M. G. Abrol Vs. M/S. Shantilal
Chhotalal & Co [1965] INSC 141 (27 July 1965)
27/07/1965 SUBBARAO, K.
SUBBARAO, K.
DAYAL, RAGHUBAR BACHAWAT, R.S.
CITATION: 1965 AIR 197 1966 SCR (1) 284
ACT:
Imports and Exports (Control) Act, 1947 (13
of 1947), s.
3(1) and (2)-Exports (Control) Order,
1954-The Sea Customs Act, 1878 (Ss. 19, 167(8) and 178-Scrap of iron and steelProhibition
on export without licence-Jurisdiction of Customs authorities to see whether
goods in accordance with licence-Licence for 'steel skull scrap' whether
description of particular variety relevant for exportabilityJurisdiction of
courts to interfere with decision of customs authorities.
HEADNOTE:
In exercise of the power given in s. 3 of the
Import and Export (Control) Act, 1947, the Central Government issued the
Exports (Control) Order, 1954 providing that no person shall export any goods
of the description specified in Schedule I annexed thereto except under and in
accordance with a licence granted by the Central Government or by any officer
specified in Schedule 11 of the order. Under the provisions of the said order
the respondents who were a firm carrying on import and export business,
obtained from the Iron and Steel Controller a licence permitting them to export
a certain quantity of 'steel skull scrap'. When the goods were at the port they
were examined by an officer authorised by the Controller who certified the
goods as 'steel skull scrap' fit for export under the said export licence. The
Customs authorities however took the view that a part of the goods was not
'steel skull scrap'. S. 3 (2) of the Imports and Exports Act 1947, provides
that goods whose export or import is prohibited restricted or otherwise
controlled under s. 3(1) would be deemed to be goods whose export was restricted
under s. 19 of the Sea Customs Act, 1878, and all the provisions of the said
Act would apply accordingly. Under s. 178 of the Sea Customs Act the Customs
authorities ordered the confiscation of the scrap sought to be exported by the
respondents, but allowed it to be shipped on the respondents' giving a bank
guarantee for payment of fine in lieu of confiscation. After giving a show
cause notice the Additional Collector of Customs imposed a fine on the
respondents in lieu of confiscation and also a personal penalty of Rs. 35,000.
Instead of seeking remedy under the Sea Customs Act the respondents filed a
writ petition in the High Court. It was heard and dismissed by a single Judge
who however reduced the personal penalty to Rs. 1,000. Both sides appealed to
the Division Bench. It was held by the Division Bench that since the
satisfaction as to whether a particular consignment of scrap is capable of
being used in India or not is to be, under the Statement of Export Policy, that
of the Iron & Steel Controller the Customs authorities were not entitled to
consider afresh whether that scrap was or was not usable in India. On this and
other grounds the High Court allowed the appeal of the respondents and
dismissed the appeal of the Customs Authorities in respect of the penalty. The
Customs Authorities appealed to this Court by special leave.
It was contended on behalf of the appellants
that (1) the Customs Authorities were entitled to see whether the goods sought
to be exported were in accordance with the licence, and (2) the High Court
should not have exercised its jurisdiction under Art. 226 when alternative
remedies were provided in the Sea Act.
2 8 5
HELD:(i) There is no conflict between the
jurisdiction of the licensing authority under the Exports (Control) Order and
that of the Customs Authority under the Sea Customs Act.
While under the Exports (Control) Order
certain articles can be exported only under a licence issued by the appropriate
authority prescribed there under, the appropriate Customs authority can prevent
the export of the articles if they are not covered by such licence. To take an
extreme case, if the licence issued permitted export of iron and the licensee
seeks to export gold, the Customs authorities can certainly prevent the export
of gold, for it is not covered by the license. [291 C-D] (ii)However in the
present case it could not be said that the goods were not covered by the
licence.
Under the Exports (Control) Order iron and
steel scrap is permitted to be exported on a licence granted by the Iron and
Steel Controller. Under the Statement of Export Policy iron and steel scrap
other than sheet cuttings can be exported if in the opinion of the Iron and
Steel Controller the material is of no use in India. The Exports (Control)
Order, the schedules annexed thereto and the Statement of Export Licensing
Policy do not define skull scrap at all;
'skull scrap' is what the Officer thinks it
is. The only restriction on the Controller giving a licence for export of scrap
is that in his opinion it is not usable in India; his opinion is final. For the
purpose of his opinion he may describe or categorize the scrap in the manner
convenient to him; but that does not make it anytheless exportable scrap.
The licence is meant only to cover scrap not
usable in India. The description of the scrap has no relevance to its
exportability. [292 B-F] A comparative study of other items in Schedule 1
annexed to the Exports (Control) Order shows that they are different items.
Obviously the licensee cannot export a different item. But scrap is only one
item and, therefore, if the appropriate authority issues a licence for the
export of one variety of the same, it cannot be held that The licensee by
exporting a different variety is exporting some other item.
