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Shaik Md. Omer Vs. the Collector of Customs and ors. - Court Judgment

LegalCrystal Citation
SubjectCustoms
CourtKolkata High Court
Decided On
Case NumberA.F.O.O. No. 114 of 1965 (Matter No. 99/1965)
Judge
Reported inAIR1967Cal16
ActsSea Customs Act, 1878 - Section 75; ;Passengers (Non-Tourist) Baggage Rules; ;Customs Act, 1962 - Section 125; ;Imports and Exports (Control) Act, 1947; ;Import (Control) Order, 1955
AppellantShaik Md. Omer
RespondentThe Collector of Customs and ors.
DispositionAppeal dismissed
Cases ReferredRegina v. St. Margarets Trust Ltd..
Excerpt:
- sinha, j.1. this is an appeal against an order of banerjee j., dated 30th april, 1965 whereby the learned judge has discharged the rule taken out by the appellant and made no order as to costs. the facts hi this case are shortly as follows: the appellant shaik md. omer describes himself as an industrialist who is interested in breeding and maintenance of pedigree horses. in his petition he says that ha owns several horses which are treated and kept as his pet animals & that he also owns race horses & since 1950 he started breeding horses out of mares owned by him. he owns two stallions by the name of pieta and rontgen. he further says that he has earned considerable name and reputation as a race horse owner and for racing with the horses bred by himself and he has won several prizes.....
Judgment:

Sinha, J.

1. This is an appeal against an order of Banerjee J., dated 30th April, 1965 whereby the learned Judge has discharged the rule taken out by the appellant and made no order as to costs. The facts hi this case are shortly as follows: The appellant Shaik Md. Omer describes himself as an industrialist who is interested in breeding and maintenance of pedigree horses. In his petition he says that ha owns several horses which are treated and kept as his pet animals & that he also owns race horses & since 1950 he started breeding horses out of mares owned by him. He owns two stallions by the name of Pieta and Rontgen. He further says that he has earned considerable name and reputation as a race horse owner and For racing with the horses bred by himself and he has won several prizes awarded for horse-racing. In September, 1964 the appellant went to Europe and while in Switzerland he received a letter dated October 5, 1964 from Messrs. British Bloodstock Agency Ltd.. London, informing him that one of its clients was interested in obtaining a foal by his stallion 'Pieta' from the said client's Brood Mare. It was eventually agreed by and between the appellant and the said Messrs British Bloodstock Agency Ltd., that one of its clients the Glasgow Stud Farm would lease a brown English mare to the appellant, which would be shipped to India and would be kept there pending her producing two foals by the appellant's breeding race-horse 'Pieta' after which the mare would be returned to England.

The petitioner returned to Calcutta on November 7, 1964 by air and submitted at Dum Dum Airport an international passenger's Baggage Declaration indicating that 7 unaccompanied baggages would follow him by sea or air. Eventually, a brown mare by the name of 'Jury Maid' was shipped to Calcutta by S.S. 'Chinkoa', which was due to arrive at Calcutta on or about December 25, 1964. On or about January 7, 1965 the appellant through his clearing agents submitted to the Customs authority a second Baggage Declaration for clearance of the said mare which was stated to be arriving at the Port of Calcutta by the said S.S. 'Chinkoa' on or about the middle of January, 1965. It was stated in the said Declaration Form that the said baggage comprised of one brood mare, described as a 'pet animal', not for racing but for breeding purposes only, pregnant and to be returned to the United Kingdom after she was in her next pregnancy with a Stallion in India. He states that the said Baggage Declaration Form was returned to the appellant with an endorsement dated January 12, 1965, as follows:

'It is not a case of unaccompanied baggage. The importation cannot be treated as of a pet animal. The party may file Bill of Entry in Group I for clearance.'

