New Central Jute Mills Co. Ltd. Vs.
The Assistant Collector of Central Excise, Allahabad & Ors  INSC 177
(8 September 1970)
08/09/1970 GROVER, A.N.
CITATION: 1971 AIR 454 1971 SCR (2) 92 1970
SCC (2) 820
D 1975 SC 17 (31) R 1979 SC 789 (8) RF 1989
SC 222 (3) RF 1989 SC 516 (49)
Central Excise & Salt Act 18 of
1947--Section 12 whether void for excessive delegation-Power under section to
alter provisions of Sea Customs Act, 1878 in applying them to Act 18 of 1947
whether includes power to make changes in legislative policy.
General Clauses Act, s. 8(1)-whether enables
provisions of Customs Act, 1962 to be applied under s. 12 of Act 18. of 1947 in
place of the provisions of Sea Customs Act, 1878.
Customs Act, 1962, S. 105(1)--Conditions for
issue of search warrant.
The appellant company had a factory at
Varanasi at which chemicals including ammonia were manufactured. It was
considered by the Central Excise authorities that there had been evasion of
duty on ammonia by the company. The Assistant Collector Central Excise issued a
warrant for search and seizure of goods and documents, pursuant to which the
premises of the aforesaid factory were raided in May, 1968 and certain
documents seized. The company-filed a writ petition in the High Court which was
dismissed by the Single Judge. The Division bench upheld the order of the
Single Judge. In appeal to this Court by special leave, the questions that fell
for considerationwere (i) Whether s.
12 of the Central Excise Act was void because
the powers delegated to the Central Government thereby including the power to
make alterations in the Act applied were excessive;
(ii) Whether the Sea Customs Act, 1875 having
been repealed, it was open thereafter to the Central Government under s. 12 of
the Excise Act to apply s. 105 of the Customs Act 1962; and (iii) Whether the
Assistant Collector issued the warrants in the present case after due
application of mind to relevant materials and 'facts in terms of s. 105(1) of
the Customs Act, 1962.
HELD : (i) In the notifications issued inter
alia applying S. 105(1) and s. 1 10 of the Customs Act, 1962, no such changes
had been made as could possibly fall within the meaning of the word
'alterations. The power to restrict and modify does not import the power to
make essential changes.
It is confined to alterations of minor
character and no change in principle is involved. The word 'alteration' in s.
12 must be understood in the sense in which it was open to the legislature to
employ it legitimately and in a constitutional manner. No question was thus
involved of delegation either of any essential legislative functions or any
change of legislative policy. [96 B-D] In re Delhi Laws Act, 1912, 
S.C.R. 747, referred to.
(ii)S. 8(1) of the General Clauses Act
provides that where any Central Act repeals and re-enacts with or without
modification any provision of the former enactment then references in any such
enactment or in any instrument, to the provisions so repealed shall, unless a
different intention appears, be construed as references to the provisions so re93
enacted. By virtue of this provision it could not be disputed that in s. 12 of
the Central Excise and Salt Act, 1947, the Customs Act, 1962 can be read in
place of the Sea Customs Act, 1878. [96 E] The contention that s. 12 of the Act
empowers incorporation of the provision of the Sea Customs Act, 1878 in the Act
itself and, therefore, 8(1) of the General Clauses Act, does not apply could
not be accepted. Section 12 only contained a provision delegating limited
powers to the Central Government to draw upon the provisions of the Sea Customs
Act, 1878 for the purpose of implementing s. 3 of the Act.
[96 F; 97 A] Secretary of State for India in
Council v. Hindusthan Cooperative Insurance Society, 58 I.A. 259,
The Collector of Customs Madras v. Nathella
The extension of s. 105 could not be said to
be illegal merely because under s. 172 of the Sea Customs Act it was a
Magistrate who after applying judicial mind had to issue search warrant whereas
under the present notification after the enactment of the Customs Act, 1962, it
was the Assistant Collector of Customs performing executive functions who had
been empowered to issue a search warrant. By the latter notification the
previous notification applying the provisions of the Sea Customs Act was
superseded and no question with regard to the validity of the notification
issued in 1963 and then amended in 1965 could survive.