[292 G] In the present case the Iron and
Steel Controller and his subordinates examined the goods at the time the
licence was issued and at the time of loading the goods for export. The licence
was therefore issued in respect of particular goods identified by the
appropriate authorities. It was not possible therefore to say that goods other
than those in respect whereof the licence was issued were sought to be
exported. [293 A-B] What is important is not the description but whether it is
scrap of iron and steel in respect whereof the licence was issued. In this
view, the Customs Authorities had no jurisdiction to confiscate the scrap on
the ground that the same was a misdescription. The conclusion arrived at by the
High Court was therefore correct. [293 C-E] (iii)If the goods were not
prohibited goods, the Customs Authorities had no jurisdiction to impose the
penalty. [293 E-F] (iv)The existence of an alternative remedy does not oust the
jurisdiction of the High Court but it is only one of the circumstances that the
High Court may take into consideration in exercising its discretionary
jurisdiction under Art. 226 of the Constitution. In the present case the High
Court thought fit to exercise its jurisdiction and there were no exceptional
circumstances that would justify interference with its discretion. [293 G-H]
Per Raghubar Dayal, J. :-(i) The decision of the Iron and Steel Controller
contemplated by the conditions of the licence is not about the identity of the
scrap material but is only with respect to the possibility of the use of any
portion of the scrap within the country. There is nothing in the Imports and
Exports Control Act or in the Exports Control Order up.
Sup. CI/65-4 286 which lays down among the
duties of the Iron & Steel Controller the duty to check that the material
collected at the docks for export tallied with the material for export of which
the licence had been granted. [297 B-C] (ii)The statement of export licencing
policy in laying down that export of ferrous scrap other than sheet cuttings is
allowed by the Iron and Steel Controller provided he is satisfied that the
material is of no use in India does not mean that if the licence is for the
export of any particular type of steel scrap it may still be considered to be a
licence permitting export of steel scrap of any other kind except scrap from
sheet cuttings. The Statement meant only that in respect of such scrap the
authorities were free to exercise discretion to allow its export if it could
not be utilised in India. [298 G-H] (iii)The fact that in the Order iron and
steel is mentioned as one item and its varieties are not mentioned does not
mean that a licence for one kind of scrap could be utilised to export other
kinds of scrap. Clause 5 of the Order empowers the licensing authority to
impose while granting a licence such conditions as it considers necessary to
impose and be not inconsistent with the Act or Order.
The licensing authority could therefore
provide in the licence that steel scrap of a particular variety would be
exported. The exported goods will be in accordance with the licence only if
they come within the specified variety. [300 D-E] (iv)The note of the Iron and
Steel Controller on the shipping bill after inspection of the goods at the dock
does not amount to a licence. Moreover in the present case the goods were not
inspected by the Iron and Steel Controller himself but by an officer who was
not entitled to issue a licence under Schedule 11. The certification of the
goods by such an officer did not make them exportable. [301 G] (v)Section 3(2)
of the Exports Control Act makes the provisions of the Sea Customs Act applicable
in respect of goods whose export or import is prohibited, restricted or
controlled by an order made under s. 3(1). The Export Control Order was made
under s. 3(1) and therefore the Customs Authorities could exercise their powers
under the Sea Customs Act in respect of the goods sought to be exported by the
respondents. They had power to check the goods to see whether they were being
exported under and in accordance with the licence. [294 F-G; 300 F] (vi)Since
the Additional Collector of Customs acted within his jurisdiction in checking
and confiscating the goods in question on the ground that they were not 'steel
skull scrap' which alone was allowed to be exported under the licence, the High
Court or the Supreme Court did not have in exercising writ jurisdiction, power
to question, when mala fides was not alleged, his opinion about the nature of
the goods sought to be exported. The respondents should have pursued the
remedies under the Act. [300 G-H] (vii)The amount of penalty imposed by the
Additional Collector was legal and its reduction to Rs. 1,000 by the single
Judge was not correct. [303 D] Ranchoddas Atmaram v. Union of India, [1961] 3
S.C.R. 718, relied on.
CIVIL APPELLATE JURISDICTION : Civil Appeals
Nos. 276, 377, 584-625 and 669 of 1963.
Appeals by special leave from the judgment
and order, dated September 12, 1960 of the Bombay High Court in Appeals Nos.
53. 56. 57 and 54, 51 and 58 of 1959
respectively.
287 Niren De, Addl. Solicitor-General, D. R.
Prem and R. N. Sachthey, for the appellants (in C.As. Nos. 376 and 377 of
1963).
D.R. Prem, and R. N. Sachthey, for the
appellants (in C.As. Nos. 584, 625 and 669 of 1963).
S.T. Desai, J. B. Dadachanji, O. C. Mathur
and Ravinder Narain, for the respondents (in C.As. Nos. 376 and 377 of 1963).
Poras A. Mehta, J. B. Dadachanji, O. C.
Mathur and Ravinder Narain, for the respondents (in C.As. Nos. 584 and 625 of
1963).
The Judgment of Subba Rao and Bachawat, JJ.
was delivered by Subba Rao, J. Raghubar Dayal, J. delivered a dissenting
Opinion.
Subba Rao, J. These five appeals by special
leave were filed against the orders of a Division Bench of the High Court of
Judicature at Bombay setting aside the order of a single Judge of that Court
quashing the order of the Additional Collector of Customs, Bombay, levying
fines on the respondents in lieu of confiscation of consignments of scrap iron
exported to foreign countries. As the main point raised in all the appeals is
the same, it would be enough if we state the relevant facts in one of the
appeals, namely, Civil Appeal No. 376 of 1963, arising out, of Misc.
Petition No. 86 of 1958.
Messrs. Shantilal Chhotalal & Co.,
hereinafter called the firm,, are a firm of Importers and Exporters of scrap
iron.
The said' firm obtained an export licence
dated November 7, 1956, from the Iron and Steel Controller permitting them to
export from the port of Bombay 900 long tons of steel skull scrap. The licence
was to hold good up to March 31, 1957, and the goods had to be shipped to Japan
by s.s.