2. It is stated that in order to facilitate expeditious clearance of the said mare from the ship immediately upon her arrival in Calcutta, the appellant executed a bond in favour of the Collector of Customs, Calcutta, dated January 14, 1965, undertaking to submit the Bill of Entry and the relative documents within 48 hours of the delivery of the said mare from the said ship and further undertaking to pay a sum of Rupees 15,000 on the appellants failure to do so. This bond was accepted on January 16, 1965 subject to the condition that after off-loading, the Preventive Officer of the Customs would accompany the mare to the Government Veterinary College, Belgachia and the animal would remain there under Customs guard until the bond was redeemed. The mare arrived at Calcutta on January 18, 1965 and was admitted by the appellant into the Bengal Veterinary College Hospital in terms of the said bond. There was, however, a guard kept on behalf of the Customs authority to see that the mare was not removed. There was no Customs clearance permit issued, permitting the clearance of the mare. On January 20, 1965, the appellant submitted a Bill of Entry estimating the value of the animal at Rs. 5807.03 nP. Along with the Bill of Entry a certificate was annexed as given by the Additional Director of Animal Husbandry, Lucknow, U. P. Thereafter, the Customs Appraiser directed him to produce certain documents including the import trade control licence. The appellant could not produce such a licence for the simple reason that he did not have one. He however, contended that no such licence was required as the mare was a 'pet animal' and could be imported without a licence under the provisions of the passengers (Non-Tourist) Baggage Rules. On the 1st February, 1965 the Assistant Collector of Customs issued a show cause notice which is annexure I to the petition and appears at pages 35 to 38 of the Paper Book. Firstly, it states that the imported mare was a high pedigree animal used for breeding purposes and the value was under-estimated. No proper certificate from the Director of Animal Husbandry of the State of West Bengal had been produced. Secondly, the importation of such a horse required an I. T. C. licence but no such licence had been produced. The goods, therefore, had been imported in contravention of Government of India, Ministry of Commerce and Industries Order No. 17/55 dated 7th December, 1955 read with Section 3(1) of the Imports and Exports (Control) Act, 1947. The notice concluded as follows:

'You are called upon to show cause to the Collector of Customs within 7 days from the date of issue why the goods should not be confiscated and action taken against you under Section 3(2) of the Imports and Exports (Control) Act, you are also asked to state whether you would require to be heard in person. If you desire a personal hearing, this can be arranged by previous appointment with the Collector of Customs. All corroborative evidence in support of your explanation should be furnished along with your explanation.'

3. The petitioner showed cause in writing. The stand taken was that the brood mare which had been imported was a 'pet animal' and could be imported without any import Trade Control restrictions, in terms of the Import Trade Control, Government of India, Ministry of Commerce and Industry Public Notice No. 1-ITC (PN)/61 dated the 2nd January 1961. This is a notification relating to the baggage rules mentioned above. The appellant was heard before the Collector of Customs but he disallowed the contention of the appellant by his order dated 15th March, 1965, a copy whereof is annexure 'O' to the petition and is set out at pages 51 to 53 of the Paper Book. In the said order it was held that the importation was as a result of a business dealing and it was not the case of the importation of a 'pet animal' by a passenger which would be covered by the exemption granted by the Baggage Rules. The relevant part of the order is set out below:

'Shri S. M. Omer of 29, Weston Street, Calcutta imported a Brood Mare at this port but could not produce any I. T. C. licence covering its importation. The import was, therefore, considered as unauthorised as having been made in contravention of Section 3(1) of the Imports and Exports (Control) Act, 1947 read with Section 3(1) of Order No. 17/55 dated 7th December 1955 issued by the late Ministry of Commerce and Industry, Government of India a prohibition which is deemed to have been imposed under Section 11 of the Customs Act, 1962. Accordingly, the importer was called upon vide this Custom House Memo No. 837G-Gr. 1/-4/65A dated 1st February, 1965 to show cause why the goods should not be confiscated and action taken against him under Sections 111(d) and 112 of the Customs Act, 1962. In the said Memo, the importer was also given an opportunity of personal hearing.

I have gone through the submissions made by Shri S.M. Omer, As regards the contravention of I. T. C. restrictions, Shri Omer's defencewas that pet animals are allowed to be imported by passengers without I. T. C. restrictions. It is true that pet animals brought in by passengers are exempt from I. T. C. restrictions, but in the circumstances of this case I am unable to accept that the mare in question is a pet animal of Shri Omer. The mare does not belong to Shri Omer. It has been leased to Shri Omer for producing two foals in India and later return to England duly tested positively pregnant to Pieta. It is quite clearly a business deal and not a case of Importation of a pet animal. In this connection. It is also relevant that pet animals of passengers for purposes of I. T. C. exemption would be those which passengers carry with them even during their travels and which invariably stay with the passengers in their houses. From that point of view too, this particular animal cannot be considered as a pet brought by a passenger. Under the circumstances an offence warranting penal action under Section 111(d) of the Customs Act is clearly established. Since Shri Omer arranged for the importation of this animal he rendered himself liable for action under Section 112 of the Customs Act, 1962.

In view of the foregoing, I confiscate the animal in question under Section 111(d) of the Customs Act, 1962 read with Section 3(2) of the Imports and Exports (Control Act) 1947, as amended. I also impose on Shri S. M. Omer a personal penalty of Rs. 5000 (Rs. five thousand only) under Section 112 of the Customs Act, 1982, for having imported this mare in contravention of the I. T C. restrictions. The personal penalty will have to be deposited in the Customs House Treasury within 10 days.'

