Customs appeal over recovery of penalty substituted by the Central Board of Revenue in place of confiscation ordered by the Collector. The Supreme Court held the Board is not an officer of customs, so its order cannot be enforced by the Collector under section 193; consent under section 190 was unproven. Appeal dismissed.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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896 SUPREME COURT REPORTS [1962] ' '
THE COLLECTOR OF CU$TOMS, BARODA
April I2,
v.
DIGVIJAYSINHJI SPINNING & WEAVING
MILLS LTD.
(IC SUBBA RAO and RAGHUBAR DAYAL, JJ.)
Import-Confiscation of goods b_y Collector of CustomsPenalt_y substituted for confiscation b_y Board of Revenue, if can be realised bJ the Collector of Customs-Sea Customs Act, r878 (VIII of 1878), SS. I67(8), I93.
The respondent imported goods of higher value than what was granted under his licence. The Collector of Customs ordered the goods to be confiscated under s. r67(8) of the Sea Customs Act, +878 and in lieu of confiscation gave an option to the respondent to a fine. On appeal the Central Board of Revenue set aside the order of the Collector of Customs and instead of it imposed a penalty. The respondent did not pay the penalty and the Collector of Customs took proceedings under s. r93 of the Act for;the recovery of the penalty in pursuance of which a Magistrate issued warrants of attachment against the respondent holding that the Collector of Customs could validly realise the penalty under s. r93 of the Act. The Sessions Judge dismissed the respondents application in revision but the High Court held that as the penalty was imposed by the Central Board of Revenue the Collector of Customs could not realise the amount of the penalty under s. r93 of the Act and also held that the order of the Central Board of Revenue commuting the confiscation to penalty was not without jurisdiction. On appeal by special Jeave 1
Held, that the Central Board of Revenue which is the "Chief Customs Authority" cannot be called an "officer of cu·stoms", and the order of the Chief Customs Authority imposing a penalty for the first time cannot be treated to be an order of the Collector of Customs within the meaning of s. r93 of the Sea Customs Act, r873, andl as such the Collector of Customs could not realise the penalty imposed by the Central Board of Revenue.
Rangaswam_y v. Alaga_yammal, A.LR. (r9r5) Mad. n33, Kristnamachariar v. Mangammal, (1902) I.L.R. 26 Mad. gr and Lachmeshwar Prasad Shukul v. Keshwar Lal Chaudhuri, (r940) F.C.R. 84, held not applicable.
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 74 of 1960.
Appeal by special leave from the judgment and order dated August 8, 1957, of the Bombay High
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Court at Rajkot in Criminal Revision Application No. 10 of 1956.
B. K. Khanna and T. llf. Sen, for the appellant. Rame~hwr:tr Nath, S. N. Arulley and P. L. Vohra, for the respondent.
SuBBA RAo, J.-This appeal by special leave is against the order of the Bombay High Court at Rajkot setting aside the warrants of attachment issued by the First Class Magistrate, J amnagar, for enforcing the penalty imposed on the respondent under s. 193 of the Sea Customs Act, 1878, (hereinafter called the Act).
Collector of Cus~oms, Baroda v. Digvijaysinhji Spinning & Weaving Mills Ltd.
Subba Rao ].
