Section 23A of the said Act reads as follows:
'Without prejudice to the provisions of Section 23 or to any other provision contained in this Act, the restrictions imposed by sub-sections (1) and (2) of S. 8, sub-section (1) of S. 12 and clause (a) of sub-section (1) of S. 13 shall be deemed to have been imposed under S. 11 of the Customs Act, 1962 and all the provisions of that Act shall have effect accordingly' In this section, originally reference was to S. 19 of the Sea Customs Act, 1878. After the new Customs Act 1962 came to be enacted, S. 11 has been substituted for S. 19. The effect of this section is that the restrictions imposed under S. 12(1) of the Act of 1947 must notwithstanding the provisions of S. 23 of the said Act which prescribe penalty for the breach of any of the provisions of the said Act be deemed to have been imposed by the Customs Act of 1962, and inasmuch as all the provisions of the Customs Act have been made applicable, the breach thereof also becomes punishable under the Sea Customs Act.
(4) The relevant provision under which the penalty is imposed is S. 167 of the Act of 1878, and it reads thus:
'The offences mentioned in the first column of the following schedule shall be punishable to the extent mentioned in the column of the same with reference to such offences respectively.'
Clause (8) of the above section in the first column provides
'If any goods the importation or exportation of which is for the time being prohibited or restricted by or under Chapter IV of this Act be imported into or exported from India contrary to such prohibition or restriction, or
if any attempt be made so to import or export any such goods, or
if any such goods be found in any package produced to any officer of Customs as containing no such goods..............'
The second column mentions the following sections of the Act of 1878 to which the offence has reference:
'18 & 19'
The third column relating to penalties with reference to the offence in the first column reads:
'such goods shall be liable to confiscation; and any person concerned in any such offence shall be liable to a penalty not exceeding one thousand rupees'.
In the decision of this court referred to above, the learned Judge expressed the opinion that making of an untrue declaration is made an offence under S. 23 of the Act of 1947 inasmuch as making of an untrue declaration would amount to a breach of the provisions of S. 22 of the said Act. Section 23A of the Act of 1947, which contains restrictions imposed by Sections mentioned therein, does not refer to Section 22 of the Act of 1947. Therefore, a breach of S. 22 of that Act by making of an untrue declaration cannot be published under the Sea Customs Act. According to the learned Judge, in order that an offence under Section 12(1) of the Act of 1947 read with the Sea Customs Act should be committed, the goods must have been exported without making any declaration at all or by making a declaration, which, in law, does not amount to a declaration at all. According to him it was not possible to say that a declaration and therefore exporting of goods under such a declaration would not amount to an offence. The effect of this judgment is that even if an untrue declaration is made, it is still a declaration and as the goods are exported after making the declaration no offence is committed under S. 12(1) of the Act of 1947 read with S. 167(8) of the Act of 1878. In other words, if the declaration conforms to the mere form prescribed by the Act of 1947, though it is untrue no offence can be said to have been committed under those provisions.
(5) Before we go to the construction of the provisions of both the Act referred to above, we may refer to the oft quoted rules of construction which have been well summarised by Venkatarama Ayyar J. in R.M.D. Chamarbaugwalla v. Union of India, : 1SCR930 . In answer to the argument of the learned counsel for the petitioners that the language of the enactment in that case was clear and unambiguous and it was not open to the Court to read any limitation in that language, his Lordship says: (page 631)- .......Now, when a question arises as to the interpretation to be put on an enactment, what the court has to do is to ascertain ''the intent of them that make it and that must of course be gathered from the words actually used in the statute. That, however does not mean that the decision should rest on a literal interpretation of the words used in disregard of all other materials. The literal construction then', says Maxwell on Interpretation of Statutes, 10th Edn. Page 19 'has, in general, but prima facie preference. To arrive at the real meaning it is always necessary to get an exact conception of the aim, scope and object of the whole Act; to consider, according to Lord Coke: (1) What was the law before the Act was passed; (2) What was the mischief or defect for which the law had not provided: (3) What remedy Parliament has appointed: and (4) The reason of the remedy'
The Supreme Court applied these principles in the above case. It may also be stated that very often, a word may receive some qualification or some explanation by the context in which it is used and it is for this reason that the rule of interpreting the words of a section or an enactment with reference to the context has been accepted. In this connection, we may refer to the observations of Lord Fitz Gerald in Bradlaugh v. Clarke, (1883) 8 AC 354 where he quoted with approval the observations of Mr. Justice Burton which are to the following effect.
'I apprehend it is a rule in the construction of statutes that in the first instance the grammatical sense of the words is to be adhered to. If that is contrary to, or inconsistent with, any expressed intention or declared purpose of the statute, or if it would involve any absurdity, repugnance, or inconsistency, the grammatical sense must then be modified, extended or abridged, so far as to avoid such an inconvenience, but no farther'.