4. Thereupon, the appellant made an application under Article 226 of the Constitution, inter alia asking for a writ in the nature of mandamus directing the respondents in the said application not to give any effect to the confiscation order but to return the mare to the appellant and for other reliefs. This application came up for hearing before Banerjee J., and was unsuccessful as stated above, Several points were taken in the court below, but before us only two points were taken which are as follows; The first point taken is that the mare was imported as the personal baggage of the appellant and as such was not subject to import trade control restrictions, under Clause 4 or the Government of India, Ministry of Commerce and industries, Import Trade Control Public Notice No. 1-I. T. C. (PN)/ 61 dated 2nd January 1961. The second point is that under Section 125 of the Customs Act, 1962 (Act 52 of 1962), it was incumbent on the customs authority to give to the appellant an option to pay in lieu of confiscation such fine as it was thought fit to impose, before confiscation of the mare. No such opportunity was given and a confiscation was made straightway, which is contrary to law and should be struck down.

5. It may be added here that since the order was made in the court below, the mare 'Jury Maid' has died after giving birth to a foal. Now the dispute has taken a new dimension, inasmuch as, if the confiscation order stands, the foal belongs to the Customs authority. Otherwise, it must be returned to the appellant. There is a dispute going on as to the custody of the foal, but that is not necessary to be discussed here. Before I proceed to consider the two points taken above, it is necessary to notice certain provisions of the Customs Act 1962 and the Imports and Exports (Control) Act 1947 both of which are applicable to the facts of the present case. The Customs Act 1962 (hereinafter referred to as the 'said' Act) came into operation on the 19th December 1962 and has inter alia repealed the whole of the Sea Customs Act 1878, (Act VIII of 1878). The first provision to be considered is the definition in Section 2(83) of the said Act which defines the expression 'prohibited goods'. The said definition is as follows:

'(38) 'prohibited goods' means any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported nave been complied with.'

6. The next section is Section 11 of the said Act which is contained in Chapter IV, with the heading 'Prohibitions on importation and exportation of goods'. Sub-section (1) runs as follows:

'11(1) If the Central Government is satisfied that it is necessary so to do for any of the purposes specified in Sub-section (2), it may, by notification in the Official Gazette, prohibit either absolutely or subject to such conditions (to be fulfilled before or after clearance) as may be specified in the notification, the import or export of goods of any specified description.'

7. Sub-section (2) specifies certain 'purposes referred to in Sub-section (1). So far as Section 11 is concerned, there are only two notifications that could be discovered and which are set out at pages 307 to 309 of the Commentary on the Customs Act by A.N. Nanda (2nd Edn). There is no provision therein which would cover the case of the importation of a mare. The next provision to be considered is Section 111 of the said Act which is in Chapter XIV under the heading 'Confiscation of goods and conveyances and imposition of penalties'. The relevant provision therein is as follows:

'111. The following goods brought from aplace outside India shall he liable to confiscation:

xxx xxxx xx (d) any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force;'

8. Section 112 of the said Act deals with penalties for improper importation of goods. Finally we come to Section 125 of the said Act the relevant provision whereof is as follows:

'125(1) Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods,give to the owner of the goods an option to pay m lieu of confiscation such fine as the said officerthinks fit. .....'

9. It may here be mentioned that Section 11 let out above is a section which has come into the said Act, inter alia in place of Section 19 of the Sea Customs Act 1878. Section 19 of the Sea Customs Act 1878 was in the following terms:

'Power to prohibit or restrict importation or exportation of goods.

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 put of India across any customs frontier as defined by the Central Government.'

10. I now come to the provisions of the Imports and Exports (Control) Act, 1947. This is stated to be an Act to continue for a limited period powers to prohibit or control imports and exports. The relevant Section is Section 3(1) and (2) which rums as follows:

'3. Powers to prohibit or restrict imports and exports (1) 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 of 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 goodsof which the import or export has been prohibited or restricted under Section 19 of the Sea Customs Act, 1878 (VIII of 1878) and all the provisions of that Act shall have effect accordingly,except that Section 183 thereof shall have effect asif for the word 'shall' therein the word 'may'were substituted. xx xx xx'

11. Section 5 deals with penalty in the case of contravention or attempted contravention of any order made under the Act. In exercise of the powers conferred by Section 3 of the Imports and Exports (Control) Act, 1947, the Government of India has promulgated an order known as the Imports (Control) Order, 1955 dated 7th December 1955. The relevant part of the said order for our purposes is Clause 3(1) which runs as follows:

'3. Restriction on Import of certain Goodg (1) Save as otherwise provided in this order, no person shall import any goods of the description specified in Schedule I, except under, and in accordance with, a licence or a customs clearance permit granted by the Central Government or by any officer specified in Schedule II'

12. The relevant Entry is to be found in Item I of Schedule I in Part IV which is as follows:

Serial No.Name of Article.Item of First Schedule to Indian Tariff Act, 1934.