The material facts may be briefly stated. The respondent is Digvijayasinhji Spinning & Weaving Mills Limited, Jamnagar. It imported 275 cases of secondhand looms under one consignment and 175 cases of second-hand textile waste to plant machinery under another consignment from Pondicherry. The respondent held licences for import of goods of a lesser value than the value of these consignments. The Collector of Customs, Baroda, ordered the said goods to be confiscated under s. 167(8) of the Act; and in lieu of confiscation an option was given to the respondent to pay a fine of Rs. 22,918 and Rs. 16,000 in respect of the two consignments. Further, on the ground that the respondent had understated the value of the goods imported under the first consignment, the appellant imposed a penalty of Rs. 500 under s.167(37)(c) of the Act. Against the said order, the respondent preferred two appeals to the Central Board of Revenue and the said Board, by its order dated January 15, 1954, set aside the orders of the appellant and instead imposed a penalty of Rs. 22,918 in regard to the first consignment and Rs. 16,000 in regard to the other under s. 167(8) of the Act; but the penalty of Rs. 500 was however maintained. In revision the Government of India modified the order of the Central Board of Revenue by cancelling the penalty of Rs. 500 and in
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898 SUPREME COURT REPORTS [1962]
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Ig6r other respects it confirmed the order of the said Board. Th.e respondent cleared the goods on execut- Collector of ing a bond in favour of the appellant. As the respon- Custo1ns, Baroda v. dent did not pay the penalty, the appellant, acting Digvijaysinhji under s. 193 of the Act, notified the default in, writing Spinning & to the First Class Magistrate at J amnagar so that the Weaving Mills penalty might be recovered in the manner prescribed
Ltd. by the said section as if the said penalty was a fine Subba Rao ]. inflicted by the Magistrate himself. On the said requisition the Magistrate issued warrants of attachment against the respondent, but the latter filed a petition before him for the cancellation of the said warrants on the ground that the order of the Central Board of Revenue was illegal and also on the ground that the appellant had no jurisdiction to take action under s. 193 of the Act. The Magistrate, by his order dated May 8, 1956, held that the appellant could validly realize the said amounts under the machinery provided under s. 193 of the Act. Against the said order of the Magistrate the respondent preferred an appeal to the Sessions Judge, Halar, Jamnagar, b'ut it was later converted into a revision and was dismissed. On revision to the High Court against that order, the High Court held that as the penalty was imposed by the Central Board Revenue, the -appellant could not realize the said amounts under 193 of the Act; it also expressed an opinion that the final order of the appellate authority was not without jurisdiction as it was not shown that consent of the owner of the goods ordered to be confiscated had not been obtained by the Central Board of Revenue before the order commuting the confiscation to penalty was passed. In the result, the High Court set aside and cancelled the warrants of attachment issued by the J!Iagistrate. Hence the appeal. ·
Learned counsel for the appellant broadly contended that s. 193 of the Act should be liberally construed with a view to effectuate the intention of the legislature and if so construed the order of the Central Board of Revenue made in substitution of that of an officer of Customs could be enforced by the latter officer under the said section. On the other hand,
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learned counsel for the respondent argued that the I96I Central Board of Revenue was not an officer . of Customs within the meaning of s. 193 of the Act and cus;,;'.c c 11 0;.:oda ;.:oda 1 therefore its order could not be enforced under the v. said section by an officer of Customs; and that even if Digvijaysinhji the Board, being the Chief Customs Authority, could Spinning '"' be considered to be an "officer of Customs" within the W.av7 M•lls 1 meaning of those words, the said Chief Customs • Authority only could enforce the said order and not the subba Rao J. Collector of Customs.
I96I cus;,;'.c c 11 0;.:oda ;.:oda 1 v. Digvijaysinhji Spinning '"' W.av7 M•lls 1 •
To appreciate the rival contentions and to provide a satisfactory solution to the problem presented it is necessary to read the .relevant provisions of the Act, not only to understand the scheme of the Act but also to construe the· provisions of s. 193 thereof in the light of the scheme disclosed by the said provisions. It is one of the well established rules of construction that "if the words of a statute are in themselves precise and unambiguous no more is necessary than to expound those words in their natural and ordinary sense, the words themselves in such case best declaring the intention of the legislature''. It is equally well settled principle of construction that "Where alternative constructions are equally open that alternative is to be chosen which will be consistent with the smooth working of the system which the statute purports to be regulating; and that alternative is to be rejected which will introduce uncertainty, friction or confusion into the workiug of the system." With this background and having regard to the aforesaid two . principles of construction, let us at the outset scrutinize the scheme of the Act. Section 3 defines "Chief Ctrntoms-authority" to mean the Central Board of Revenue. "Customs-collector" is defined to include "every officer of Customs for the time being in separate charge of a custom-house, or duly authorized to perform all, or any special, duties of an officer so in charge." Section 19 confers a power on the Central Government to prohibit or restrict the importation or exportation of goods by sea or by land. Section 167 prescribes the various punishments for offences under the Act. Section 167(8) says that if any goods, the