Collector Custom & Excise Cochine &
Ors, v. A. S. Bava  1 S.C.R. 82, distinguished [98 A-C] (iii)On the facts
of the case it could not be said that the Assistant Collector had no relevant
material upon which the belief could be founded in terms of s. 105(1) of the Customs
Act, 1962. [98 D] & CIVIL APPELLATE JURISDICTION: Civil Appeal No. 460 of
Appeal by special leave from the judgment and
order dated May 20, 1969 of the Allahabad High Court in Special Appeal No. 1177
M. C. Chagla and R. Gopalakrishnan, for the
V. A. Seyid Muhammad, P. C. Chandi, B. D.
Sharma and S. P. Nayar, for the respondents.
The Judgment of the Court was delivered by
Grover, J. This is an appeal by special leave from a judgement of the Allahabad
High Court dismissing a writ petition by which the appellant challenged the
validity of a warrant issued by the Assistant Collector, Central Excise,
Allahabad, authorising the Superintendent Central Excise, Varanasi, to enter
certain premises, search the same and seize the documents therefrom.
The appellant, which is a public limited
company having its registered office at Calcutta, owns and runs a factory known
as Sahu Chemicals and Fertilisers at Varanasi where chemicals such 94 as
ammonia and soda ash are manufactured. In February 1962 excise duty was fixed
on manufacture of ammonia for the purpose of fertilisers at Rs. 25/per metric
ton, the rate being Rs. 125/per metric ton if it was used for other purposes.
The notification by which the aforesaid duty was payable was later withdrawn by
means of another notification dated March 1, 1964 and thereafter no excise duty
was required to be paid on the manufacture of ammonia. For the period from May
1962 to the beginning of March 1964 the appellant had paid duty at the rate of
Rs. 25/per metric ton on the ground that ammonia had been utilised for the
purpose of manufacture of chemical fertiliser. The Central Excise authorities,
however, had received information that part of the ammonia had been utilised
for purposes other than the manufacture of fertilizers on which higher duty of
Rs. 125/per metric ton was payable. It was considered that there had been
evasion of duty. On May 11, 1968, the Assistant Collector issued a warrant for the
search and seizure of goods and documents pursuant to which the premises of the
factory at Varanasi were searched on May 11, 12 and 13, 1968 and various
documents were seized.
The writ petition was heard in the first
instance by the learned single judge who dismissed it. In appeal his judgment
was upheld by the Division Bench. Three contentions were raised before the
Division Bench; the first was that S. 1.2 of the Central Excises and Salt Act,
1944, hereinafter called, the "Act" was void as the powers delegated
to the Central Government by the legislature were excessive and beyond
permissible limits. The second point was that the Sea Customs Act 1878 having
been repealed it was not open to the Central Government under s. 12 of the Act
to apply s. 105(1) of the Customs Act 1962 to the Act and the notification
dated May 4, 1963 by which this was done was illegal and ultra vires. The,
third was that the search and seizure made by the respondents under the
impugned authorisation dated August 11, 1968 and the authorisation itself were
not in accordance with the provisions of s. 105 of the Customs Act 1962.
Section 12 of the Act is in the following
S. 12. Application of the provisions of Act
VIII of 1878 to Central Excise Duties.-The Central Government may, by
notification in the official Gazette declare that any of the provisions of the Sea
Customs Act 1878 relating to the levy on and exemption from customs duties,
drawback of duty, warehousing offences and penalties, confiscation, and
procedure relating to offences and appeals, shall, with such modifications and
alterations as it may consider necessary or desirable to adapt them to the
circumstances, be applicable in regard to 95 like matters in respect of the
duties imposed by section 3." When the Act was enacted s. 172 of the Sea Customs
Act 1878 which could be applied to the Act under s. 12 provided :
S.172. "Any Magistrate may, on
application by a Customs-Collector, stating his belief that dutiable or
prohibited goods (or any documents relating to such goods) are secreted in any
place within the local limits of the, jurisdiction of such Magistrate, issue a
warrant to search for such goods.