123

Part IV. 1.Animals, living all sortsI and I (1).'

13. Section 75 of the Sea Customs Act 1878 empowered the Chief Customs Authority to make rules with regard to baggage and mails. In exercise of the said power, the Central Board of Revenue promulgated the 'Passengers (Non-Tourist) Baggage Rules' by notification No. 122 dated 19-11-1960. Under the said notification, the personal baggage of a passenger may be exempted from customs duty upto the extent specified in the said notification. This includes things like personal wearing apparel articles of personal use, instruments, apparatus or appliances used in the profession or calling of a passenger, personal jewellery not exceeding Rs. 2000 in value and articles not exceeding Rs. 500 in value which could be reasonably treated as baggage or are of a kind normally used for making gifts or as souvenirs. By a notification by the Government of India, Ministry of Commerce and Industries, Import Trade Control Public Notice No. 1--ITC (PN)/61 dated 2-1-1961 the above mentioned notification of the Central Board of Revenue dated 19-11-60 was explained. The relevant part is Clause 4 which rims as follows:

'4. The clearance of one dog, pet animals and birds in a limited number may be allowed without Import Trade Control restrictions on furnishing the following health certificates to the Customs authorities:

(i) A health certificate from a veterinary Officer authorised to issue a valid certificate by the Government in the country of export to the effect that the dog imported is free from Aujossky's disease, Distemper, Rabies, Leishmaniasis and Leptospirosis and in the case of cats from Rabies and Distemper.

(ii) In the case of import of dogs and cat originating from countries where Rabies infection is known to exist, a health certificate containing a record of vaccination, the vaccine used,brew of the vaccine and the name of the production laboratory & to the effect that the dog/cat was vaccinated against Rabies more than one month, but within 12 months prior to actual embarkation with nervous tissue vaccine or within 36 months prior to actual embarkation with chicken embryo vaccine, both vaccines having previously passed satisfactory potency tests.

(iii) In the case of parrots, a certificate to the effect that the parrots were subjected to a compliment fixation test for Psittacosis with negative results within 30 days prior to actual embarkation.'

14. The first point taken in this case, directly involves Clause 4 of the last-mentioned notice issued by the Government of India as set out above. Briefly put, the argument if that the mare 'Jury Maid' was imported by the appellant and is excluded from import trade control restrictions under Clause 4, as it comes within the heading 'pet animals'. In order to consider this point, it would be necessary also to referto a public notice of import policy issued in the year April 1964 to March 1.965 published in theGazette of India Extraordinary dated 31-3-04which is as follows:

'Part and S. No of I.T.C. Schedule.Description.Lioensing Authority.Policy for Established Importers.Validity of Licenses.Remarks.

1Animals, living all sorts.Ports/CCI.Nil.Twelve months.(i)... ... ... (ii)Applications from atud farms for import ofhorses for breading purposes will be considered with-in a limited ceiling.Applications for import licenses shouldbe submitted to C. C. I. not later than the 31st May, 1964.'

The appellant does not come within the 'Remarks'Column as he has no stud--farm, no shift-farm, as mentioned therein.

15. It will be recollected that even before the mare arrived in Calcutta, the appellant gave notice to the Customs authority that one of the items in his baggage would be the mare in question. If the importation of the mare is covered by Clause 4 of the said notice No. 1 ITC (PN)/61 dated 2-1-61 then, of course, no question of import trade control restriction arises and the mare would be entitled to be imported without any license and without any duty. Therefore, the solution of the problem turns round the question as to whether the mare 'Jury Maid' can be called a 'pet animal' within the meaning of Clause 4. The argument is that horses are kept as pets and, therefore, they come within the scope of the expression 'pet animals'. This argument has been rejected by the court below and we do not think that it is a valid contention. As will appear from the facts set out above, the importation of the mare was purely a business proposition. The appellant deals in horses, especially racing horses. It was intended that he would take a lease of the mare 'Jury Maid' and it would be impregnated by his stallion 'Pieta' and then it would be returned to its owner together with the foals. This operation would be within the ordinary scope of the appellant's business. The word 'pet' has been defined in various recognised dictionaries, inter alia, as follows :---

Concise Oxford Dictionary of Current English

'Animal tamed and kept as favourite or treated with fondness'

The Shorter Oxford Dictionary.

'Any animal that is domesticated or tamed and kept as a favourite or treated with fondness,esp. applied to a lamp reared by hand.'

Chamber's Twentieth Century Dictionary.

'Any animal tame and fondled.'

16. Then is no such species of animal known as 'pet animal'. What happens is that certain kind of animals or birds are often domesticated and when a particular person becomes fond of such an animal or bird it may be said to have become a 'pet' of that person, and may be called a 'pet animal'. It is a subjective expression. In the present case, the mare 'Jury Maid' was not the 'pet' of any particular person. So far as the appellant is concerned, he had not evenseen the mare when it arrived in India. It cannot be said that he became fond of it at any relevant point of time. In actual life we find that men have at times become fond of strange animals like lions, tigers and even crocodiles. It was not intended to make the baggage rules a warrant for transforming passenger ships into a Noah's Ark. 'Pet animals' in Clause 4 means an animal usually kept as a pet, like dogs, cats and even horses. But in order to qualify, not only should the animal belong to such a class, but must be the pet of a particular person,

17. The position seems to be quite clear. Section 3 of the Imports and Exports (Control) Act 1947 gives power to the Central Government to make provisions for prohibiting, restricting or otherwise controlling the bringing into any port or place in India of goods of any specified description. Under the Imports (Control) Order 1955, Part IV Item I of Schedule I, no living animals can be imported without a license or customs clearance permit granted by the Central Government or by any officer specified in Schedule II. Next we come to the import policy notice dated 31st March, 1964 set out above by which it is laid down that there was to be no relaxation for established importers even, but application from stud farms for import of horses for breeding purposes will be considered within a limited ceiling. In such a case, however, an import license would have to be obtained. The appellant does not come within that description, for he is not an owner of a stud farm for breeding of horses. In my opinion, the Passengers (Non-Tourist) Baggage Rules do not apply at all because those rules are made under Section 75 of the Sea Customs Act 1878. But even if the said Baggage Rules, as well as the Public Notice No. 1 ITC (PN)/61 are applicable to this case, in my opinion, the mare Jury Maid' does not come under the description 'pet animals' under Clause 4 of the said notice and, therefore, was not exempted from import trade control restrictions. In other words, in order to import the said animal, the obtaining of a license under the Imports and Exports (Control) Act, 1947 read with the Imports (Control) Order 1955 was an essential pre-condition.

18. I now come to the second point argued on behalf of the appellant. That point may briefly be stated as follows: It is argued that under Section 111(d) of the said Act, any goods which are imported contrary to any 'prohibition' imposed by or under the said Act or any other law for the time being in force, would be liable to confiscation. The prohibition, if any, is under Sections (1) and (2) of the Imports and Exports (Control) Act, 1947 read with Clause 3 of the Imports (Control) Order, 1955 read with the Schedule set out above. It is argued that under Section 3 of the Imports and Exports (Control) Act, 1947 the heading is 'powers to prohibit or restrict imports and exports'. Under Sub-section (1) of Section 3 of the Imports and Exports (Control) Act, 1947, three expressions are used 'prohibiting', 'restricting' and 'otherwise controlling'. It is argued that these are three different categories altogether. En other words, 'prohibition' means absolute prohibition which is to be differentiated from restriction or control. Coming now to Clause 3 of the Imports (Control) Order, 1955 it is pointed out that the heading is 'restriction on import of certain goods'. Sub-clause (1) provides that in the case of restricted goods, a license or customs clearance permit must be obtained as a pre-condition of import. It is argued that the word 'restriction' used in the heading shows that the obtaining of a license is not a prohibition as contemplated in Sub-section (1) of Section 3 of the Imports and Exports (Control) Act, 1947. Finally, it is argued that under Section 111(d) of the said Act, there can be a confiscation only if there is an import contrary to any 'prohibition' imposed by any law for the time being in force. It is contended that in this case there is no prohibition but only restriction. Attractive as this argument may seem, it does not seem to me acceptable for the following reasons; We are concerned in this case with the word 'prohibition' used in Section 111(d) of the Customs Act 1962. I have already set out above the definition of 'prohibited goods' given In Section 2(33) of the said Act. It states that goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with are not to be considered as 'prohibited goods.' This clearly means that where there is a prohibition with a condition and the condition has not been complied with it will come within the definition ofprohibited goods'. It is true that in Section 3 (1) of the Imports and Exports (Control) Act, 1947 three expressions are used namely, prohibiting', 'restricting' and 'otherwise controlling', but it is not difficult to come to the conclusion that restriction or control which imposes a condition on import is prohibition subject to a condition, and if the condition is not complied with, then the goods are prohibited goods, in terms or Section 111 of the said Act. So far as the said Act is concerned, there can be no doubt that this if the intention of the legislature. As I have stated above, Section 11 in the said Act has come in, inter alia in place of Section 19 of the Sea Customs Act, 1878. The heading of Section 19 was 'power to prohibit or restrict the importation or exportation of goods'. While in that section, both the expressions 'prohibit' andrestrict' had been used in the repealing Section 11(1), we have mention of absolute prohibition or prohibition subject to conditions. It is clear, therefore, that the word 'restriction' has now been replaced by the expression 'prohibition' subject to such conditions as may be specified, That this is a correct way of interpreting these expressions, appears from several decisions which have been cited before UK. The first case which is almost on all fours with the point in the instant case, is a decision of the Kerala High Court Bernado Steenholf Ultrich v. Collector of Customs, Cochin, : AIR1960Ker170 . In that case the facts were as follows:

