The Collector of Customs, Madras Vs.
K. Ganga Setty  INSC 156 (19 April 1962)
19/04/1962 AYYANGAR, N. RAJAGOPALA AYYANGAR,
N. RAJAGOPALA AIYYAR, T.L. VENKATARAMA SINHA, BHUVNESHWAR P.(CJ)
CITATION: 1963 AIR 1319 1963 SCR (2) 277
CITATOR INFO :
F 1973 SC 194 (8) D 1975 SC 769 (3,12) R 1975
SC2288 (1) D 1977 SC 597 (41)
High Court-Decision of Customs
Authorities-Construction of entiries in tariff Schedule-Jurisdiction to
interfere"Feed oats" used horse feed-Whether falls within
"folder" or "grain"-Import Trade Control Schedule, Part IV.
Item Nos. 32 and 42-Specific Relief Act, 1877 (1 of 1877) 8. 45
Item 42 of Part IV of the Import Trade
Control Schedule permitted "fodder.... . " to be imported without a
special import licence from a soft Currency area... Item 32 of the same
Schedule related to "grain...... and included oats; and a licence was
necessary for importing goods covered by this item. The respondent imported
from Australia, without a licence, goods described as "feed-oats" for
feeding race horses. He claimed that the goods were covered by Item 42 and
could be imported without a licence. The customs authorities held that the
goods were "grains" within the meaning of Item 32 which could not be
imported without a licence, confiscated the goods and imposed a penalty in lieu
of confiscation. The respondent moved the High Court for the issue of a writ of
mandamus under s. 45 specific Relief Act. The High Court held that the 278
goods were covered by item 42 and issued a writ prohibiting the authorities
from recovering the penalty imposed.
Held, that the High Court had no,
jurisdiction to interfere with the decision of the customs authorities that the
goods fell within item 32. It is primarily for the Import Control authorities
to determine the head of entry under which any particular commodity falls, and
only when the construction adopted is perverse are the courts entitled to
In the present case the decision of the
customs authorities was not one which could not be supported on any, reasonable
basis, and could be called perverse.
Venkatesvaran v. Wadhwani, A. I. R. 1961 S.
C. 1506, referred to.
Held, further that the goods imported fell
within item 82 and not within item 42. Oats are undoubtedly grain. Any
particular species of grain cannot be, excluded, from the item
"grain" merely because it is capable of being used as cattle or horse
feed. The matter is made clear by the reference to "coats" in item 32
where grain is classified into two categories, oats and "other
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 568 of 1960.
Appeal from the judgment, and order dated
April 6, 1956, of the Madras High Court in 0. S, A. No. 147 of 1953.
H. N. Sanyal, Additional Solicitor-General of
India, V. D. Mahajan and P. D. Menon, for the appellant.
R.Ganapathy Iyer, M. S. K. Sastri and M. S.
Narasimhan, for the respondent.
1962. April 19. The Judgment of the Court was
delivered by AYYANGAR, J.-The point involved in this appeal which comes before
us on a certificate of fitness under Art. 133 (1)(e) granted by the High, Court
of Madras is a very short one and relates to the nature and extent of the
jurisdiction posses- sed by the High Court in considering the validity 279 of
an order of the Customs Authorities interpreting the provisions of the entries
in the Tariff Schedule as regards the imposition of duties.
The respondent imported from Australia a
quantity of oats which was described in the indent, contract and shipping
documents as "'standard feed-oats". The commodity imported consisted
of oats in whole grain. The question raised related to the proper
classification of the goods imported under the Import Trade Control Schedules
current during the period July to December 1952 when the consignment reached
India. The controversy centered round the point whether the
"feed-oats" fell within item 42 or within item 32 of the Circular.
Item 42 ran:
"'Fodder, bran and
pollards-O.G.L.-Soft" i.e., this item was covered by an open general
licence and so no special import licence was necessary for the import of these
goods from a soft currency area, while as regards item 32 the entry ran:
"Graio, not otherwise specified,
including broken grain but excluding flour- (a) oats (b) others --Ports -Nil---A.V."
which meant that a licence was necessary for the importation of the goods
specified in it which would be granted by the Joint Chief Controller of Imports
or Exports at Calcutta and Bombay, if they were the ports of entry, and by the
Deputy Chief Controller of Imports & Exports Madras if they were to be
imported through Madras; "nil" that no quotas were specified limiting
the quantity to be imported, & that actual users (A.U.) could apply for the
280 The respondent who carried on business in
fodder under the name and style of Balakrishna Flour Mills placed an order with
an Australian firm for the supply of whole grain "feed- oats" without
obtaining any licence for the import. The goods arrived in Madras on August 1,
1952 and when the respondent attempted to clear the goods, the Customs
Authorities insisted on the production of a licence before he would be
permitted to do so. The Assistant Collector hold that. the goods imported fell
within item 32 and as admittedly the respondent held no licence from the Deputy
Chief Controller of Imports & Exports, Madras covering the import, there
had been a contravention of a. 19 of the Sea Customs Act read with s. 3(2) of
the Import & Export Control Act, 1947 and so proceeded to deal with the violation
under s. 167 (8) of the Sea Customs Act. He directed the confiscation of the
good sand imposed a fine of Rs.5,000/- in lieu of confiscation, if the. Respondent
desired to clear the goods. An appeal filed to the Collector of Customs was
rejected and thereafter the respondent moved the High Court for the issue of a
writ of mandamus under s. 45 of the Specific Relief Act.