Such warrant shall be executed in the same
way and shall have the same effect, as a search warrant issued under the law
relating to Criminal Procedure." It may be mentioned that the words
"or documents" were inserted by the Sea Customs Amendment Act 1955.
After the enactment of the Customs Act 1962 by the notification dated May 4,
1963 as amended by the Notification dated February 6, 1965 amongst other
provisions of the Customs Act 1962, subs. (1) of s. 105 and s. 1, IO were made
applicable with certain modifications of a minor nature under s. 12 of the Act.
The material part of these sections are reproduced below ;"S. 105(1) Power
to search premises.-(1) if the Assistant Collector of Customs, or in any area
adjoining the land frontier or the coast of India an officer of Customs
specially empowered by name in this behalf by the Board, has reason to believe
that any goods liable to confiscation or any documents or things which in his
opinion will be useful for or relevant to any proceeding under this Act are
secreted in any place, he may authorise any officer of customs to search or may
himself search for such goods, documents or things." "S. 110(3). The
proper officer may seize any document or things which, in his opinion, will be
useful for, or relevant to, any proceeding under this Act." On the first
point it has been urged on behalf of the appellant that s. 12 of the Act gave
unrestricted and unlimited power to the Central Government to modify or alter
the provisions of the Sea Customs Act 1878 and to apply the provisions of that
Act with such modifications and alterations as the Central Government might
consider appropriate. Modification, it has been pointed out, may be
permissible, and may not fall within the vice of excessive delegation because
the basic structure is not changed but alteration, it is suggested, has a much
wider connotation and it emm96 braces even the changing of the essential
pattern of a thing or object. Such a power inherently involves the making of
changes even in regard to matters pertaining to legislative policy.
In our opinion the above contention is purely
of academic interest in the present case. In the notifications which were
issued applying, inter alia, s. 105 (1) and S. 1 10 of the Customs Act 1962 no
such changes have been made as can possibly fall within the meaning of the word
It has been pointed out in the previous decisions
of this Court that the power to restrict and modify does not import the power
to make essential changes. It is confined to alterations of a minor character
and no change in principle is involved. See In re Delhi Laws Act, 1912.(1) It
was conceded before the High Court and has not been urged before us that the
word "modifications" could not be taken as conferring on the Central
Government any legislative power which was in excess of the permissible limits.
Objection was taken only with regard to the word "alterations" but
that word must be understood in the sense in which it was open to the
legislature to employ it legitimately and in a constitutional manner. No
question is thus involved of delegation either of any essential legislative
functions or any change of legislative policy.
The second contention has hardly any merit.
Section 8(1) of the General Clauses Act provides that where any Central Act
repeals and re-enacts with or without modification any provision of a former
enactment then references in any such enactment or in any instrument to the
provision so repealed shall, unless a different intention appears, be construed
as references to the provision so re-enacted. By virtue of this provision it
cannot be disputed. that in s. 12 of the Act the Customs Act 1962 can be read
in place of the Sea Customs Act 1878. An attempt has been made to argue that s.
12 of the Act empowers incorporation of the
provisions of Sea Customs Act 1878 in the Act itself and whenever a notification
is issued under it such provisions of the Sea Customs Act as have been applied
become incorporated as in integral part of the Act. Section 8 of the General
Clauses Act would not be applicable to a case of such incorporation and it can
only apply if s. 12 can be regarded as containing a reference to the provisions
of the Sea Customs Act. In Secretary of State for Indian in Council v.
Hindusthan Cooperative Insurance Society Ltd. (2) it was accepted as a settled
rule of construction that where a statute is incorporated by reference into a
second the repeal of the first statute does not affect the second. The law laid
down by the Privy Council can have no applicability to the present case.