The petitioner, a national of Bolivia, was a passenger from Colombo to Genoa on the Italian passenger vessel M. V. Australia, which called at Cochin during its voyage to Genoa. The customs authorities got information that he was smuggling currency. At Cochin, the customs officers boarded the vessel and asked the petitioner to declare if he had any currency. He stated that he did not have anything to declare, excepting a small sum in his possession. Upon investigation it was found that he was taking with him in the ship, a motor car in which there was a secret chamber in which was concealed more than three lakhs of Indian currency, as also a large amount of American dollars. Thereupon, the same was confiscated. It was inter alia argued that under Section 167(73) of the said Act, there could be confiscation only if the importation of the goods was prohibited, It was argued that prohibition meant absolute prohibition under Section 18 of the Sea Customs Act, 1878 and did not apply to goods like currency in respect of which there was only a restriction. Nayar J., said as follows :--

'It is argued that apart from dutiable goods (of which there is no question in this case) this item speaks only of prohibited goods and that therefore it can apply only to goods in respect of which there is an absolute prohibition under Section 18 and not to goods like currency in respect of which there is only a restriction under Section 19 of the Sea Customs Act. It is also pointed out that both the heading of Section 8 of the Foreign Exchange Regulation Act and the body of Section 23A of that Act refer to what is imposed by Section 8 as a restriction and not as a prohibition.

But every restriction is a partial prohibition, and in fact, both Section 8 if self and the notification issued under Sub-section (1) thereof are worded in the form of a prohibition. They impose a prohibition except in cases where the general or special permission of the Reserve Bank has been obtained. Under Section 19 of the Sea Customs Act, the Central Government may prohibit or restrict the importation or exportation of goods, and I see little difficulty in viewing the so-called restrictions under Section 8 of the Foreign Exchange Regulation Act as prohibitions. It is not as if it is importation or exportation above a specified quantity or in a particular manner that is forbidden--all importation and exportation is forbidden--unless there is the general or special permission of the Reserve Bank.

All this apart, it seems to me that the term 'prohibited goods' in item 73 under Section 167 of the Sea Customs Act is only a compendious way of describing (to borrow the language of the first paragraph of item 8), goods the importation or exportation of which is, for the timebeing, prohibited or restricted by or under Chapter IV of the Act.'

19. Coming now to the facts of the instant case, Clause 3 of the Imports (Control) Order 1955 prohibits the importation of certain good except in accordance with a licence or customs clearance permit. As explained in the decision above mentioned, such restrictions may be considered as a prohibition subject to a condition and where the condition has not been satisfied, the goods are prohibited goods. In other words, where the importation of certain goods is prohibited except under a licence, and no licence has been obtained, then it may be said that the goods are 'prohibited goods' and, therefore, under Section 111(d) of the said Act the said goods are liable to confiscation. Light is thrown upon this point by several other decisions cited before us. In the Supreme Court decision, State of Maharashtra v. Mayer Hans George : [1965]1SCR123 the court was considering Section 8(1) of the Foreign Exchange Regulation Act 1947 which prohibited the bringing of gold etc. into India except with a special or general permission of the Reserve Bank and after satisfying the conditions if any prescribed therefor.

20. In exercise of the powers conferred by the said section on the Central Government, a notification was issued on 25th August 1948 to the effect that except with the general or special permission of the Reserve Bank no person shall bring or send into India, any gold etc. The Reserve Bank issued notification dated 25th August, 1948 whereby conditions were laid down for granting permission for the importation of gold etc. The object of citing this decision is to consider how the Supreme Court viewed the case of a prohibition with a condition attached. This is how Ayyangar J. puts it:

'When one turns to the main provision whose contravention is the subject of the penalty imposed by Section 23(1-A) viz., Section 8(1) in the present context, one reaches the conclusion that there is no scope for the invocation of the rule of mens rea. It lays an absolute embargo upon persons who without the special or general permission of the Reserve Bank and after satisfying the conditions, if any, prescribed by the Bank bring or send into India any gold etc., the absoluteness being emphasised, as we have already pointed out, by the terms of Section 24(1) of the Act.'

