The Collector of Customs, Baroda Vs.
Digvijaysinhji Spinning & Weaving Mills Ltd.  INSC 153 (12 April
CITATION: 1961 AIR 1549 1962 SCR (1) 896
RF 1973 SC1461 (325,1407,2105) R 1982 SC 149
Import--Confiscation of goods by Collector of
Customs--Penalty substituted for confiscation by Board of Revenue, if can be
realised by the Collector of Customs--Sea Customs Act, 1878 (VIII of 1878), ss.
The respondent imported goods of higher value
than what was granted under his licence. The Collector of Customs ordered the
goods to be confiscated under s. 167(8) of the Sea Customs Act, 1878 and in
lieu of confiscation gave an option to the respondent to a fine. On appeal the
Central Board of Revenue set aside the order of the Collector of Customs and
instead of it imposed a penalty. The respondent did not pay the penalty and the
Collector of Customs took proceedingsunder s. 193 of the Act for the recovery
of the penalty in pursuance of which a Magistrate issued warrants of attachment
against the respondent holding that the Collector of Customs could validly
realise the penalty under s. 193 of the Act. The Sessions Judge dismissed the
respondents application in revision but the High Court held that as the penalty
was imposed by the Central Board of Revenue the Collector of Customs could not
realise the amount of the penalty under s. 193 of the Act and also held that
the order of the Central Board of Revenue commuting the confiscation to penalty
was not without jurisdiction. On appeal by special leave, Held, that the Central
Board of Revenue which is the "Chief Customs Authority" cannot be
called an "officer of Customs", and the order of the Chief Customs
Authority imposing a penalty for the first time cannot be treated to be an
order of the Collector of Customs within the meaning of s. 193 of the Sea
Customs Act, 1873, and as such the Collector of Customs could not realise the
penalty imposed by the Central Board of Revenue.
Rangaswamy v. Alagayammal, A.I.R. (1915) Mad.
1133, Kristnamachariar v. Mangammal, (1902) I.L.R. 26 Mad. 91 and Lachmeshwar
Prasad Shukul v. Keshwar Lal Chaudhuri, (1940) F.C.R. 84, held not applicable.
CRIMINAL APPELLATE JURISDICTION: Criminal
Appeal No. 74 of 1960.
Appeal by special leave from the judgment and
order dated August 8, 1957, of the Bombay High 897 Court at Rajkot in Criminal
Revision Application No. 10 of 1956.
B. K. Khanna and T. M. Sen, for the
Rameshwar Nath, S. N. Andley and P. L. Vohra,
for the respondent.
1961. April 12. The Judgment of the Court was
delivered by SUBBA RAO, J.-This appeal by special leave is against the order of
the Bombay High Court at Rajkot setting aside the warrants of attachment issued
by the First Class Magistrate, Jamnagar, for enforcing the penalty imposed on
the respondent under s. 193 of the Sea Customs Act, 1878, (hereinafter called
The material facts may be briefly stated. The
respondent is Digvijavasinhji Spinning & Weaving Mills Limited, Jamnagar.
It imported 275 cases of secondhand looms
under one consignment and 175 cases of second-hand textile waste to plant
machinery under another consignment from Pondicherry.
The respondent held licences for import of
goods of a lesser value than the value of these consignments. The Collector of
Customs, Baroda, ordered the said goods to be confiscated under s. 167(8) of
the Act; and in lieu of confiscation an option was given to the respondent to
pay a fine of Rs. 22,918 and Rs. 16,000 in respect of the two consignments.
Further, on the ground that the respondent
had understated the, value of the goods imported under the first consignment,
the appellant imposed a penalty of Rs. 500 under s. 167(37)(c)of the Act.
Against the said order,. the respondent preferred two appeals to the Central
Board of Revenue and the said Board by its order dated January 15, 1954, set
aside the orders of the appellant and instead imposed a penalty of Rs. 22,918
in regard to the first consignment and Rs. 16,000 in regard to the other under
167(8) of the Act; but the penalty of Rs. 500
was however maintained. In revision the Government of India modified the order
of the Central Board of Revenue by cancelling the penalty of Rs. 500 and in 898
other respects it confirmed the order of the said Board.