' 900 SUPREME COURT REPORTS [1962] importation or exportation of which is for the time being prohibited or restricted by or under Chapter IV Collector of of the Act, be imported into or exported from India Customs, Baroda v. contrary to such prohibition or restriction, such goods Digvijaysinhji shall be liable to confiscation; and any person con- Spinning & cerned in any such offence shall be liable to a penalty Weaving Mills not exceeding three times the value of the goods, or Lid. not exceeding one thousand rupees. Under s.167(37)(c), if it be found, when any goods are entered at, or Subba Rao ]. brought to be passed through, a custom-house, either for importation or exportation, that the contents of such packages have been misstated in regard to sort, quality, quantity or value, such packages shall be liable to confiscation and every person concerned in any such offence shall be liable to a penalty not exceeding one thousand rupees. Sectio:rf 182, empowers the Collector of Customs to adjudicate whether anything is liable to confiscation, increased rate of duty or any person is liable to a penalt,Y- Section 183 enjoins on such authority to give the owner of goods so confiscated an option to pay in lieu of confiscation such fine as it thinks fit. Section 188 gives a right of appeal from such an order to the Chief Customs Authority who is empowered to pass such order as he thinks fit, confirming, altering or annulling the decision or order appealed against; but under the proviso to that section the said appellate authority cannot make an order subjecting any person to any greater confiscation, penalty or rate of duty than has been adjudged against him in the original decision or order. Every order passed under this section is final subject to the power of revision conferred by s. ·191 on the Central Government. Section 190 confers a power on the Chief Customs Authority to remit penalty, increased rate or confiscation in whole or in part; it also enables tlie said authority, with the consent of the owner of the goods ordered to be confiscated to commute the order of confiscation to a penalty not exceeding the value of such goods. Section 190A gives a power of revision to the Chief Customs Authority against an order of any officer of Customs passed under the Act and enables it to pass such order thereon as it thinks fit. Then comes the
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1 S.C.R. SUPREME COURT REPORTS
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crucial s. 193. As the argument turns upon the provi- z96z sions of this section, it would be convenient to read t e entire sec h · . t' 10n a t th' 1s s age. t l . c us oms, Collector Collector , B aro a of d d Section 193: "When a pena ty or mcreased rate v. of duty is adjudged against any person under this Digvijaysinhji Act by any officer of customs, such officer, if such Spinning & penalty or increased rate be not paid, may levy the Weaving Mills same by sale of !tnY goods of the said person which Ltd. may be in his charge or in the charge of any other Subba Rao J. officer of Customs.
c us oms, Collector Collector , B of d d us oms, Collector aro a v. Digvijaysinhji Spinning & Weaving Mills Ltd.
When an officer of Customs who has adjudged a penalty or increased rate of duty against any person under this Act is unable to realise the unpaid amount thereof from such goods, such officer may notify in writing to any Magistrate within the local limits of whose jurisdiction such person or any goods belonging to him may be, the name and residence of the said person and the amount of penalty or increased rate of duty unrecovered; and such Magistrate shall thereupon proceed to enforce payment of the said amount in like manner as if such penalty or increased rate had been a fine inflicted by himself."
Pausing here, let us recapitulate the gist of the aforesaid provisions. Under the Act the goods, whose importation or exportation is prohibited or restricted by the provisions of the Act, are liable to be confiscated and also the person concerned is liable to a penalty. Even a mis-statement in regard to sort, quality, quantity or value of the goods so imported or exj1orted is an offence and the packages, with their contents, are liable to be confiscated and the person concerned in any such offence is also liable to penalty. The Collector of Customs can make an order confiscating the said goods as well as imposing a penalty on tho person concerned. In an appeal against that order, the Chief Customs Authority can modify the said order, but it has no power to increase the burden. It can remit such penalty or confiscation, in whole or in part, but it can also commute the order of confiscation to penalty not exceeding the value of such goods. A person desiring to file an appeal against an order of
902 SUPREME COURT REPORTS [1962]
penalty passed by an officer of Customs shall, pending an appeal, deposit in the hands of the Customs-collec- Collector of Customs, Baroda tor at the port where the dispute arises the amount v. demanded by the officer passing such decision or order; Digvijaysin.hji and if he succeeds wholly or in part, the whole or such Spinning &- part thereof, as the caRe may be, shall be returned to Weaving Mills Ltd. him. The result of the provisions, therefore, is that there would never be a contingency or necessity for an Subba Rao J. appellate tribunal to enforce payment of penalty imposed by it, for no appeaf would be heard by it unless the penalty was deposited as aforesaid.
With this background let us look at the relevant provisions of s. 193 of the Act. Under the said section only an officer of Customs, who has adjudged a penalty or increased rate of duty, can realize the said penalty or rate through the machinery of a Magistrate. The question is whether the Chief Customs Authority is "an officer of Customs" who has adjudged a penalty or rate, as t.he case may be, within the meaning of s. 193 of the Act. