Rib Tapes (India) Pvt. Ltd. & ANR
Vs. Union of India & Ors [1986] INSC 181 (2 September 1986)
OZA, G.L. (J) OZA, G.L. (J) NATRAJAN, S. (J)
CITATION: 1986 AIR 2014 1986 SCR (3) 697 1986
SCC (4) 189 JT 1986 312 1986 SCALE (2)367
ACT:
Customs Act, 1962;-Section III(m)-Difference
in 'value'Whether could be made basis of breach prior to 1973.
Statutory Interpretation:Object and Reasons
of BillResort to for intention of Legislature re-Permissible.
HEADNOTE:
The appellants, owners of a hosiery factory,
imported 27 knitting machines in 1972 under the import licence held by them.
According to the Customs authorities the machinery was not new as the licence
permitted to import, but was old reconditioned, and that the price shown was
much lower than the actual value. After hearing the appellants, the Collector
of Customs found that the appellants had committed breach of s. l l l(d) and
also of s. l ll(m) of the Customs Act 1962 and for both the counts he imposed
the penalty, which was maintained by the Board. On revision the Central
Government reduced the penalty from Rs. 1,47,000 to Rs. 1,00,000 which had been
imposed for breach of s. 111 (m). A writ petition filed by the appellants was
dismissed by the High Court.
In the appeal to this Court, on behalf of the
appellants it was contended that a penal provision has to be construed strictly
and in absence of specific words requiring 'value' to be mentioned, it could
not be inferred that any difference in value could be made the basis of
penalty.
On behalf of the respondents it was contended
that although the term 'value' was not in s. 1 l l(m) before the 1973 amendment
but that will make no difference as even without the term 'value' a
mis-description could be interpreted to be a mis-description on the basis of
value stated and ultimately the goods found to be of a higher value. By the
amendment the Legislature had only tried to explain or clarify the position.
698 Allowing the Appeals, the Court, ^
HELD: 1. The impugned orders are set aside
and the penalty imposed on the appellants under s. Ill(m) read with s. 111(d)
of the Customs Act 1962 is quashed. [704A-B]
2. Before the amendment in 1973, s. 111(m)
did not contemplate any difference in material particulars in respect of value
but it referred matters other than the value. [703B-C]
3. Unamended s. 111(m) indicated that
wherever goods actually imported are different in material particulars than the
goods which were shown in the bill of entry or a declaration as contemplated in
s. 46 then it will be a breach of s. 11 l(m). The difference in particulars
could be in respect of anything but value, as this sub-clause clearly shows
that the difference in value could not be made the basis of breach of this
sub-clause before the amendment of 1973, when the term 'value' has been
introduced into this sub-clause. [70 1 B-C ]
4. In order to interpret a particular
provision and to infer the intention of the Legislature, the objects and
Reasons stated in the Bill, when it is presented to the Legislature, could be
used. [703B ] 5. The amendment inserting the term 'value' in s. 111(m) cannot
be said to be explanatory. [703Fl Union of India & ors. v. M/s. Rai Bahadur
Shree Ram Durga Prasad (P) Ltd. & ors., [1969] 2 SCR 727, relied upon.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 172 of 1979 From the Judgment and order dated 4.4.1978 of the Delhi High
Court in Civil Writ No. 261 of 1978.
B.R. Aggarwala for the Appellants. O.P.
Sharma for the Respondents.
The Judgment of the Court was delivered by
OZA, J. This appeal on special leave arises out of a Judgment of 699 the Delhi
High Court dated 4th April, 1978. The leave is granted on a limited question as
regards the question of interpretation of sub-clause . (m) of Section 111 of
the Customs Act, 1962 ('Act' for short). The appellants imported 27 knitting
machines as the appellants owns a hosiery factory in 1972. The appellants held
an import licence for import of knitting machinery.
According to the Customs authorities the
machinery was not new as the licence permitted to import, but was old
reconditioned. The Customs authorities also held that the price shown by the
appellant on the basis of invoice was much lower than what the price actually
should be. The price shown by the appellant on the basis of invoice was
Rs.77441 whereas according. to the Customs authorities the price came to
Rs.2,98,359. On this basis, a show cause notice was issued and after hearing
the appellant, the Collector of Customs Bombay by order dated 29.12.73 found
that the appellants had committed breach of Section 111(d) of the Act and also Section
111(m) of the Act and for both the counts the penalty was imposed on the
appellants. Under Section 111(d) the penalty imposed was Rs.1,12,000 in lieu of
confiscation of goods and for breach Section 111(m) a penalty of Rs. 1.47,000
was imposed under Section 112 of the Act.