The respondent cleared the goods on executing
a bond in favour of the appellant. As the respondent did not pay the penalty,
the appellant, acting under s. 193 of the Act, notified the default in writing
to the First Class Magistrate at Jamnagar so that the penalty might be
recovered in the manner prescribed by the said section as if the said penalty
was a fine inflicted by the Magistrate himself. On the said requisition the
Magistrate issued warrants of attachment against the respondent, but the latter
filed a petition before him for the cancellation of the said warrants on the
ground that the order of the Central Board of Revenue was illegal and also on
the ground that the appellant had no jurisdiction to take action under s. 193
of the Act. The Magistrate, by his order dated May 8, 1956, held that the
appellant could validly realize the said amounts under the machinery provided
under s. 193 of the Act. Against the said order of the Magistrate the
respondent preferred an appeal to the Sessions Judge, Halar, Jamnagar, but it
was later converted into a revision and was dismissed. On revision to the High
Court against that order, the High Court held that as the panalty was imposed
by the Central Board Revenue, the appellant could not realize the said amounts
under 193 of the Act; it also expressed an opinion that the final order of the
appellate authority was not without jurisdiction as it was not shown that
consent of the owner of the goods ordered to be confiscated had not been
obtained by the Central Board of Revenue before the order commuting the
confiscation to penalty was passed. In the result, the High Court set aside and
cancelled the warrants of 'attachment issued by the Magistrate. Hence the
Learned counsel for the appellant broadly
contended that s. 193 of the Act should be liberally construed with a view to
effectuate the intention of the legislature and if so construed the order of
the Central Board of Revenue made in substitution of that of an officer of
Customs could be enforced by the latter officer under the said section. On the
other hand, 899 learned counsel for the respondent argued that the Central
Board of Revenue was not an officer of Customs within the meaning of s. 193 of
the Act and therefore its order could not be enforced under the said section by
an officer of Customs; and that even if the Board, being the Chief Customs
Authority, could be considered to be an "officer of Customs" within
the meaning of those words, the said Chief Customs Authority only could enforce
the said order and not the Collector of Customs.
To appreciate the rival contentions and to
provide a satisfactory solution to the problem presented it is necessary to
read the relevant provisions of the Act, not only to understand the scheme of
the Act but also to construe the provisions of s. 193 thereof in the light of the
scheme disclosed by the said provisions. It is one of the well established
rules of construction that "if the words of a statute are in themselves
precise and unambiguous no more is necessary than to expound those words in
their natural and ordinary sense, the words themselves in such case best
declaring the intention of the legislature". It is equally well settled
principle of construction that "Where alternative constructions are
equally open that alternative is to be chosen which will be consistent with the
smooth working of the system which the statute purports to be regulating; and
that alternative is to be rejected which will introduce uncertainty, friction
or confusion into the working of the system." With this background and
having regard to the aforesaid two principles of construction, let us at the
outset scrutinize the scheme of the Act. Section 3 defines "Chief
Customs-authority" to mean the Central Board of Revenue.
"Customs-collector" is defined to include "every officer of
Customs for the time being in separate charge of a custom-house, or duly
authorized to perform all, or any special, duties of an officer so in
charge." Section 19 confers a power on the Central Government to prohibit
or restrict the importation or exportation of goods by sea or by land. Section
167 prescribes the various punishments for offences under the Act. Section
167(8) says that if any goods, the 900 importation or exportation of which is
for the time being prohibited or restricted by or under Chapter IV of the Act, be
imported into, or exported from India contrary to such prohibition or
restriction, such goods shall be liable to confiscation; and any person
concerned in any such offence shall be liable to a penalty not exceeding three
times the value of the goods, or not exceeding one thousand rupees.
Under s. 167(37)(c), if it be found, when any
goods are entered at, or brought to be passed through, a custom-house, either
for importation or exportation, that the contents of such packages have been
misstated in regard to sort, quality, quantity or value, such packages shall be
liable to confiscation and every person concerned in any such offence shall be
liable to a penalty not exceeding one thousand rupees. Section 182, empowers
the Collector of Customs to adjudicate whether anything is liable to
confiscation, increased rate of duty or any person is liable to a penalty.
