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The Collector of Customs Vs. the Calcutta Cycle Syndicate - Court Judgment

LegalCrystal Citation
SubjectCustoms
CourtKolkata High Court
Decided On
Case NumberA.F.O.O. No. 167 of 1960
Judge
Reported inAIR1964Cal225
ActsSea Customs Act, 1878 - Sections 19, 163, 183, 167(8) and 167(37); ;Imports and Exports (Control) Act, 1947 - Section 3 and 3(2)
AppellantThe Collector of Customs
RespondentThe Calcutta Cycle Syndicate
Appellant AdvocateG.P. Kar and ;A.K. Banerjee, Advs.
Respondent AdvocateP.P. Ginwalla and ;T.K. Bose, Advs.
DispositionAppeal partly allowed
Cases ReferredF. N. Roy v. Collector of Customs
Excerpt:
- bose, c.j. 1. this is an appeal from an order of sinha, j., dated the 19th may, 1960, making a, rule issued under article 226 of the constitution absolute.2. the respondent calcutta cycle syndicate is a registered partnership firm carrying on business at no. 3, bentinck street calcutta as dealers in cycles and parts and accessories of cycles including auto cycles. between 20th december, 1956 and 31st december, 1956, the respondent entered into a contract with rajdhani motors carrying on business at kashmere gate, delhi, for purchase of about 60,000 pieces of auto cycle chains measuring 1/2' x 3/16' x 104 links of japanese manufacture at the rate of rs. 24/- per dozen. under the terms of the said contract which was entered into by correspondence, the respondent agreed to pay the amount of.....
Judgment:

Bose, C.J.

1. This is an appeal from an order of Sinha, J., dated the 19th May, 1960, making a, Rule issued under Article 226 of the Constitution absolute.