In his affidavit in support of the
application the respondent besides contending that oats in full-grain fell
within the head fodder' under item 42, set out earlier, because (1) he had
imported them for being made available solely for feeding race-horses at
Bangalore, (2) that in South India oats was not used as human foods but only as
feed for horses, and (3) that in any event, he had been misled by an answer
that he received from the Deputy Chief Controller of Imports, Madras of whom he
had made an enquiry as to whether feed-oats could be imported under an open
general licence under serial No. 42 and had received an affirmative answer, The
learned 281 Single Judge who heard the application dismissed it on the ground
that the order of the Customs Authorities classifying uncrushed feeds-oats as
grain and not as fodder could not be said to be either perverse or malafide and
that consequently the Court could not interfere with the decision of the
authorities. An appeal was preferred there from to a Division Bench and the
learned Judged allowed the appeal and issued a direction prohibiting the
Collector and his subordinates from collecting or taking steps to recover the
fines and penalties imposed on the respondent. It is the correctness of this
order of the Division Bench that is challenged in this appeal.
Shortly stated, the ground on which the
learned Judges allowed the respondent's appeal were : (1) that the decision of
the Customs authorities as regards the entry of the Tariff classification
within which an imported commodity fell was not final but was open to judicial
review and had ultimately to be decided by the Courts, (2) In the case before the
Court, entry 32 reading "grain" had, in the absence of any specific
entry regarding oats to be read as excluding all grains which would be
"fodder" i.e., which were usually used as cattle or animal feed, and
that as the respondent had imported the oats for use as horse-feed the proper
item within which the goods imported fell was item 42-Fodder etc.
In arriving at this conclusion the learned
Judges referred to the answer of the Deputy Chief Controller to the query by
the respondent to which we have adverted earlier, as a circumstance indicative
of the doubts entertained by the departmental authorities themselves on this
With very great respect to the learned Judges
we are unable to agree with them both as regards the function and jurisdiction
of the Court in matters 282 of this type, as well as in their actual
construction of the relevant entries in the Import Trade Circular. As regards
the limits of the jurisdiction of the Court it is sufficient to refer to the
decision in Venkatesvaram v. Wadhwani. (1) That was a case where a party moved
the High Court under Art.226 of the Constitution, and not as here under s. 45
of the Specific Relief Act under which the power of the Court to interfere is
certainly narrower and not wider. This Court proceeded on the basis that it is
primarily for the Import Control authorities to determine the head or entry
under which any particular commodity fell; but that if in doing so, these
authorities adopted a construction which no reasonable person could adopt i.e.,
if the construction was perverse then it was a case in which the Court was
competent to interfere. In other words, if there were two constructions which
an entry could reasonably bear, and one of them which was in favour of Revenue
was adopted , the Court has no jurisdiction to interfere merely because the
other interpretation favourable to the subject appeals to the Court as the
better one to adopt.
In the present case it could not be contended
that uncrushed oats did not answer the description of "grain" and
therefore the decision of the Customs authorities holding that the oats
imported fell within item 32 could not be Raid to be a view which on no
reasonable interpretation could be entertained. In other words, the conclusion
or decision of the Customs authorities wag rationally supportable. We consider
that even if there was no specific reference to "oats" in entry 32,
any particular species of grain cannot be excluded merely because it is capable
of being used as cattle or horse feed. The word "'fodder" is defined
in the Oxford' dictionary as 'dried food, hay, straw etc. for stall feeding
Cattle". Without resorting to (1) A.I.R.  S.C. 1506, 283 Johnson's
famous definition of "'oats" in his Dictionary, it is sufficient to
point out that oats, though they may serve as food for horses, is also used as
human food; in other words it is not by its nature or characteristic capable of
serving solely as food for animal,% and incapable of use in the human dietary.
For instance, all coarse grains like Ragi and Khambu- serve as food for man as
well as for cattle. The mere fact therefore that a grain is capable of being
used as horse or other cattle feed does not make it "fodder"
excluding it from the category of grain to which it admittedly belongs. The
decision of the Assistant Collector. and of the Collector on appeal holding the
oats imported by the respondent to be grain cannot therefore be characterised
as perverse or malafide and in the circumstances we consider that the learned
Judges of the High Court erred in interfering with the order of the appellant.
In this particular case however, the matter
is placed beyond the pale of controversy by the specific reference to
"oats" in entry 32 where "grain" is classified into two
categories "oats" and "other. grains". It is apparent that
unfortunately the attention of the learned Judges was 'not drawn to the entry
in full, because, in the course of the judgment they point out that the
construction of entry 42 would be different if there had been a specific
reference to oats in entry 32.
Learned Counsel for the respondent laid some
stress on the respondent having been misled by the answer of the Deputy Chief
Controller of Exports to a query as regards the scope of entry 42. The answer
which was stated to have misled was in these terms :
"Feed oats classifiable under serial 42
of Part IV can be imported under Open General License No. XXIII".
284 an answer by no means a model of clarity.
This letter is dated September 14, 1951, and it is the case of the respondent
that he placed an order for the import of "feed- oats" because he was
led to believe that for its import no licence was necessary. The contract for
the purchase of the foods for import was entered into in the beginning of June,
1-952, but before that date the Deputy Chief Controller wrote a further letter
to the respondent on January 1, 1952, clarifying the answer he gave in his
earlier letter, and pointing out that whereas if the oats were in whole grain
it would fall within item 32, but if the same was crushed, it would be
"fodder" within item 42. The respondent however, denied having
received this letter and there is no specific finding on this point by the
learned Judges of the High Court. We do not propose to record any finding
either. We are drawing attention to this matter merely for pointing out that it
is a matter which the authorities could properly take into account in
modifying, if they consider that the respondent has really been misled, the
quantum of penalty imposed on the respondent.
The appeal is accordingly allowed and the
order of the Division Bench of the High Court set aside. The application filed
by the respondent under s. 45 of the Specific Relief Act will stand dismissed.
In the circumstances of the case we direct that the parties bear their own
costs in this Court.