"KUIBISHEV". Between October 1956
and March 1957 the firm purchased scrap iron from various sources at rates
varying from Rs. 95 to Rs. 207 per ton. After they brought the goods to the
docks, the Officer authorized, by the Iron and Steel Controller and the
representative of the Regional Joint Scrap Committee certified the goods as
steel skull scrap fit for export under the said export licence and the
necessary endorsements to that effect were made on the shipping bills in
respect of the said goods. Thereafter, the goods were taken to the customs
authorities for the purpose of exporting the same. The customs authorities took
the view that a part of the goods was not steel skull scrap;
and the matter was referred to the Iron and
Steel Controller. By his order dated March 18, 1957, the said Controller
informed the customs authorities that the rejected 288 buffers, plungers and
casings were furnace rejects and formed part of skull scrap etc. By order dated
March 26, 1957, the customs authorities seized the entire goods on board the
ship under s. 178 of the Sea Customs Act; but the said authorities allowed the
goods to remain in the temporary custody of the shippers and permitted the ship
to sail. They also retained the documents relating to the goods, but later on
released them on April 25, 1957, on the firm furnishing a bank guarantee for a
sum of Rs. 49,995.75 for payment of fine in lieu of confiscation if such
confiscation was ultimately adjudged by them. On May 27, 1957, the customs
authorities served a notice upon the firm to show cause why the said goods
should not be confiscated and penal action taken against them under s. 167 (8)
and (37) of the 'Sea Customs Act. By his order dated December 21, 1957, the
Additional Collector of Customs held that of the total quantity shipped 320
tons were unauthorized and directed confiscation thereof; but he imposed a fine
of Rs.
49,995.95 in lieu of confiscation and a
personal penalty of Rs. 35,000. On March 4, 1958, the firm filed a writ
petition under Art. 226 of the Constitution in the High Court of Bombay for
quashing the said order. To that writ petition the Additional Collector of
Customs, Bombay, and the Union of India were made parties. In the first
instance, the said petition was heard by Shelat, J., of that Court, who held in
effect that the firm was exporting something which was not permitted to be
exported and that while the licence authorized them to export steel skull scrap
they were exporting non-skull scrap and, therefore, the customs authorities had
acted within their jurisdiction in confiscating the said goods and imposing a
personal penalty on the firm. The learned Judge also expressed the view that
the firm had suppressed certain relevant facts and thus disentitled themselves
to have the discretionary remedy. However, the learned Judge gave a limited
relief by reducing the penalty of Rs. 35,000 to Rs. 1,000 on the ground that
under s. 167(8) of the Sea Customs Act the maximum penalty leviable could not
exceed Rs. 1,000. The firm preferred Appeal No. 53 of 1959 against that order
to a Division Bench of the said Court; and the Additional Collector of Customs
and the Union of India also preferred an appeal, being Appeal No. 56 of 1959,
against the said order of the single Judge raising the question of penalty in
so far as it went against them.
The appeals came up for hearing before a
Division Bench of the High Court, consisting of Mudholkar, Acting Chief
Justice,, and S. M. Shah, J. The learned Judges held in favour of the firm
mainly on the following grounds : (1) "Since the satisfaction 289, as to
whether a particular consignment of scrap is capable of being used in India or
not is to be, under the Statement of export policy, that of the Iron and Steel
Controller, the Customs Authorities were not entitled to consider afresh
whether that scrap was or was not usable in India"; (2) "the licence
in question not having been granted by the Customs Collector, but by the Iron
and Steel Controller, it was not open to the customs authorities to rely upon
the provisions of the Imports and Exports Control Act, 1947, or the Exports
Control Order, 1954, for the purpose of making inspection of the consignment
which the petitioners were exporting"; and (3) "if what was being
exported was not Skull Scrap, but still was something the export of which was
permitted by the Iron and Steel Controller on the ground that that scrap was
not usable in India, there was nothing which the Customs Authorities were
entitled to do". On those grounds the Division Bench allowed the appeal preferred
by the firm, set aside the order of the learned single Judge and made the rule
absolute. The learned Judges also dismissed the appeal filed by the customs
authorities and the Union of India on the around that, as the firm only
exported the goods covered by the licence, the customs authorities had no power
to impose a personal penalty under s. 167(8) of the Sea Customs Act. Civil
Appeal No. 376 of 1963 has been preferred against the former order and Civil
Appeal No. 377 of 1963, against the latter order.
The argument of the learned Additional
Solicitor-General may briefly be stated thus : There is no conflict of
jurisdiction between the Iron and Steel Controller issuing, a licence for
exporting steel skull scrap under the provisions of the Export Control Order,
1954, and the customs authorities prohibiting the export of the same on the
ground that they are not the goods covered by the licence : they exercise
different functions. In the present case, the Iron and Steel Controller granted
an export licence dated November 7, 1956, permitting the respondents to export
900 tons of steel skull scrap subject to the conditions set out in the said
export licence, but the customs authorities found, on the materials placed
before them, that out of the total quantity shipped, 320 tons were non-skull
scrap and on that finding they levied a fine in lieu of confiscation of the goods
as they were already allowed to be exported. The said order was well within the
jurisdiction of the customs authorities and, therefore, whether it was right or
wrong, the High Court should not have interfered under Art. 226 of the
Constitution. If his contention was correct, the argument proceeded, as the
firm exported goods contrary to the terms of the licence, the customs
authorities, in view of the recent -decision 290 of this Court, had power to
impose the penalty within the maximum limits prescribed in s. 167 (8) of the Sea
Customs Act. As that order also was within the jurisdiction of the customs
authorities, the High Court should have maintained it.
The argument of Mr. Desai, learned counsel
for the respondents, may be put thus: Under the Export Control Order, 1954, the
Iron and Steel Controller can issue a licence for exporting iron skull scrap if
he is of the opinion that the said scrap is not usable in India. The Schedule
annexed to the said Order treats scrap of iron and steel as one unit and it
does not make a distinction between non-skull scrap and skull scrap nor does
that Order define what skull scrap is. In the circumstances when the Iron and
Steel Controller described certain scrap as skull scrap and gave the licence
for exporting the same, it is not open to the appropriate customs authority to
hold that the said description is wrong and, therefore, the scrap sought to be
exported is not covered by the licence.
To appreciate the rival contentions it is
necessary at the outset to ascertain the scope of the respective jurisdictions
of the Iron and Steel Controller under the Exports Control Order and the
Customs Collector under the Sea Customs Act qua the goods covered by the
licence issued by the former.
The Iron and Steel Control Order, 1956, was
issued by the Central Government in exercise of the powers conferred on it by
s. 3 of the Essential Commodities Act and in supersession of all previous
orders on the subject. Under s. 3 of the Imports and Exports (Control) Act,
1947 (Act 18 of 1947) the Central Government may, by order published in the
Official Gazette, make provisions for prohibiting, restricting or otherwise
controlling the export of the goods specified in the order. In exercise of the
said power the Central Government issued the Exports (Control) Order, 1954,
providing that no person shall export any goods of the description specified in
Schedule I annexed thereto, except under and in accordance with a licence
granted by the Central Government or by any officer specified in Schedule 11 to
the said Order.
Under s. 19 of the Sea Customs Act, 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 out of India across any customs frontier as
defined by the Central Government. Under s. 167(8) thereof the appropriate
authority can confiscate the pro291 hibited goods exported or imported and
impose a penalty on the person concerned, who illegally exported or imported or
attempted to export any goods, in the manner prescribed thereunder. It is,
therefore, clear that the customs authorities had the jurisdiction to
confiscate the prohibited goods if they were exported. Under s. 178 of the said
Act, "Any thing liable to confiscation under this Act may be seized in any
place in India either upon land or water, or within the Indian customs waters,
by any officer of customs or other person duly employed for the prevention of
smuggling".
Is there any conflict between the two
jurisdictions, i.e., the jurisdiction of the licensing authority under the
Exports (Control) Order and that of the Customs Authority under the Sea Customs
Act ? While under the Exports (Control) Order certain articles can be exported
only under a licence, issued by the appropriate authority prescribed
thereunder, the appropriate Customs Authority can prevent the export of the
articles if they are not covered by such licence. To take an extreme case, if
the licence issued permitted the export of iron and the licensee seeks to
export gold, the Customs Authorities can certainly prevent the export of gold,
for it is not covered by the licence.
In this view, there is no conflict between
the jurisdictions of the two authorities; indeed, their functions are
complementary to each other.
Can it be said, as it was contended by the
learned Additional Solicitor General, that in the present case the respondents
sought to export goods that were not covered by the licence ? We have noticed
earlier that under the Exports (Control) Order, 1954, no person shall export
goods of the description specified in Schedule 1, except under and in
accordance with a licence granted by the Central Government or by an officer
specified in Schedule 11. Under the heading "Raw Materials and Articles
Mainly Unmanufactured" in Part B of Schedule 1, item 3 is "scrap
containing any of the metals or alloys specified in entry C-9 of this Schedule".
C-9 of the Schedule enumerates the various metals; and C-9(a)(x) is "Iron
and Steel". The sub-headings (1) to (27) thereof give different categories
of that article. Officers competent to grant a licence are mentioned in
Schedule 11 and they are (i) the Iron and Steel Controller; (ii) a Deputy Iron
and Steel Controller; and (iii) an Assistant Iron and Steel Controller. 'Me
Statement of Export Licensing Policy issued by the Government of India as on
October 31, 1956, throws some more light on this question. Item 3 mentioned
therein is "Scrap containing, any of the metals or alloys specified in
entry C-9 of this Schedule; in the column under the heading "Other
details, if any", item (ii) 292 is "Iron and steel scrap". Iron
and steel scrap is divided into two categories, namely, (a) sheet cuttings, and
(b) others. Against the entry "sheet cuttings" certain conditions for
issuing the licence are mentioned; and against the entry "others",
the following remarks are found:
"Export of any other ferrous scrap is
allowed by the Iron and Steel Controller provided he is satisfied that the
material is of no use in India." A combined reading of the relevant
provisions of the Exports (Control) Order and the entries in the Statement of
Export Licensing Policy leads to the following position : The Exports (Control)
Order recognizes scrap of iron and steel as one entity; it does not recognize
different categories of scrap, such as skull scrap or non-skull scrap; it
permits export of such scrap under a licence issued by the Iron and Steel
Controller, as he is the officer who regulates the trade in scrap under the
Iron and Steel Control Order; but under the Policy Statement a distinction is
made between sheet cuttings and other ferrous scrap; in the case of the export
of the former more stringent conditions are imposed than in, the case of the
latter; and in the case of the latter export is permitted if in the opinion of
the Iron and Steel Controller the material is of no use in India. We are not
concerned in this case with sheet cuttings, but only with other ferrous scrap.
The Exports (Control) Order, the Schedules annexed thereto and the Statement of
Export Licensing Policy do not define skull scrap at all; skull scrap is what
the Officer thinks it is.
The only restriction on the Controller giving
a licence for export of scrap is that in his opinion it is not usable in India;
his opinion is final. For the purpose of his opinion he may describe or
categorize the scrap in the manner convenient to him; but that does not make it
anytheless an exportable scrap. In the circumstances it must be held that the
licence covers only the scrap not usable in India. The description of the scrap
has no relevance to its exportability.
A comparative study of other items in
Schedule 1 annexed to the Exports (Control) Order shows that they are different
items and if licence is given for the export of a particular item, obviously
the licensee cannot export a different item.
But scrap is only one item and, therefore, if
the appropriate authority issues a licence for the export of the same, it
cannot be held that the licensee is exporting some other item.
A different approach leads to the same
position. The record discloses, and it is not disputed, that the Iron and Steel
Controller and his subordinates examined the goods at the time the licence was
issued and at the time of loading of the goods in the 293 ship for export. The
licence was, therefore, issued in respect of particular goods identified by the
appropriate authorities who were authorised to issue the licence and to inspect
the goods. The name given by the authorities to the goods was, therefore, the
name by which the appropriate authorities identified the goods. The licence was
issued in respect of the specified goods identified by the appropriate
authorities. It is not possible, therefore, to say that goods other than those
in respect whereof the licence was issued were sought to be exported.
In this view, can it be said that the Customs
Authorities had jurisdiction to confiscate the scrap of iron and steel
certified to be not usable in India and covered by the licence granted by the
Iron and Steel Controller on the ground that the scrap exported was, in their
view, not of the description given in the licence ? The Customs Authorities would
have such jurisdiction if under the Exports (Control) order scrap of iron and
steel was dealt with under different heads. But, as we have pointed out, for
the purpose of satisfaction of the Controller and for the purpose of issuing a
licence for export, the said scrap was one unit and the description of it in
the licence was only that given to it by the Iron and Steel Controller for
identifying the goods. What is important is not the description but whether it
is scrap of iron and steel in respect whereof the licence was issued. In this
view, the Customs Authorities had no juridiction to confiscate the scrap on the
ground that the same was a mis-description.
The conclusion arrived at by the Court is, in
our view, correct.
If the goods were not prohibited goods, the
Customs Authorities had no jurisdiction to impose the penalty.
Lastly, it was argued that the High Court
should not have exercised its jurisdiction under Art. 226 of the Constitution,
as the respondents had an effective remedy by way of appeal to Higher Customs
Authorities. But the High Court rightly pointed out that the respondents had no
effective remedy, for they could not file an appeal without depositing as a
condition precedent the large amount of penalty imposed on them. That apart, the
existence of an effective remedy does not oust the jurisdiction of' the High
Court, but it is only one of the circumstances that the Court should take into
consideration in exercising its discretionary jurisdiction under Art. 226 of
the Constitution. In this case, the High Court thought fit to exercise its
jurisdiction under Art. 226 of the Constitution and we do not see any
exceptional circumstances to interfere with its discretion. In the result,
Civil Appeals; Nos. 376 and 377 of 1963 are dismissed with costs.
2 94 Now coming to the other appeals, though
there is some ,difference in the matter of details between the aforesaid
appeals and the other appeals, the broad facts are similar.
The view we have expressed in the aforesaid
two appeals governs the other appeals also. The other appeals are also
dismissed with costs. One hearing fee.
Ragbubar Dayal, J. I regret I have to come to
a different conclusion.
I need not repeat the facts leading to these
appeals as they have been stated in the judgment of brother Subba Rao, J.
The main question for determination in these
appeals is whether the Collector of Customs had power to check the scrap for
the purposes of satisfying himself that the scrap to be exported answered the
description of the material which was to be exported under the licence granted
to the exporter. The appellant claims such a right. The respondent denies it
and urges that the decision -of the Iron and Steel Controller contemplated by
the conditions of the licence was final and the scrap in regard to which that
-decision is given could be exported without any further check by the
Collector.
It is necessary, before determining this
controversial point, to first refer to the various provisions relating to the
powers and jurisdiction of the Collector of Customs with respect to the export
of iron and steel for whose export there exists some prohibition or
restriction.
Section (3) 1 of the Imports & Exports
(Control) Act, 1947 (Act. XVIII of 1947) empowered the Central Government to
make provision for prohibiting restricting or otherwise controlling the import,
export of goods of any specified description. Sub-s. (2) of s. 3 provides inter
alia that all goods to which any order under sub-s. (1) applies shall be deemed
to be goods of which the import or export has been prohibited or restricted
under s. 19 of the Sea Customs Act, 1878, hereinafter called the Act, and that
all the provisions of that Act shall have effect accordingly.
By virtue of the power conferred by sub-s.
(1) of s. 3, the Central Government issued the Exports (Control) Order, 1954.
Clause 3 of this Order provides that save as
otherwise provided in the Order, no person shall export any goods of the
description specified in Schedule 1, except under and in accordance with a
licence granted by the Central Government or by any officer -specified in
Schedule II. The officers specified in Schedule II 295 include the Iron &
Steel Controller, the Deputy Iron & Steel Controller and the Assistant Iron
& Steel Controller.
Clause 5(1) of the Exports Order provides
that a licence granted under the Order may contain such conditions not
inconsistent with the Act or the Order as the licensing authority may deem fit.
Sub-cl. (3) of cl. 5 provides that the licensee shall comply with all the
conditions imposed or deemed to be imposed under the clause.
Schedule 1 mentions the commodities subject
to export control. Group B-3 mentions scrap containing any of the metals or
alloys specified in entry C-9 of that schedule. Entry C9 mentions many metals
which include iron and steel. The export of iron and steel scrap is subject to
control and, in view of cl. 3 of the Exports Order, it cannot be exported
except under and in accordance with the licence granted by the competent
authority referred to in cl. 3. In view of sub-s. (2) of s. 3 of the Imports
and Exports (Control) Act, iron and steel scrap would be deemed to be goods
whose export has been prohibited or restricted under s. 19 of the Act and all
the provisions of that Act would have effect accordingly.
Now, s. 19 of the Act empowers the Central
Government to prohibit or restrict the bringing or taking by sea or by land
goods of any specified description into or out of India across any customs
frontier as defined by the Central Government. Section 167(8) provides inter
alia that if any goods exportation of which is for the time being prohibited or
restricted by or under Chapter IV of the Act be exported from India contrary to
such prohibition or restriction or if any attempt be made so to export any such
goods, those goods would be liable to confiscation and that any person
concerned in any such offence would be liable to a penalty not exceeding three
times the value of the goods or not exceeding Rs. 1,000. It follows that scrap
of iron and steel is liable to confiscation if it is exported or any attempt is
made to export it contrary to the prohibition or restriction imposed by the
Central Government. Section 178 of the Act empowers any officer of Customs to
seize in any place in India either upon land or water, or within the Indian
Customs waters, anything liable to confiscation under the Act. It is clear
therefore that the officers of Customs have power to seize steel scrap if it be
liable to confiscation, that is, if it is being exported or any attempt is
being made to export it contrary to the prohibition or restriction imposed. If
steel scrap is not exported under and in accordance with the licence issued by
the proper authority, it would be liable to confiscation. It becomes the duty
of the Customs Authorities 296 to check the steel scrap which is exported for
satisfying themselves that it is being exported under and in accordance with
the licence issued by the proper authority. Such a right of the Customs
Authorities under the Act is not seriously disputed for the respondent.
What is really contended for the respondent
and what has been held by the High Court is that the decision given by the Iron
& Steel Controller in view of the conditions of the licence is final and
that this finality of the decision impliedly takes away the power and
jurisdiction of the Customs authorities, which they have under the provision of
the Act to check whether the goods to be exported tally with those mentioned in
the licence. The conditions of the license on which reliance is placed for the
respondent are:
"1. The materials specified overleaf
will be inspected at the Docks by representatives of the Iron & Steel
Controller and also by representatives of such parties as the Iron & Steel
Controller may direct. To enable the Iron & Steel Controller to arrange for
the inspection at least two clear days' notice is required. The Customs
Authorities have been informed not to permit loading of scrap before such
inspection is carried out and the material certified for shipment by an officer
authorised by the Iron & Steel Controller.
2. If it is found as a result of this
inspection that the scrap in question can be utilised in India the exporter
will have to remove the materials from the docks at his own expense and sell it
to consumers in India nominated by the Iron & Steel Controller at the price
to be fixed by the latter. Exports will be permitted only if the materials
cannot be used in India.
3. The Iron & Steel Controllers decisions
in this respect shall be final. Government will not be responsible for any
claim for loss due to demurrage, wharfage, frustration of contract or any other
reasons whatsoever." These conditions to which the licence is subject mean
that despite the scrap answering the description of steel skull scrap whose
export was allowed by the licenee, the Iron & Steel Controller could
disallow the export of such scrap which upon inspection appears to be such
which could be utilised in this country. Condition 3 gives finality to the
decision of the Iron & Steel Controller in this respect, i.e., in respect
of the scrap determined to be such which could be utilised in India.
The decision contemplated by these conditions
is not about the identity of the scrap material with the scrap described and
loaded under the licence for export, but is only with respect to the
possibility of the use of any portion of the scrap within the country. This is
the clear interpretation of the conditions, according to the language used.
It is to be noted that there is nothing in
the Imports & Exports Control Act or in the Exports Control Order which
lays down among the duties of the Iron & Steel Controller the duty to check
that the material collected at the docks for export tallied with the material
for export of which the licence had been granted. Neither the Import and Export
Control Act nor the Export Control Order contains any such express provision
which debars or prohibits the Customs Authorities from exercising, their powers
of checking the goods sought to be exported for satisfying themselves that they
were being exported in accordance with the licence granted for the export of the
material. On the other hand, sub-s. (2) of s. 3 makes all the provisions of the
Act effective in regard to the goods whose export is prohibited or restricted
under the Control Order as those are deemed to be goods whose export had been
prohibited or restricted under s. 19 of the Act.
Further, the conditions are imposed by the
licensing authority under cl. 5 of the Order. They have to be consistent with
the Imports & Exports Control Act and the Order and cannot therefore take
away directly or indirectly the powers of the Customs Authorities under the
provisions of the Act to satisfy themselves that goods sought to be exported
are in accordance with the licence.
It is also urged that the grant of a licence
lifts the prohibition or restriction imposed on the export of steel scrap with
the result that the scrap for which the licence is granted becomes goods for
the export of which no prohibition or restriction exists. I do not agree with
this contention. The prohibition or restriction imposed over certain types of
goods continues so long as that restriction is imposed under a valid
notification of the Government of India. The effect of the granting of the
licence is that the licencee is permitted to export those goods whose export is
permitted under the licence. Those goods do not become goods which are not
subject to the controls imposed by the Export Control Orders. The goods to be
exported by virtue of that licence 298 are subject to the condition that they
answer fully the description of the goods for the export of which the licence
is granted. The export is not to be only under the licence, but to be in
accordance with it also. That is what cl. 3 of the Exports Control Order
requires. It is therefore not correct to say that the mere grant of the licence
for the export of certain goods whose export is prohibited or restricted takes
those goods out of the category of goods whose export is prohibited or
restricted.