21. The position, therefore, is as follows: Under the Foreign Exchange Regulation Act read with the notice of the Reserve Bank, the Importation of gold etc., into India is prohibited except under the permission of the Reserve Bank and/or in compliance with the conditions imposed by it. This may be said to be a restriction or a prohibition with a condition. This is characterised by the Supreme Court as an 'absolute embargo' with a condition that gold etc. cannot be imported without the permission of the Reserve Bank. This supports the conclusion reached above namely, that prohibition with a condition attached is a prohibition if the condition is not fulfilled. In Pukhraj v. D. R. Kohli Collector of Excise, Madhya Pradesh, AIR 1962 SC 1569, the Supreme Court was consideringSection 8 of the Foreign Exchange Regulation Act 1947 read with Sections 23 and 23A and Section 167(8) of the Sea Customs Act, 1878 which involved confiscation of gold imported without the permission of the Reserve Bank, or without conforming with the restrictions imposed by it. Gajendragadkar J. (as he then was) said as follows :--

'This notification imposed restrictions on import of gold and silver and it has been issued under Section 8(1) of the Foreign Exchange Regulation Act, 1947. The effect of this notification, inter alia, is that except with the general or special permission of the Reserve Bank, no person shall bring or send into India any gold, coin, gold bullion, gold sheets or gold ingot, whether refined or not. Thus bringing into India gold from outside is prohibited by this notification unless the said gold is brought with the general or special permission of the Reserve Bank.'

22. This is also supported by an English case, Regina v. St. Margarets Trust Ltd.. (1958) 1 WLR 522 at p. 527. In that case, the facts were as follows: Article 1 of the Hire Purchase and Credit Sale Agreements (Control) Order, 1956, provided as follows:

'A person shall not dispose of any goods to which this order applies, in pursuance of a hire purchase or credit sale agreement .... unless the requirements specified in the Second Schedule hereto are or have been satisfied in relation to that agreement.'

The Second Schedule required inter alia, that certain specified percentages of the cash price of the goods must be paid before the signing of the agreement. The nature of this restriction or conditional prohibition came to be considered in the case. In course of his judgment, Donovan J. said:

'The words of the order themselves are a0 express and unqualified prohibition of the acts done in this case by St. Margarets Trust Ltd.' What was alleged in that case was that St. Margarets Trust Ltd. has contravened the conditions laid down in the Second Schedule. Thus, we find that a prohibition with a condition, where the condition was not fulfilled was described as an 'Express and unqualified prohibition'.

23. With reference to the Supreme Court decisions mentioned above, Mr. Gorai has argued that they are cases under the Foreign Exchange Regulation Act, 1947 and are not applicable to the facts, of this case. The Foreign Exchange Regulation Act, 1947 is an Act to regulate certain payments dealing in foreign exchange and securities and the import and export into and out of India, of currency and bullion. The relevant part of Section 8 of the Foreign Exchange Regulation Act, 1947 runs as follows :--

'8. Restrictions on import and export of certain currency and bullion. (1) The Central Government may, by notification in the official Gazette, order that, subject to such exemption. If any, as may be contained in the notification, no person shall, except with the general or special permission of the Reserve Bank and on payment of the fee, if any, prescribed, bring or send into India any gold or silver or any currency notes or bank notes or coin whether Indian of Foreign............'

24. In exercise of the power conferred by the said section on the Central Government, a notification was issued on 25th August 1948 to the effect that except with a general or a special permission of the Reserve Bank no person shall bring or send into India any gold etc. The Reserve Bank issued notification dated 25th August, 1948 whereby conditions were laid down for granting permission for the importation of gold etc. Section 23A of the Foreign Exchange Regulation Act, 1947 is in the following terms:--

'23A, Application of Customs Act. 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 Section 8, Sub-section (1) of Section 12 and Clause (a) of Sub-section (1) of Section 13 shall be deemed to have been imposed under Section 11 of the Customs Act. 1962, and all the provisions of that Act shall have effect accordingly.'