Under s 167 (8) of the Act of 1878, what is made penal is the import or export of goods contrary to the prohibition or restriction. Now, the question is whether the plaintiff exported the goods contrary to the prohibition or restriction. The prohibition or restriction is contained in S. 12(1) of the Act of 1947, which requires that an exported must furnish a declaration that the amount representing the full export value of the goods has been or will within the prescribed period be paid in the prescribed manner. Now, the declaration that is to be furnished is required under the rules to be in a particular form. This form is in the First Schedule to the Foreign Exchange Regulation Rules, 1952 contained in the India Sea Customs Manual, Vol. II at page 105, Edn 1959. It requires the number of Shipping Bill to be stated; and rupee value to be stated and certain other particulars . Item No. 5 of the declaration requires that the mode of payment to be received in India be stated. There are five modes in which the payment can be received, and lastly, it requires an exporter to declare that he is a seller or consignor of the goods in respect of which the declaration is made and the particulars give above are true and (a) that the invoice value declared is the full export value of the goods and is the same as that contracted with the buyer; (b) that this is a fair valuation of the goods which are unsold'. Clause (a) or (b) not applicable is to be struck out.
(6) Mr. Hegde for the respondent, supported the judgment of the learned trial Judge contending that the words in S. 12(1) of the Act of 1947 viz. 'the amount representing the full export value of the goods' must necessarily indicate that there is some allowance for the error of margin and, therefore the section cannot be read to mean that the declaration must be a correct declaration. Moreover, he says that this is a penal and restrictive provision and therefore it should be strictly construed. It is possible to assume that there may be a margin of error under certain circumstances. But that does not mean that the exporter is entitled to make deliberately a false declaration. This is made clear by S. 22 of the Act of 1947. It is impossible to construe the word 'declaration' by itself and give its ordinary meaning which may mean any statement that a person may make. This certainly could hardly be the intention of the legislature in making the enactment. The declaration under S. 12(1) of the said Act is required for a specific purpose, the purpose being to ensure that the full export value of the goods is received in this country and no amount of the value of the goods exported is kept back in a foreign country. This provision is made in the interest of the economy of the country. The provisions of sub-section (2)(b) of S. 12 prohibit the person exporting from taking any steps which would affect the securing the payment of the full value of the exported goods. Clause (b) gives power to the Reserve Bank to verify and examine whether the declaration made does in fact represent the full amount or the full value of the goods exported. This provision clearly indicates that what is intended to be declared is the true and full value of the goods exported and not any declaration irrespective of the correctness of the value. This is made equally clear by the provisions of S. 22 of the Act of 1947 which require that every declaration made under the Act must be a true declaration and not a declaration which is known to the maker to be untrue or which he has reason to believe to be false or untrue in any material particular. These provisions would suggest that the declaration must be true. Having regard to the purpose of the enactment of the Act of 1947 and to the relevant sections thereof the word 'declaration' 'an have but one meaning and that is 'a true declaration'.
(7) It is true that in S. 23A of the Act of 1947 reference is made only to S. 12(1) of the said Act and to no other sub-section thereof. However, the first question is to find out the real content of sub-section 12(1) and determine the restrictions under it. Once the content of the restriction is decided that restriction becomes one under the Sea Customs Act and all its provisions become applicable. The language of S. 23A of the said Act is capable only of this construction for it does not say that S. 12(1) shall be deemed to be part of the Sea Customs Act or shall be deemed to be incorporated therein. It makes the restrictions imposed under S. 12(1) of the Act of 1947 to be imposed under the Sea Customs Act.
(8) Even assuming, for a moment, that in determining the ambit of Section 12(1) other provisions of the Act of 1947 cannot be referred to, even so, S. 12(1) of the said Act itself indicates that the declaration has to be a true declaration, because it requires that the declaration shall be that the amount represents the full export value of the goods and that it has been paid or will be paid as prescribed. Having regard to the fact that the full export value has to be assured the declaration must state the full export value, which again means the correct value.
(9) According to Mr. Hegde, an incorrect statement made is punishable under S. 23 of the Act of 1947 and, therefore, no action can be taken under S. 167(8) of the Sea Customs Act. But then, S. 23 of that Act would be applicable in cases where an untrue declaration is made whether or not the goods are exported. If the goods are exported without making the necessary declaration that the full value shall be paid, then it becomes an offence under S. 167(8) of the Act of 1878 read with S. 12(1) of the Act of 1947. The nature of the two offences is different. Whatever the form of the declaration if the effect of it is that the payment of the full value of the exported goods is not assured then the export is in contravention of S. 12(1) of the Act. To accept the contention would almost make the restriction valueless and fail to achieve its purpose.
(10) Nothing much can be made of the words 'representing the full export value of the goods' in sub-section (1) of Section 12 of the Act of 1947, because very often the amount in foreign currency has to be equivalent to the Indian currency and it is to indicate this aspect of the matter that the said words have been used in the said sub-section.
(11) For the reasons stated above, it is impossible to hold that the penalty imposed by the Collector of Customs was without jurisdiction.
(12) As to the limitation on the power of the Customs authority to impose the penalty, the decision of this court that the power is limited to the imposition of a penalty of Rs. 1000 has been overruled by the Supreme Court. The order, therefore, made by the Customs authority cannot be challenged on this ground.
(13) In the result we allow the appeal and dismiss the plaintiff's suit with costs throughout.
(14) Appeal allowed.