Section 183 enjoins on such authority to give
the owner of goods so confiscated an option to pay in lieu of confiscation such
fine as it thinks fit. Section 188 gives a right of appeal from such an order
to the Chief Customs Authority who is empowered to pass such order as he thinks
fit, confirming, altering or annulling the decision or order appealed against;
but under the proviso to that section the said appellate authority cannot make
an order subjecting any person to any greater confiscation, penalty or rate of
duty than has been adjudged against him in the original decision or order.
Every order passed under this section is final subject to the power of revision
conferred by s. 191 on the Central Government. Section 190 confers a power on
the Chief Customs Authority to remit penalty, increased rate or confiscation in
whole or in part; it also enables the said authority, with the consent of the
owner of the goods ordered to be confiscated to commute the order of confiscation
to a penalty not exceeding the value of such goods. Section 190A gives a power
of revision to the Chief Customs Authority against an order of any officer of
Customs passed under the Act and enables it to pass such order thereon as it
thinks fit. Then comes the 901 crucial s. 193. As the argument turns upon the
provisions of this section, it would be convenient to read the entire section
at this stage.
Section 193: "When a penalty or
increased rate of duty is adjudged against any person under this Act by any
officer of customs, such officer, if such penalty or increased rate be not
paid, may levy the same by sale of any goods of the said person which may be in
his charge or in the charge of any other officer of Customs.
When an officer of Customs who has adjudged a
penalty or increased rate of duty against any person under this Act is unable
to realise the unpaid amount thereof from such goods, such officer may notify
in writing to any Magistrate within the local limits of whose jurisdiction such
person or any goods belonging to him may be, the name and residence of the said
person and the amount of penalty or increased rate of duty unrecovered;
and such Magistrate shall thereupon proceed
to enforce payment of the said amount in like manner as if such penalty or
increased rate had been a fine inflicted by himself." Pausing here, let us
recapitulate the gist of the aforesaid provisions. Under the Act the goods,
whose importation or exportation is prohibited or restricted by the provisions
of the Act, are liable to be confiscated and also the person concerned is
liable to a penalty. Even a misstatement in regard to sort, quality, quantity
or value of the goods so imported or exported is an offence and the packages,
with their contents, are liable to be confiscated and the person concerned in
any such offence is also liable to penalty.
The Collector of Customs can make an order
confiscating the said goods as well as imposing a penalty on the person
concerned. In an appeal against that order, the Chief Customs Authority can
modify the said order, but it has no power to increase the burden. It can remit
such penalty or confiscation, in whole or in part, but it can also commute the
order of confiscation to penalty not exceeding the value of such goods. A
person desiring to file an appeal against an order of 902 penalty passed by an
officer of Customs shall, pending an appeal, deposit in the hands of the
Customs-collector at the port where the dispute arises the amount demanded by
the officer passing such decision or order; and if he succeeds wholly or in
part, the whole or such part thereof, as the case may be, shall be returned to
him. The result of the provisions, therefore, is that there would never be a
contingency or necessity for an appellate tribunal to enforce payment of
penalty impossed by it, for no appeal would be heard by it unless the penalty
was deposited as aforesaid.
With this background let us look at the
relevant provisions of s. 193 of the Act. Under the said section only an
officer of Customs, who has adjudged a penalty or increased rate of duty, can
realize the said penalty or rate through the machinery of a Magistrate. The
question is whether the Chief Customs Authority is "an officer of
Customs" who has adjudged a penalty or rate, as the case may be, within
the meaning of s. 193 of the Act. Section 182 of the Act enumerates the
different officers of Customs who are empowered to adjudge a question of
penalty, but the Chief Customs Authority is not included in that list. Indeed,
in s. 182(c) the Chief Customs Authority is empowered to nominate the
subordinate officers of Customs to adjudge questions within certain pecuniary
limits. That apart, s. 3(a) of the Act defines "Chief
Customs-authority" to mean the Central Board of Revenue. The Central Board
of Revenue is a statutory authority and, though it can only function through
officers appointed to the said Board, it is inappropriate to call it an officer
of Customs. In this situation, when under the provisions of the Act there is no
scope for realization of any penalty imposed for the first time by the Chief
Customs Authority, it would be more in accord. with the scheme of the Act to
construe the words "an officer of Customs" as an officer of the
Customs who is authorized to adjudicate in the first instance on the question
of confiscation, increased rate of duty or penalty under s. 182 of the Act.