Much stress has been laid for the respondent
on the export policy of the Government which, it is urged, supports the
contention that steel scarp of any description can be exported except such
scrap which can be utilised in the country. It is urged that the prohibition or
restriction under cl. 3 of the Exports Control Order really applies to the
steel scrap which cannot be used in India.
The policy of the Government laid down for
the guidance of the Central Government and the officers specified in Schedule
11 of the Export Control Order and to some extent for the guidance of the would
be exporters in making requests for the grant of licences cannot have the
effect of affecting the provisions of the Import & Export Control Act or
the Control Order issued under it. Reference has been made to Part II of the
Hand Book of Export Trade Control published by the Ministry of Commerce and
Consumer Industries of the Government of India in October 1956. The statement
of the export licensing policy as on October 31, 1956, states with reference to
export of all iron and steel scrap except scrap, presumably from sheet cuttings
:
"Export of any other ferrous scrap is
allowed by the Iron & Steel Controller provided he is satisfied that the
material is of no use in India." This may be the general policy for the
granting or nongranting of a licence for the export of iron and steel scrap
other than from iron sheet cuttings, but this does not mean that if the licence
is for the export of any particular type of steel scrap, it may still be
considered to be the licence permitting export of steel scrap of any other kind
except scrap from sheet cuttings. If this policy statement meant that the
licence granted would have just mentioned the quantity of iron and steel scrap
other than scrap from sheet cuttings, instead of specifying the nature of the
scrap for the export of which the licence is granted. The policy stated in this
statement is really a restriction on the exercise of the discretion of the
authorities empowered to grant the licence, the restriction being that no
licence be granted for the export of iron 299 and steel scrap other than scrap
from sheet cuttings if it could be utilised in India. The authorities were free
to exercise the discretion with respect to the export of scrap which could not
be utilised in India. The mere fact that certain scrap could not be utilised in
India does not mean that its export is freely allowed. What may not be usable
in the country at a certain point of time may become usable after a lapse of
time.
I am therefore of opinion that neither the
policy statement nor the provisions about the granting of the licence justify
the conclusion that scrap which could not be used in India could be exported
irrespective of the terms of the licence or that the moment a licence is
granted for the export of certain scrap that scrap gets the status of material
for the "port of which there exists no prohibition or restriction with the
result that it would not come within the goods which could be checked by the
Customs authorities for the purpose of satisfying themselves whether those
goods were being exported in accordance with the terms of the licence.
Reference may also be made to Chapter VI,
Part 1 of the aforesaid Handbook of Export Trade Control. This deals with
customs and foreign exchange procedure. Paragraph 1 mentions the shipping bill
and the export licence among the documents to be submitted to the export
department of the Custom House at the port of export. Para 2 provides for the
scrutiny of these documents in the department inter alia for the purpose of
verifying that the proposed "port is permissible and the consignment
satisfies the requirements under the Export Control Order. It further provides
:
"If the Customs authorities are
satisfied that the documents are in order, an endorsement is made on the
shipping bill giving directions to the Preventive Officer, Examining Officer or
the Appraiser at the docks or jetties as to the physical examination to be
carried out in respect of the value, description etc., of the consignment and
according sanction for its export." This provision concerning the procedure
to be followed by the Customs Authorities makes it clear that the Preventive
Officer, the Examining Officer or the Appraiser of the Customs Department at
the docks have to do the physical examination in respect of the description of
the consignment to be exported and to sanction the export if satisfied that the
consignment is in accordance with the terms of the licence. This is in
accordance with the 300 requirements of the provisions of the Act as stated
above and goes against the contention for the respondent on the basis of the
conditions in the licence about the finality of the decision of the Iron &
Steel Controller about certain goods sought to be exported to be usable in the
country.
It is also urged that scrap of 'iron and
steel' is one unit under .the Export Control Order, that the Order does not
contemplate any different varieties of such scrap and that therefore the
granting of the licence for exporting steel skull scrap amounts, in law, to the
granting of the licence or exporting any steel scrap, even if that is not
'steel skull scrap' Which is not defined under the Export 'Control Act or the
Order. I do not agree. It is not disputed that steel scrap can be of different
varieties. The Order need not specify all the varieties. Special specification
of a variety could be necessary if it was to be excepted from the scope of the
Order. Clause 5 of the Order empowers the licensing authority to impose, when
granting a licence, such conditions as it considers necessary to impose and be
not inconsistent with the Act or Order. The licensing authority could therefore
provide in the licence that steel scrap of a particular variety would be
exported. The exported goods will then be in accordance with the licence if
they come within the specified variety. I am therefore of opinion that the
licensing authority was competent to allow export of any particular variety and
that the respondents could not under the licence export steel scrap of any
variety other than that stated in the licence.
I therefore hold that the officers of the
Customs Department had power and jurisdiction to examine the steel scrap which
the respondent was seeking to export to satisfy themselves that that scrap was
really steel skull scrap whose export had been permitted under the licence.
The Additional Collector of Customs acted
within his jurisdiction in checking the scrap to be exported by the respondent.
It was for him to decide whether the scrap to be exported was of the kind for
which the licence was given.
We, in the exercise of writ jurisdiction,
cannot enter, unless mala fides are alleged, into the question whether his
opinion about the nature of the goods to be exported was right or not. The Act
contains provisions for the person aggrieved with the order of the Officer of Customs
under s.
167(8) to appeal against that order. It is
for the authorities provided by the Act for determining the correctness of the
orders of the Customs Officers with respect to the confiscation of goods and
penalty imposed to decide on being properly moved 301 the orders of the customs
officers were correct or required some modification.
