M.U. Isaac, J.
1. The petitioner is a partner of a firm, which carries on business as exporter of processed and deep-freezed food. Stainless steel is an article, which was at this relevant time allowed to be imported only by actual users of important industrial goods as food freezing machinery, deep freezers etc. as per a public notice, Ext. P10, dated 25-7-1966 issued by the Deputy Iron and Steel Controller. Ex. P10 was subsequently clarified by another Public notice, Ext. PI, dated 20-3-1967 issued by the Iron and Steel Controller in the Ministry of Iron and Steel, Government of India. Accordingly three licenses were issued to the petitioner by the Import and Export Controller in April and May, 1968, for import of stainless steel sheets. All that the petitioner really wanted was only stainless strips; and the goods actually imported under the above three licences were stainless steel strips. Import duty on stainless steel sheets is 100% of the cost, while the duty on the import of stainless steel strips is only 271/2%. The petitioner cleared the goods on payment of cent per cent duty. But subsequently he came to realise that he was liable to pay only 27% duty. Accordingly he made an application for refund of the excess duty collected by the Revenue. In the meanwhile the departmental internal audit had also pointed out that the duty collected from the petitioner was excessive, and that the excess should be refunded. Accordingly the excess amount collected from the petitioner was refunded to him. But then it was followed by a notice, Ext. P5, dated 18-9-1969 from the Assistant Collector of Customs, Appraising Department, Cochin stating that the petitioner, by importing stainless steel strips under the licences issued to him which were in respect of stainless steel sheets contravened the Government of India I.T.C. Order No. 17/55, dated 7-12-1955 issued under Section 3 of the Imports and Exports (Control) Act, 1947, that the goods so imported were liable for confiscation under Section 111(d) of the Customs Act, read with Section 3(2) of Imports and Exports (Control) Act, 1947, and that the importer was also liable for personal penalty under Section 112(a) of the Customs Act. Ext. P5 called upon the petitioner to show cause why the said penalties should not be imposed upon him. The petitioner showed cause against the proposed action. But his explanation was rejected by the first respondent, the Collector of Customs and Central Excise, Cochin, who, by his order Ext. P11, dated 24-3-1970, imposed on, the petitioner under Section 112(a) of the Custom Act a penalty of Rs. 10,500/-. This writ petition has been filed to quash the said order.
2. The only question that arises for determination is whether the license issued to the petitioner which was admittedly for import of stainless steel sheets covered the goods which he actually imported viz. stainless steel strips. There can be no doubt that stainless steel sheets and stainless steel strips are commercially different goods. The rates of duty on the import of these goods are also different. Ordinarily, a licence issued for import of a particular goods cannot cover any other commercially different goods. But it is contended that by virtue of the public notice, Ext. PI a licence issued for import of stainless steel sheets would cover also plates, strips and circles of stainless steel.Ext. P1 reads :-
'Attention is invited to Iron and Steel Controller's Public Notice No. 1/I-116/66-A&B;, dated 25-7-1966. It is notified for general information that the words 'Stainless Steel Sheets' used in para 2 of the public notice includes also 'Plates', 'Strips' and 'Circles'.
The aforesaid public notice may be treated to have been amended accordingly.
The above clarification shows that in the matter of import licence, 'Stainless Steel Sheets' includes 'Plates', 'Strips' and 'Circles'. I, therefore hold that a licence issued under the aforesaid public notices for import of stainless steel sheets would include plates, strips and circles of stainless steel.
3. The learned Government Pleader contends that Ext. PI only extends the concession granted in respect of stainless steel sheets to plates, strips and circles, and that sheets cannot include plates strips or circles. I am unable to accept this argument. It is for the Central Government to decide whether a licence granted for import of sheets should include or cover plates, strips and circles; and by Ext. P-l the Central Government decided by express words that sheets would include plates, strips and circles. There is nothing out of the ordinary in doing so. On the other hand, it may be strange to say that a person who is granted a licence to import stainless steel sheets cannot import under that licence strips of stainless steel. At any rate, the action taken against the petitioner is penal in character. In deciding the question whether a person has contravened a penal statutory provision, it has to be construed in favour of the alleged offender, if the said provision is capable of two interpretations, one in favour of the offender, and the other against him/On that ground also, it has to be held that the petitioner has not imported goods not covered by the licence issued to him.
4. There is also another ground which entitled the petitioner to succeed in this action. The penalty imposed against him is under Section 112 of the Customs Act, 1962. It reads :-
'112. Penalty for improper importation of goods, etc. - Any person,-
(a) who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under Section in, or abets the doing or omission or such an act, or
(b) who acquires possession of or is any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under Section 111, shall be liable
(i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding five times the value of the goods or one thousand rupees, whichever is greater,
(ii) in the case of dutiable goods other than prohibited goods, to a penalty not exceeding five times the duty sought to be evaded on such goods or one thousand rupees, whichever is the greater.'
The penalty has been imposed against petitioner under Section 112(a). I shall assume that the goods are liable for confiscation under Section 111 of the Act. Admittedly clause (i) of Section 112 has no application. It is clause (ii) that is sought to be applied. It appears to be very clear from clause (ii) that a penalty is attracted under that clause only in a case where the duty sought to be evaded on the imported good. That can happen only when goods liable to a higher rate of duty is imported under a licence which permits import of goods liable to a less rate of duty. What happened to the instant case was just the opposite. Goods which were liable under a much less rate of duty were imported under a licence which relates to goods liable to a higher rate of duty; and the higher rate was actually paid Section 112 of the Customs Act has clearly no application to such a case.
For the reasons stated above, the impugned order Ext. P-11 is quashed. There will be no order as to costs.