Section 12 of the Act did not bodily lift, as it were, certain provisions of
the Sea Customs Act 1878 and incorporate (1)  S.C.R. 747.
(2) 58 I.A.259.
97 them as an integral part of the Act. It
only empowered the Central Government to apply the provisions of the Sea Customs
Act 1878 with such modifications and alterations as might be considered
necessary or desirable by the Central Government for the purpose of
implementation and enforcement of s. 3 of the Act. No exception could be taken
to the view of the High Court that s. 12 contained a provision delegating
limited powers to the Central Government to draw upon the provisions of the Sea
Customs Act 1878 for the purpose of implementing s. 3 of the Act. in The
Collector of Customs, Madras v. Nathella Sampathu Chetty & Another(1) this
Court examined at length the meaning and effect of incorporation by reference
of one statute into another and discussed the Privy Council case referred to
before in detail. Section 8(1) of the General Clauses Act, it was pointed out,
'dealt with reference or citation of one enactment in another without incorporation.
The usual or recognised formulae generally employed to effect incorporation
were considered; for instance the words used in s. 20 of 53 and 54 Vict. Ch.
70-Housing of the Working Classes Act, 1890, the words used were " shall,
for that purpose, be deemed to form part of this Act in the same manner as if
they were enacted in the body thereof." In 54 and 55 Vict. Ch. 19, s.
1(3), the language employed was,:
"The provisions of s. 134 of the said
Act (set out in the schedule) shall apply as if they were herein enacted."
It is unnecessary to mention the other provisions because a comparison of the
recognised formulae with the text of s. 12 of the Act shows that the provisions
of the Sea Customs Act 1878 were not meant to be incorporated in the Act and
were only to be applicable to the extent notified by the Central Government for
the purpose of the duty leviable under s. 3.
Another aspect which has been presented under
the second contention is that the impugned notification is bad and stands
vitiated because under the previous notification which applies s. 172 of the Sea
Customs Act 1878 it was a Magistrate who had to bring his judicial mind to bear
on the expediency or desirability of issuing a warrant for search whereas under
the present notification after the enactment of the Customs Act 1962 it is the
Assistant Collector of Customs who performs executive functions and who has
been empowered to issue the warrant for search and seizure. The decision of
this Court in Collector of Customs & Excise.
Cochin & Ors. v. A. S. Bava(2) has been
sought to be pressed into service in support of the argument that extension of
s. 105 (1), (1)  (3) S.C.R. 786.
(2)  1 S.C.R. 82.
98 is illegal. In that case the provisions of
S. 129 of the Sea Customs Act 1878 had been applied under S. 12 of the Act.
Section 129 dealt with the procedure relating to appeals and required an
appellant to deposit pending the appeal the duty or penalty imposed and
empowered the appellate authority, in its discretion, to dispense with such
deposit pending the appeal in any particular case.
There was a provision in the Act itself, s.
35, which gave an unfettered right of appeal to a person aggrieved by any
decision or order made under the Act. It was in these circumstances that it was
held that s. 129 of the Sea Customs Act 1878 could not be made applicable so as
to whittle down the substantive right of appeal conferred by s. 35 of the Act.
The ratio of that decision can afford no assistance to the appellant in the
present case. By the notification issued under s. 12 of the Act after the
enactment of Customs Act 1962, the previous notification under the Sea Customs
Act 1878 stood superseded and no question survives with regard to the validity
of the notification issued in 1963 and amended in 1965.
On the third point an attempt was made to
argue that the Assistant Collector, while issuing the, warrant for search and
seizure did not apply his mind to the relevant and necessary facts. Our
attention has been invited to the warrant itself in which the documents have
not been particularised or specified but the words certain documents" have
been used. The learned single judge dealt with this matter fully and repelled
the contention that there was no relevant material before the authority upon
which the belief could be founded in terms of s. 105(1) of the Customs Act 1962
by the Assistant Collector. We find no merit in this contention.
The appeal fails and it is dismissed with
G.C. Appeal dismissed.