It is urged that there was no evidence before
the Additional Collector to come to the conclusion that the scrap confiscated
was not steel skull scrap. The contention is not sound. The Additional
Collector took into consideration certain survey reports of competent surveyors
about the description of the cargo exported by the respondent as steel skull
scrap. Such survey reports were produced by the respondent. It is therefore not
the case in which the Additional Collector proceeded on no evidence for holding
that the quantity of scrap confiscated was not steel skull scrap.
It is not really disputed that the entire quantity
of scrap exported by the respondent came within the definition of skull scrap
as given in 'Metals Hand Book' by Taylor and Lyman (American Institute of
Metals, 1948 Ed) which reads :
"A film or dross remaining in a pouring
vessel after the metal has been poured-A frozen shell of metal sometimes remaining
in the bottom of the ladle." The respondent however urges that a wider
meaning is given to this expression in India. There is not sufficient material
on record to substantiate this allegation. In matters of international trade,
it appears a bit difficult to expect that the expression 'skull scrap' would
have different meanings in different countries or that India alone would put a
wider meaning on the expression with the result that there might be disputes
between the exporters of this country and the importers of countries abroad.
It has been urged that as the Iron &
Steel Controller had power to grant the licence for the export of steel scrap,
his order on the shipping bill after inspecting the scrap on the docks that it
was passed for export, be treated as the requisite licence for the export of
the actual scrap which had been inspected at the docks. Such a note on the
shipping bill does not amount to licence granted under the relevant provisions
of the Act and the Import & -Export (Control) Act. The Export Control Order
could not have contemplated such a report of the Inspecting Officer to amount
to the granting of a licence for the export. If it contemplated so, the entire
procedure for the grant of a licence would have been different. Further, the
person who inspected the scrap at the docks and passed it for export was not an
officer mentioned in Schedule 11 of the Export Control Order. The materials
taken to the dock by the exporter are not necessarily inspected by the
specified officer but by any representative of the Sup.Cl/65-5 302 Iron &
Steel Controller and the representative too has to inspect the material along
with the representatives of such parties as the Iron & Steel Controller
might direct. The various shipping bills for the materials taken to the docks
show that the material was inspected ,on behalf of the Iron & Steel
Controller by the Deputy Assistant Controller of Iron & Steel, an officer
who is not included among the officers mentioned in Schedule II of the Exports
Control Order.
Another contention raised for the respondent
is that the Additional Collector could not confiscate the goods after they had
left the country and that therefore his order of confiscation of the scrap
which according to him was not steel skull scrap was bad in law. The affidavit
filed by the Additional Collector, appellant No. 1, mentions the circumstances
in which the scrap exported by respondent was allowed to leave the country. It
was allowed to leave the country after the Collector had formally seized it and
after the agents of the shipping company had undertaken not to release the
documents in respect of the cargo to its consignees. This undertaking meant
that the cargo would remain under the control of the customs authorities as
seized cargo till further orders from the Additional Collector releasing the
cargo and making it available to the consignees by the delivery of the
necessary documents to them. The documents were allowed to be delivered to them
on the application of the respondents praying for the passing on of the
necessary documents to the purchasers of the goods in Japan and on the
respondents giving a bank guarantee that the full f.o.b. value to be released
from the said parch would be paid to the customs authorities towards penalty or
fine in lieu of confiscation that might be imposed upon the respondents by the
adjudicating authority. The customs authorities had seized the goods when they
were within their jurisdiction. It is immaterial where the seized goods be
kept. In the circumstances of the case, the seized goods remained on the ship
and were carried to Japan. The seizure was lifted by the Additional Collector
only when the respondents requested and gave bank guarantee. 'Me effect of the
guarantee was that in case the Additional Collector adjudicated that part of
the goods exported was not in accordance with the licence and had to be
confiscated, the respondents, would, in lieu of confiscation of the goods, pay
the fine equivalent to the of the bank guarantee.
Section 183 of the Act provides that whenever
confiscation is authorised by the Act the Officer adjudging it would give the
owner of the goods option to pay in lieu of confiscation such fine 303 as the
officer thinks fit. This option was extended to the respondent at the stage
before the goods were released from seizure. The formal order of confiscation
had to be passed after the necessary enquiry and therefore when passed in the
present case after the goods had actually left this country cannot be said to
be an order which could not be passed by the Customs Authorities.
I, therefore, do not agree with this
contention.
There now remains the question of the amount
of penalty which can be imposed under s. 167(8) on the person concerned in the
export of prohibited or restricted goods contrary to the prohibition or
restriction. This Court has held in Ranchoddas Atmarwn v. Union of India(1)
that it is open to the Customs Authorities to impose any of the alternative
penalties under s. 167(8) even though the amount of it exceeds the amount of
the maximum in the other alternative.
The amount of penalty was therefore not
limited to Rs. 1,000 only. The penalty imposed is not said to exceed three
times the value of the goods exported unauthorizedly. It follows that the
amount of penalty imposed by the Additional Collector of Customs was legal and
that its reduction to Rs.
1,000 by the High Court was not correct.
1, therefore, hold that the impugned orders
of the Additional Collector were correct and would accordingly allow the
appeals, set aside the orders under appeal and restore the orders of the
Additional Collector dated December 21, 1957, but, in the circumstances, order
the parties to bear their own costs.
ORDER BY COURT In accordance with the opinion
of the majority, the appeals are dismissed with costs. One hearing fee.
(1) 3 S.C.R. 718.
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