2. The respondent Calcutta Cycle Syndicate is a registered partnership firm carrying on business at No. 3, Bentinck Street Calcutta as dealers in cycles and parts and accessories of cycles including auto cycles. Between 20th December, 1956 and 31st December, 1956, the respondent entered into a contract with Rajdhani Motors carrying on business at Kashmere Gate, Delhi, for purchase of about 60,000 pieces of auto cycle chains measuring 1/2' x 3/16' x 104 links of Japanese manufacture at the rate of Rs. 24/- per dozen. Under the terms of the said contract which was entered into by correspondence, the respondent agreed to pay the amount of the bank drafts on Rajdhani Motors and to look after the formalities regarding the clearance of the consignment from the customs at the Calcutta Port and also to pay the customs duty and clearing charges on behalf of Rajdhani Motors. It was further provided, under the said contract that all the documents would be sent to Rajdhani Motors after the clearance of the consignment with a statement of payment made on their behalf. At or about the same time, the respondent entered into another contract with Messrs. S. Nath and Co., of 6, Esplanade Road, Delhi, upon substantially similar terms for the supply of further 60,000 pieces of auto cycle chains of the same description. This contract was entered into verbally between the parties. On or about 24th December, 1956, S. Nath and Co., placed an order for the said goods with Messrs. Nigam Brothers of Calcutta, who are the agents in India of a Japanese company carrying on business in Osaka, Japan, under the name and style of Asia Machinery Trading Co., Ltd. On the same date S. Nath and Co., opened a letter of credit with Hind Bank Ltd., in favour of the Asia Machinery Trading Co., Ltd., for the invoice value of the said goods in terms of the contract between S. Nath and Co. and the said Japanese Company. The respondent guaranteed to the Hind Bank Ltd., that it would make payment of the drafts drawn against the said letter of credit. On or about 10th January, 1957, Rajdhani Motors similarly placed an order with Nigam Brothers for supply of the said auto cycle chains by the said Asia Machinery Trading Co., Ltd. On 16th January, 1957, Rajdhani Motors opened a letter of credit with the Hind Bank Ltd., in favour of the Japanese Company for the full invoice value of the goods and the respondent similarly guaranteed payment of drafts drawn against the said letter of credit. The Japanese company shipped 250 cases of the said goods in part fulfilment of its contract with S. Nath and Co., and on or about 31st January, 1957 the respondent made payment to the Hind Bank of the bill of exchange drawn by the Japanese company for the price of the said 250 cases. It appears that the payment made by the respondent as guarantor was credited to the ac-count of S. Nath and Co., and thereafter appropriated by the bank towards payment of the bill of exchange drawn by the Japanese company on S. Nath and Co. Upon such payment the bank released the shipping documents to the respondent as agent of 5. Nath and Co., and the respondent instructed the clearing agent Messrs. Nalini Bandho Ray and Co. to clear the goods on behalf of S. Nath and Co. On 2ist February, 1957, the said goods were cleared and the respondent paid the customs duty after 10 cases of the said 250 had been selected at random by the customs authorities for examination. Thereafter the Japanese company shipped a further 53. cases in completion of the deliveries under the contract with S. Nath and Co., and drew a further bill of exchange against the said letter of credit for, the price of the said 53 cases. On, or about 25th March, 1957, the respondent paid the amount of the bill of ex-change as guarantor and obtained the shipping documents relating to the said 53 cases and instructed Messrs. Akshoy Kumar Ghosh as dealing agent to clear the said consignment of 53 cases on behalf of S. Nath and Co. The said Means. Akshoy Kumar Ghosh thereupon completed the bill of entry with respect to the 53 cases and submitted the same to the customs authorities. The Shed Appraising Staff of the customs upon instruction received from the Scrutinising Appraises of the customs opened 5 cases at random and checked the goods and the duty on the said good was thereafter calculated at 471/4% and returned the bill of entry to the clearing agent on or about 5th April, 1957. But before the clearing agent actually cleared the goods, the customs authorities reviewed the classification and assessment and made arrangement for all the 53 cases to be opened for examination of their contents. This examination was completed on or about 28tb June, 1957, and only 3 of the said 53 cases were found to contain goods of the contract description conforming to the description declared in the bill of entry and stated in the invoice of the Japanese supplier and other documents. The remaining 50 cases were found to contain cycle chains of size 1/2' x1/2' x 104 links on which the proper duty payable was 731/2 and the import of which was prohibited except under a licence under Serial No. 301/IV of the schedule to the Import Control Order. But the import licence of S, Nath and Co., was not under the said serial number and did not cover the said goods. In or about 1957 the Japanese company shipped a further 303 cases of good's in fulfilment of the contract with Messrs. Rajdhani Motors, The said consignment arrived in Calcutta on or about 5th April, 1957, by s. s. 'State of Travancore-Cochin'. On or about 16th April, 1957 the respondent as guarantor paid to the Hind Bank She amount of the bill of exchange drawn by the Japanese company on Rajdhani Motors against the Letter of Credit opened by Rajdhani Motors with the bank. The amount was first credited to the account of Rajdhani Motors and thereafter appropriated by the Bank towards payments of the bill of exchange. Thereafter the respondent obtained from the bank the Bill of Lading and other shipping documents relating to the consignment and instructed Messrs. Akshoy Kumar Ghosh to clear the said goods. The said clearing agentcompleted the Bill or Entry with respect to those cases and submitted it to the Customs authorities. The Shed Appraiser's Staff opened 5% of the said 303 cases at random for appraisement and checking and assessed the duty at 47 1/4%. But before the goods were actually cleared, there was review of assessment and classification by the Customs authorities and upon such examination it was found that only 15 cases contained goods of the description entered in the Bill for Entry and the documents of the supplier and the remaining 288 cases contained cycle chains of size 1/2' x 1/8' x 104 links, the import of which was prohibited without a licence and the import licence of Rajdhani Motors did not cover the said goods. Thereafter on 26th March, 1958 notices were issued by the Assistant Collector of Customs to Messrs. Rajdhani Motors and Messrs. S. Nath and Co., to show cause why action should not be taken against them under Section 167 (8) of the Sea Customs Act read with Section 3 of the Import and Export Control Act and Section 19 of the Sea Customs Act and the relevant Ministry of Commerce and Industries Order No. 17/55 dated the 7th December, 1955. Similarly notices were served upon the' respondent to show cause why action should not be taken against the respondent under Section 167 (8) of the Sea Customs Act as a person concerned in the alleged offence of illegal importation. The respondent duly replied to the said notice and asked for a personal hearing and pointed out that they were neither importer nor supplier and stated as follows: -

'We only undertook to purchase the goods subsequent to their clearance out of tbe Customs Control, We undertook to purchase Roller Chains of size 1/2' x 3/16' x 104 links from the above party and it is not understood how a local buyer acquiring subsequent interest in the goods after importation was the person concerned in the importation of the offending goods. We therefore deny that we are the persons concerned for importation of the goods. Not being the importers or the suppliers, we do not know why or how the goods other than those described in the indent of the importers of the Sale Note of the Suppliers have been found in the packages now under detention by the Customs Department. We do not intend to be the scape goat of the importers and are in a position to refute the allegations of alleged misuse of their licence by us.'

3. A somewhat similar reply was given by the respondent with regard to the show cause notice relating to the consignment of the 53 cases of goods purchased through S. Nath and Co. On 28th May, 1958, a personal hearing was given to the respondent by the Deputy Collector of Customs, Calcutta. Thereafter the respondent also appeared before the Collector of Customs and had a farther personal hearing before the said officer. But no order was made so far as the respondent was concerned in respect of the said, proceeding for adjudication. About a year later the respondent received a further notice dated 27/29th June, 1959 from tbe Collector of Customs to show cause why penal action should not be taken against the respondent under Section 167 (8) of the Sea Customs Act as a person concerned in the unauthorised importation of the said 53 and 303 cases and another consignment of 218 cases which is not thesubject-matter of the present appeal. The respondent duly replied to the said notice to show cause and asked for a personal bearing. This notice to show cause issued by the Collector of Customs suggests that there was a pre-planned conspiracy to import chains of size 1/2' x 1/8' x 104 links and that the respondent was a party to the alleged conspiracy and tbe said notice did not call upon the respondent to show cause why goods should not be confiscated. It appears that on or about 4th July, 1959, the Collector of Customs purported to pass two orders against Messrs. S. Nath and Co., and Messrs. Rajdhani Motors for confiscation of all the said 53 and 303 cases of goods without any option to pay fine in lieu of confiscation on the ground that all the said goods were unclaimed and all the parties concerned disclaimed ownership. The respondent challenged the legality of these orders of confiscation by a letter written to the Customs authorities on 18th September, 1959, on the ground that the notice should have been issued to the respondent as the respondent had paid for the said goods and was the owner thereof before any order of confiscation had been made. On or about 24th September, 1959, the respondent moved this Court under Article 226 of the Constitution and obtained a Rule Nisi. This Rule finally came up for hearing before Sinha, J., who by his judgment and order dated 19th May, 1960, made the Rule absolute. It is against this order of Sinha, J., that the present appeal has been preferred.

4. A short point which has been urged before us on behalf of tbe appellant is that the respondent was not entitled to any notice to show cause against action being taken for confiscation of the goods under Section 167 (8) of the Sea Customs Act before the orders confiscating the goods were passed on 4th July, 1959, against S. Nath and Co., and Rajdhani Motors. It is submitted that under Section 29 of the Sea Customs Act upon the importation of any goods the owner of such goods has to declare in the Bill of Entry or shipping bill the real value, quantity and description, of such goods to the best of his knowledge and belief and has to subscribe a declaration of the truth of such statement at the foot of such bills. As in the present case in the respective Bill of Entry S. Nath and Co., and Rajdhani Motors were declared to be the importers and the Bill of Entry was submitted before the Customs in their names, it was presumed that they were the importers and owners of the said goods, because as pointed out, under Section 29 it is the owner of the goods who is called upon to file a Bill of Entry, and accordingly they were given notice to show cause why confiscation of the goods should not be ordered in respect of the goods which had been imported in contravention of the prohibition or restriction upon importation of such goods. It is further submitted that it was not incumbent upon the Customs authorities to issue any notice to persons who had acquired any interest in the goods subsequent to importation or who had not declared themselves as owners or as having any interest in the goods, in the Bill of Entry or the invoice relating to the goods or in the other relevant documents relating to the importation of the said goods. The respondent had emphatically denied in the correspondence, to which reference has already been made, that they were either importers or suppliers of the goods. Their case was that they were guarantors for making payment of the bank drafts which would be drawn upon S. Nath and Co., or Messrs. Rajdhani Motors and they had agreed to purchase roller chains of size 1/2' x 3/16' x 104 links from the said parties and not goods of the size of 1/2' x 1/8' x 104 links. Their further case was that they had undertaken to purchase the goods subsequent to their clearance out of the Customs control and therefore they should not be regarded as a person concerned in the importation of the goods.

5. Reliance is placed on an unreported decision of the Bombay High Court in Misc. Case No. 196 of 1952, (Chhogumal Kodumal v. Collector of Customs and Union of India, judgment D/- 4-9-1952 by Tendolkar, J.) in support of this argument. In this case one Hassanali Brothers indented under their import licence 9,000 dozens optical frames from a firm in New York. They sold the goods before the arrival to Messrs. Hansraj Shadilal Jain, who in their turn sold them to Messrs. Kodumal Motiram, which was a business carried on by Chhogumal Kodumal. This sale to Kodumal Motiram was effected on 10th October, 1949. The consignment arrived in 30 cases on 9th January, 1930, and was cleared on behalf of Messrs. Hasanali Brothers upon payment of customs duties and other charges. It was subsequently discovered that these cases contained not optical frames but goggles. The import of goggles was at this time prohibited and so the Collector of Customs had issued a notice to show cause to Hassanali Brothers why action should not be taken against them under Section 167 (8) of the Sea Customs Act and Section 167 (37) of the Act. An enquiry was held and an order of confiscation was made on 5th July, 1950, and a penalty was imposed of Rs. 2,500/-on Messrs. Hassanali Brothers and Rs. 5,000/- on Chhogumal Kodumal as a person concerned in the commission of offence under Section 167 (8) and Section 167 (37) of the Sea Customs Act. Upon departmental appeal, the appellate authority reduced the penalty imposed on Chhogumal Kodumal. Against this decision a representation was made to the Central Government but with no effect. Thereafter Chhogumal Kodumal challenged the order under Article 226 of the Constitution on the ground that he was entitled to notice of any enquiry relating to confiscation of the goods and in any event no penalty could be imposed upon him without his being heard. Tendolkar, J., after referring to the words of Section 29 of the Sea Customs Act observed: -

'Therefore, the offence of importing any goods in contravention of any restrictions placed on the import of goods by the Union of India under Section 19 of the Sea Customs Act is committed by the owner of the goods, the word 'owner' being used in the sense of the person who fills in the bill of entry or the shipping bill and makes the requisite declaration in respect thereof. Such person being the importer of the goods who holds an import licence. Tt is obvious, therefore, that in an enquiry concerning the commission of suchan offence the 'owner' of the goods in the sensethat I have indicated above must have notice. That owner in the present case were Messrs. Hassanali Brothers and a notice was duly addressed to them to show cause why action should not be taken against them.'

In repelling the contention that Chhogumal Kodumal was also entitled to notice of the proceeding for confiscation of the goods, the learned Judge proceeded to make the following further observation : -

'1 do not find in the Act any duty cast on the Customs Officer to search for a person or persons who may be interested in the goods. The Customs Officer is entitled to treat the person who had signed the bill of entry or the shipping bill and made the requisite declaration under Section 29 of the Sea Customs Act as the true owner of the goods and to give a notice to him and him alone. Others who derive title through such an owner would no doubt have notice of such an enquiry through him and should make themselves heard also through him, and in this case it is admitted that Messrs. Hassanali Brothers in their turn gave notice to Messrs. Hansraj Shadilal Jain and the latter in their turn gave notice to Messrs. Kodumal Motiram of the enquiry held by the Collector of Customs. In my opinion, therefore, there was no obligation on the Customs Collector under the law to give any notice to a person other than the owner referred to in Section 29 of the Sea Customs Act in respect of an offence under Section 167 (8) in so far as it is proposed to confiscate the goods.'