25. Section 11 of the said Act, as stated above, provides in Sub-section (1) that the Central Government if satisfied that it was necessary so to do for any of the purposes specified in Sub-section (2), may by notification in the official Gazette prohibit absolutely or subject to such conditions as may be specified in the notification, the import or export of goods of any specified description. Mr. Gorai argues that under Section 8 of the Foreign Exchange Regulation Act, 1947 the Central Government may impose a restriction by notification and under Section 23A such restrictions will be deemed to be imposed under Section 11 of the said Act, and so a notification under Section 8 of the Foreign Exchange Regulation Act, 1947 would be deemed to be a notification under Section 11(1) of the said Act. He, however, points out that in the instant case we are dealing with Section 3 of the Imports and Exports (Control) Act, 1947 and Sub-section (2) of Section 3 which makes Section 11 applicable, dots not refer to any notification but states that all 'goods'' to which any order under Sub-section (1) applies, shall be deemed to be goods of which import or export has been prohibited or restricted under Section 19 of the Sea Customs Act, 1878, which has been replaced inter alia by Section 11 of the said Act. The argument is that since there is no reference to any notification in Section 3(2), there can be no prohibition or restriction in the instant case, because no notification has been issued under Section 11 relating to horses. In fact, in the only two notifications issued under Section 11, there is no mention of horses. It is argued that unless such a notification is issued under Section 11 there cannot be said to be any prohibition under it, in spite of the provisions of Sub-section (2) of Section 3 of the Imports and Exports (Control) Act, 1947. I am unable to appreciate this argument. Under Section 23A of the Foreign Exchange Regulation Act 1947, the restrictions imposed by Section 8(1) thereof shall be deemed to have been imposed under Section 11 of the Customs Act, 1962. In such a case, a fresh notification under Section 11 was accordingly not necessary, as the deeming provision makes a notification under Section 8 (1) of the ForeignExchange Regulation Act 1947 effective as a notification under Section 11 of the said Act. Similarly, under Sub-section (2) of Section 3 of the Imports and Exports (Control) Act 1947 all goods to which any order under Sub-section (1) applies shall be deemed to be goods prohibited under Section 11 of the said Act. An order under Sub-section (1) of Section 3 has to be promulgated by a notification published in the official Gazette and where goods are prohibited by virtue of such notification, no further notification under Section 11 of the said Act is necessary. The goods will be deemed to be prohibited under Section 11 of the said Act and the notification under Sub-section (1) of Section 3 of the Imports and Exports (Control) Act 1947 must serve the purpose of a notification under Section 11 of the said Act. If a substantial notification under Section 11 was necessary, then there would be no sense in introducing a deeming provision in Sub-section (2) of Section 3 of the Imports and Exports (Control) Act 1947. Mr. Roy Choudhury has also pertinently pointed out that in part IV of Schedule I to the Imports (Control) Order, 1955 there are items like fire-arms including guns, ammunition, military stores etc., and it would be difficult to come to the conclusion that the law intended that people who imported into India such things without a license should be allowed to retain the same simply by paying a penalty. For the above reasons I think that the word 'prohibition' in Section 125 of the said Act, means not only absolute prohibition but prohibition subject to condition where the condition has not been fulfilled. In that view of the matter, it would also include restriction in the nature of prohibition with a condition. Mr. Gorai has argued that if this is the construction of Section 125 namely, that prohibition includes both absolute prohibition and prohibition with a condition and includes restriction, then it will cover the entirety of Section 111 of the said Act and nothing will be left for the operation of the latter part of Section 125(1), namely 'in the case of any other goods'. That, however, is not so. For example, Section 111(c) speaks about

'any dutiable ...... goods broughtinto any bay, gulf, creek or tidal river for the purpose of being landed at a place other than a customs port.'

In such a case, the bringing of the goods into India is not prohibited, only duty has to be paid, yet there is a provision for confiscation if the goods are landed at a place other than a customs port. Another example is Clause (h) which speaks of 'any dutiable goods unloaded or attempted to be unloaded in contravention of the provisions of Section 33 or Section 34'. In such a case, the import is not prohibited, and yet there is a provision for confiscation if the unloading is done in contravention of Section 33 or Section 34. Mr. Gorai has also argued that the obtaining of a licence cannot be called a condition. I am unable to accept this argument. If goods are prohibited from being imported except under a licence, the obtaining of a licence is clearly a condition for importation. In fact, it is a precondition.

26. For the reasons aforesaid I am of the opinion that the second point raised has not been substantiated. In other words, in my opinion, the Imports and Exports (Control) Act 1947 read with the Imports (Control) Order, 1955 and the schedule thereto, have laid down that the importation of horses into India could only be done subject to the obtaining of a valid licence or a customs clearance permit. This is a prohibition with a condition and where the condition has not been fulfilled the goods are 'prohibited goods' and comes within the mischief of Section 125 of the said Act. That being so, the adjudging officer had a discretion to impose a fine or not and was not bound to give to the appellant an option to pay fine in lieu of confiscation.

27. In the premises this appeal tails and should be dismissed. In the facts and circumstances of this case, there will be no order as to costs.

Masud, J.

28. I agree.


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