Against this order passed by the Collector of
Customs, an appeal was filed by the appellants before the Board and the Board
maintained the order passed by the Collector of Customs. On revision, the
Central Government reduced the penalty from Rs.1,47.000 to Rs. One lac only.
Against this the appellant preferred a writ petition before the Delhi High
Court which was dismissed by a Division Bench of the High Court by its judgment
dated 4th April, 1978 and aggrieved by this the present appeal has been
preferred.
So far as the penalty under Section 111(d) in
lieu of confiscation was concerned, the leave has not been granted and it is
not disputed that the appellants have taken away the goods after paying the
duty and in this appeal therefore we are not concerned with it. The only
challenge before us therefore is in respect of penalty of Rs. One lac imposed
under Section 111(m) of the Act.
It is not disputed that Section 111(m) of the
Act has been amended in 1973 by Act No. 36 of 1973 but this amendment will not
be applicable to the present case.
Section 111(m) as it stood before the
amendment reads as under:
700 "Any dutiable or prohibited goods
which do not correspond in any material particular with the entry made under
this Act or in the case of baggage with the declaration made under Section 77
in respect thereof." and After the Amendment Act 1973 this provision now
reads like:
"any goods which do not correspond in
respect of value or in any other particular with the entry made under this Act
or in the case of baggage with the declaration made under Section 77 in respect
thereof." It is therefore clear that the word 'value' was inserted in this
provision. Before the insertion of this word 'value';
Section 111(m) appears to mean that if the
dutiable or prohibited goods are imported which do not correspond in any
material particular with the entry made under Section 46 of the Act and in case
of baggage with the declaration made under Section 77, then alone Section
111(m) could be attracted:
Section 46 of the Act provides:
"46(1) The importer of any goods, other
than goods in tended for transit or transhipment, shall make entry thereof by
presenting to the proper officer a bill of entry for home consumption or
warehousing in the prescribed form:
Provided that if the importer makes and
subscribes to a declaration before the proper officer, to the effect that he is
unable for want of full information to furnish all the particulars of the goods
required under this sub-section, the proper officer may, pending the production
of such information, permit him, previous to the entry thereof (a) to examine
the goods in the presence of an officer of customs or (b) to deposit the goods
in a public warehouse appointed under Section 57 without warehousing the same.
XX XX XX XX XX XX XX XX XX XX XX XX (4) The
importer while presenting a bill of entry shall at the foot thereof make and
subscribe to a declaration as to MANOHAR 701 the truth of the contents of such
bill of entry and shall, in A support of such declaration, produce to the
proper officer the invoice, if any, relating to the imported goods." XX XX
XX XX It is in respect of this that Section 111(m) indicated that wherever
goods actually imported are different in material particulars than the goods
which were shown in the bill of entry or a declaration as contemplated in
Section 46 then it will be a breach of Section 111(m). The difference in
particulars could be in respect of anything but value, as this sub-clause
clearly show that the difference in value could not be made the basis of breach
of this sub-clause before the amendment of 1973, when the term 'value' has been
introduced into this sub-clause.
It was contended by the learned counsel for
the appellants that in fact in the decision of this Court in Union of India
& ors. v. M/s Rai Bahadur Shree Ram Durga Prasad (P) Ltd. & ors.,
[1969] 2 SCR 727 this Court considered the question of description and came to
the conclusion that a penal provision has to be construed strictly and in absence
of specific words requiring 'value' to be mentioned, it could not be inferred
that any difference in value could be made the basis of penalty.
Whereas learned counsel appearing for the
respondents contended that although the term 'value' was not in Sec.
111(m) of the Act before the amendment but
that will make no difference as according to him even without the term 'value'
a mis-description could be interpreted to be a misdescription on the basis of
value stated and ultimately the goods found to be of a higher value. By the
amendment the Legislature had only tried to explain or clarify the position and
he contended that this was the view taken by the High Court while considering
this question.
In Union of India's case the Court held:
"If we are to hold that every
declaration which does not state accurately the full export value of the goods
exported is a contravention of the restrictions imposed by s. 12(1) then all
exports on consignment basis must be held to contravene the restrictions
imposed by s. 12(1). Admittedly s. 12(1) governs every type of export. Again it
is hard to believe that the legislature intended that any minor mistake in
giving the full export value should be penalised in the manner provided in s.
23(A). The wording of s. 12(1) does 702 not
support such a conclusion. Such a conclusion does not accord with the purpose
of s. 12(1).
It is true that the regulations contained in
the Act are enacted in the economic and financial interest of this country. The
contravention of those regulations which we were told are widespread are
affecting vital economic interest of this country. Therefore the rigour and
sanctity of those regulations should be maintained but at the same time it
should not be forgotten that s.
12(1) is a penal section. The true rule of
construction of a section like s. 12(1) is, if we may say so with respect, as
mentioned by Plowman, J. in Re H.P.C. Productions Ltd.-[1962] Ch. Dn.
466 at 473." It is therefore clear that
their Lordships relied on the rule of construction holding that penal provision
has to be strictly construed and held that where the provision itself did not
require the value to be stated for any error in respect of that, no penalty
could be imposed. Learned counsel contended that it was because of this decision
that the Amendment Act 1973 was passed by the Parliament and the term 'value'
was inserted in Sec. 111(m) of the Act. Learned counsel referred to objects and
Reasons for the amendment mentioned in the Bill, which resulted in Act No. 36
of 1973.
The material words mentioned in the objects
and Reasons for the amendment as stated in the Bill reads as under "The
amendments to these Acts proposed in the Bill mainly seek to make the
punishments prescribed thereunder more severe and to make certain other provisions
the rein with regard to the rules of evidence and procedure with a view to
removing the loopholes noticed in the working of these Acts and making their
enforcement more effective.
2. The notes on clauses explain in detail the
various provisions of the Bill.
-Clause(2). This clause seeks to amend
Section 111 of the Customs Act, 1962, with a view to providing for the
confiscation of goods in cases of misdeclaration of the value or imported goods
irrespective of whether or not such goods 703 are dutiable or prohibited, in
order to cover cases of over invoiced imports." It is not in dispute that
in order to interpret a particular provision and to infer the intention of the
Legislature, the objects and Reasons stated in the bill, when it is presented
to the Legislature, could be used. In this view of the matter it appears that
before the amendment in 1973, Sec.
111(m) did not contemplate any difference in
material particulars in respect of value but it referred matters other than the
value.
It is not disputed that penalty under Sec.
111(m) has been imposed solely on the ground that the price shown by the
appellant in the declaration was much less than what was ultimately found by
the Department to be the price of imported goods and in respect of this
difference of price, it was held that there is a difference in material
particulars which brought the matter within the mischief of Sec. 111(m) of the
Act. But in view of the fact that the term 'value' was not in Sec. 111(m)
before the amendment of 1973 this difference on the basis of value could not be
said to be a difference in material particulars within the meaning of the
language of Sec. 111(m) and in this view of the matter, the view taken by the
authorities could not be maintained.
The High Court in its judgment realising this
difficulty observed that this amendment where the term 'value' has now been
inserted is merely explanatory and that was what was also contended by learned
counsel for the respondents.
It is not in dispute that a penal provision
has to be strictly construed and reading Sec. 111(m) before the amendment it is
not possible to draw an inference that any difference in material particulars
may be referable to 'value'. This argument therefore can not be accepted. The
scheme of Sec. 111(m) as it stood then nowhere referred to the difference of
value as one of the ingredients which may attract this provision. In such a
situation therefore if it was not the specific intention of the provision, a
difference in respect of value therefore could not be said to attract this
provision and on that basis no penalty could be imposed.
704 The appeal is allowed and the orders
passed by the Collector, Board, Central Government and the High Court are
hereby set aside. The penalty imposed on the appellants under Sec. 111(m) read
with Sec. 112 is hereby quashed. The appellant shall be entitled to get refund
of the penalty if already deposited. No order as to costs.
A.P.J. Appeals allowed.
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