This construction, it is said, would lead to ail anomaly of the statute conferring
a power on the Chief Customs Authority to 903 from it a procedure to enforce
its collection. As we have pointed out, such an anomaly cannot arise under the
provisions of the Act, for there is no section which empowers the Chief Customs
Authority to impose a penalty higher than that imposed by the Customs Officer.
Assuming that the Chief Customs Authority is
an Officer of Customs within the meaning of s. 193 of the Act, it had to
initiate proceedings under the said section; but in this case the Collector of
Customs notified in writing to the Magistrate for recovering the said penalty.
Learned counsel for the appellant contends
that an order made by the Chief Customs Authority imposing a penalty shall be
deemed in law to be an order made by the original authority, that is, the
Collector of Customs and, therefore, the said order for the purpose of
enforcement shall be treated as the order of the Collector of Customs. It is
said that this legal position would flow from the proposition that an appeal is
a continuation of a suit. The said proposition is unexceptionable: see
Rangaswamy v. Alagayammal (1), Kristnamachariar v. Mangammal (2), Lachmeshwar
Prasad Shukul v. Keshwar Lal Chaudhuri (3). But neither the said decisions nor
the principles laid down therein can have any bearing on the question whether
an order made for the first time by an appellate authority could in law be
deemed to be one made by the original authority. In the absence of any
statutory fiction giving rise to that result, it is not permissible to treat
the order made by one authority as that made by another authority. If so, it
follows that the order of the Chief Customs Authority imposing a penalty for
the' first time cannot be treated to be an order of the Collector of Customs
within the meaning of s. 193 of the Act.
As we have pointed out, the Chief Customs
Authority has no power to impose a penalty for the first time under s. 188 of
the Act; but it has power under (1) A.I.R. 1915 Mad. 1133.
(2) (1902) I.L.R. 26 Mad. 91,95-96.
(3) (1940) F.C.R. 84, 10.3.
904 s.190 of the Act to commute the order of
confiscation to a penalty riot exceeding the value of the goods confiscated.
Though the Chief Customs Authority in its
order dated January 15, 1954, did not expressly rely on s. 190 of the Act, it
cannot be disputed that it has jurisdiction to pass such an order there under
subject to the conditions laid down therein. The condition for the exercise of
that power is that it should have obtained the consent of the party whose goods
were confiscated. The High Court in its order observed that there was nothing
before it to show that the consent of the owner of the goods ordered to be
confiscated was not obtained before the order of confiscation was commuted to
one of penalty by the Chief Customs Authority.
If that be taken as a finding the question of
the legal effect of an order of commutation would arise for consideration.
Would such an order be deemed to be made in substitution of that of an original
authority? Could it be said that the commuted sentence shall be deemed in law a
sentence imposed by the original tribunal? But these questions need not detain
us, as we are not satisfied on the material placed before us that the condition
of consent has been fulfilled in this case. The High Court in effect drew a
presumption in favour of the-regular performance of an official act. But this
presumption is only optional. In a case like this when the validity of an order
depends upon the fulfillment of a condition, the party relying upon 'the
presumption should at least show that the order on the face of it is regular
and is in conformity with the provisions of the statute. But in the present
case the order of the Chief Customs Authority ex facie does not show that it
was made under s. 190 of the Act. Indeed it is purported to have been made
under s. 167(8) of the Act. If as a matter of fact the said Authority made the
order of commutation with the consent of the owner of the goods it would have
certainly jurisdiction to make such an order under s. 190 of the Act. Though
there was no such recital, it would have been open to the appellant to
establish that fact by necessary evidence. In the absence of any such 'evidence
we must hold that it has 905 not been established that the Chief Customs
Authority made its order under s. 190 of the Act with the consent of the
This will not preclude the State from
establishing by relevant evidence that the penalty was imposed under s. 190 of
the Act with the consent of the owner of the goods in an appropriate proceeding.
In the result the order of the High Court is
correct and the appeal is dismissed.