6. In a subsequent part of the judgment, the learned Judge further expressed himself thus:-

'In so far as the confiscation of goods is concerned, since the essence of the offence is a wrong description of the goods, and such description is given only by the owner who fills in the bill of entry or the shipping bill under Section 29, so far as the penalty of confiscation is concerned, in my opinion, notice need not be given to any one other than the owner. But when it is sought to penalise any other than the person as a person concerned in any such offence, quite obviously be is entitled to a notice to show cause why a penalty should not be levied upon him.'

7. This decision went up in appeal before a Division Bench of the Bombay High Court consisting of Chagla, C. J., and Shah, J., but they did not express any opinion on this question of notice.

8. It appears that the offence contemplated in Section 167 (8) of the Sea Customs Act consists in the importation or exportation of goods contrary to any prohibition or restriction relating to the importation or exportation of such goods and one of the penalties contemplated is that such goods shall be liable to confiscation. Now it is clear that steel roller chains of size 1/2' x 1/8' x 104 links could not be imported or in other words its importation is prohibited except under a licence issued under I. T. C. Serial No. 301/IV. The importers who imported such goods had no such licence and so the goods had been imported in contravention of Section 19 of the Sea Customs Act read with Section 3 (2) of the Import and Export Control Act, 1947 and Section 167 (8) of the Sea Customs Act.

9. IN the case of Sewpujan Rai Indrasan Rai Ltd. v. Collector of Customs, : 1958CriLJ1355 the Supreme Court pointed out that Section 167(8) of the Sea Customs Act provides for two kinds of penalties when contraband goods arc imported into or exported from India -- one is confiscation of goods which is an order in rem and the other is a penalty on the person concerned in any such offence, that is the offence described in column I of item 8. It was further observed in that case by S.K. Das, J. who delivered the judgment of the Supreme Court that the point to note is that so far as the confiscation of the goods is concerned it is a proceeding in rem and the penalty is enforced against the goods where the offender is known or not known; the order of confiscation under Section 182 of the Sea Customs Act operates directly upon the status of the property and under Section 18F4 transfers that absolute title to Government (paragraph 15 of the judgment at pages 852-853).

10. In a later decision of the Supreme Court reported in Pukhraj v. D.R. Kohli, Collector of Central Excise M.P., : 1983(13)ELT1360(SC) , referring to Section 167(8) the Supreme Court observed:

'If Section 167(8) applies, then there can be no doubt that as soon as it is shown that certain goods have been imported contrary to the statutory prohibition or restriction, they are liable to confiscation and the confiscation of the said goods is not based on the fact that they are necessarily found with a person who was concerned with their importation.' (page 1561).

11. In a still later decision of the Supreme Court reported in East India Commercial Co. Ltd. v. Collector of Customs, : 1983(13)ELT1342(SC) the majority decision of the Supreme Court laid down that

'Where a Collector of Customs proposes to take action under Section 167(8) of the Sea Customs Act read with Section 3(2) of the Imports and Exports (Control) Act, 1947, the proceedings under the said sections being quasi-judicial in nature, whether statute provides for a notice or not, it is incumbent upon the Collector to issue notice to the importer disclosing the circumstances under which proceedings are sought to be initiated against him. Any proceedings taken without such notice would be against the principles of natural justice.'

12. As already pointed out, in the case before UP, it was Messrs. S. Nath and Co. and Messrs. Rajdhani Motors that had placed orders for the goods. The Bill of Exchange, the invoice and the other shipping documents were in their names. The Bill of Entry which was submitted with the Customs authorities had been submitted on their behalf and they were described as importers in such bills of entry. It is true that the Customs authorities had also reason to think that the respondent was a person concerned in the importation of the goods though the respondent did not profess to be the actual importer. The attitude taken up by the respondent had been that he had nothing to do with the actual importation but he undertook to become interested in the goods after clearance out of customs control. In the circumstances, the Customs authorities very properly thought that in respect of the proceeding for adjudication of confiscation of the goods, which had been imported contrary to prohibition or restriction imposed under Section 3(2) of the Imports and Exports (Control) Act, 1947 read with Section 19 of the Sea Customs Act, the only persons who are entitled to notice to show cause were Messrs. S. Nath and Co. and Messrs. Rajdhani Motors. There can be hardly any room for doubt that the respondent was fully aware of the fact that proceedings for confiscation of the goods under Section 167(8) qf the Act had been taken against Messrs. S. Nath and Co. and Messrs. Rajdhani Motors. Reference to the notices to show cause and bearing date 26th March 1958 which were served on the respondent relating to the 53 cases and 303 cases respectively, indicate that copies of the notices which were served on Messrs. S. Nath and Co. and Messrs. Rajdhani Motors for the proposed confiscation of the goods had been forwarded to the respondent for their information. The relevant portion is contained in the opening sentence of the notice to the following effect:

'A copy of this office memorandum of even number and date issued to Messrs. S. Nath and Co., Delhi, in connection with the importation of the above consignment, is enclosed herewith for your information.'

13. This relates to the 53 cases in respect of the contract with Messrs. S. Nath and Co.

14. So far as the 303 cases imported under the contract with Messrs. Rajdhani Motors are concerned, the opening sentence was as follows:

'A copy of this office memorandum of even number and date issued to Messrs. Rajdhani Motors. Delhi, in connection with the importation of the above consignment, is enclosed herewith for your information.'

So if the respondent had any bona fide intention of resisting those proceedings or showing cause against those proceedings, the respondent might very well have done so through Messrs. S. Nath and Co., and Messrs. Rajdhani Motors or might have asked for an opportunity from the Customs authorities to contest those proceedings. But not only they did not do so, but took up the attitude that they were not even persons concerned in the importation of the goods in question, and notice to show cause against them under Section 167(8) as a person concerned in the offence was also not proper and was not justified. In respect of the notice which has been issued to them on or about J7fh/29th June, 1959 by the Collector of Customs requiring the respondent to show cause why penal action should not be taken against them under Section 167(8) rend with the relevant provisions of the Imports and Exports (Control) Act, 1947 and Section 19 of the Sea Customs Act as being a person concerned in the unauthorised importation of the goods, no enquiry has yet been held nor has any hearing taken place. The respondent has desired to he heard by their reply to the show cause notice, dated 27th August 1959 and the said proceedings are pending. In my view, the order of the learned trial Judge quashing these orders of confiscation dated 4th July 1959 on the ground that notice should have been given about this proceeding for confiscation to the respondent is not sustainable and should be set aside.

15. The further question 1hat has been raised is whether the order of the Collector of Customsdated 4th July, 1959 confiscating the goods without giving an option to pay fine in lieu of the confiscation is justified or not. It is submitted that under Section 183 of the Sea Customs Act, an option should have been given to redeem the goods upon payment of fine in lieu of confiscation. A reference to the relevant orders of confiscation passed by the Collector of Customs on the 4th July 1959 shows that upon actual examination of the contents of all the 53 cases in respect of which Messrs. S. Nath and Co. filed a Bill of Entry, it was found that 3 cases contained goods as per declaration and these goods were covered by the import licence under which they were purported to have been imported. But with regard to the remaining 50 cases it was found that they contained steel roller chains of different size namely 1/2' x 1/8' x 104 links; but they were packed in cartons bearing the description 'auto chains D.I.D. Brand size 1/2' x 3/16' x 104 links, made in japan.' So there was mis-declaration so far as goods contained in these 50 cases were concerned and they were not covered by the import licence which Messrs. S. Nath and Co. held. There being thus contravention of Section 3 of the Imports and Exports (Control) Act 1947 read with relevant sections of the Sea Customs Act and of the notification dated 7th December 1955 issued under Section 3(1) of the Imports and Exports (Control) Act, the order of confiscation was made. Similarly in respect of the consignment of 303 cases in respect of which Messrs. Rajdhani Motors had filed a Bill of Entry, it was found' that 288 packages contained goods of the size 1/2' x 1/8' x 104 links, but they were described in the Bill of Entry and also on the cartons as goods of the size 1/2 x 3/16' x 104 links. But the remaining 15 cases were found to contain goods of the size 1/2' x 3/16' x 104 links which was covered by the import licence held by Messrs. Rajdhani Motors. So in respect of 288 cases there was contravention of Section 3(2) of the Imports and Exports (Control) Act, 1947 but in respect of remaining 15 cases there was no such contravention. Section 3(1) of the Imports and Exports Control Act, 1947 (Act XVIII of 1947) is as follows:

'3(1) The Central Government may by order published in the official gazette make provision 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 (i) applies shall be deemed to be goods of 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 as if for the word 'shall' therein the words 'may' were substituted.

(3) .........................'

Section 183 provides as follows:

'Option to pay fine in lieu of confiscation: Whenever confiscation is authorised by this Act the, officer adjudging it shall give the owner of the goods an option to pay in lieu of confiscation such line as the officer thinks fit.'

16. It is clear from the wording of Section 183 that that section enjoins that the officer adjudging confiscation must give the owner an option to pay a fine in lieu of confiscation. The section entitles the owner to avoid confiscation by paying only the fine imposed. But in the present case, it is because of the contravention of the Imports and Exports Control Act and the notification which prohibited or restricted the importation of the auto chains of the size 1/2' x 1/8' x 104 links except under an appropriate licence taken for that purpose that the order of confiscation had been made in respect of such goods. So far as the Imports and Exports (Control) Act applies to the facts of this case by virtue of Sub-section (2) of Section 3 of the Imports and Exports Control Act, 1947, the word 'shall' in Section 183 of the Sea Customs Act is to be read as 'may' or in other words as conferring a discretion upon the officer adjudging the confiscation to give an option in lieu of confiscation if he only thought fit to do so. In the case of F. N. Roy v. Collector of Customs, Calcutta, (S) : 1983ECR1667D(SC) in construing Section 183 of the Sea Customs Act in relation to Sections 3(1) and (2) of the Imports and Exports (Control) Act 1947, Sarkar, J. delivering the judgment of the Supreme Court, observed as follows:

'It is admitted that the Imports and Exports (Control) Act applies to the case with which we are concerned and in this case the action that was taken was by virtue of this Act. That being so, Section 183 of the Sea Customs Act became applicable because of the Imports and Exports (Control) Act and it could hence be applied only as modified by the latter Act. So applied the section did not make it obligatory on the customs authorities when ordering confiscation, to give an option to the owner to pay a fine in lieu of confiscation but gave them a discretion whether to do so or not. The order of confiscation was not therefore bad even though it had not given the petitioner an option to pay a fine in lieu of confiscation.'

17. It will thus appear that the orders of confiscation passed by the Collector of Customs dated the 4th July 1959 so far as they related to 50 cases and 288 cases respectively, cannot be impugned as invalid. The position, however, appears to be different so far as the remaining 3 cases of the goods imported by Messrs. Rajdhani Motors are concerned. There was no contravention of the Imports and Exports (Control) Act, 1947 so far as these goods were concerned; but they have been confiscated by virtue of the provisions of Section 167(37) of the Sea Customs Act. It appears to me that the portions of the orders of confiscation so far as they relate to these 3 cases of the consignment of Messrs. S. Nath and Co. and the 15 cases of the consignment of Messrs. Rajdhani Motors are bad and cannot be sustained.

18. The result, therefore, is that this appeal is allowed in part and the order of the learnedtrial Judge making the Rule absolute and declaring that the orders passed by the Collector of Customs dated the 4th July 1959 relating to confiscation of the 53 packages and 303 cases are not binding on the respondent, is set aside, and in lieu thereof there will be an order declaring that the orders of confiscation in so far as they relate to the 50 cases and 288 cases are concerned are valid and binding on the respondent and should stand; but so far as they relate to the remaining 3 cases and the 15 cases, are invalid and not binding on the respondent and are hereby quashed and the Rule is made absolute to that extent. The customs authorities will however be at liberty, if they are so advised, to take fresh proceedings in respect of these 3 cases and the 15 cases, according to law and act according to law.

19. The appellant is entitled to half the costs of the appeal. Certified for two Counsel.

Mitter, J.

20. I agree.


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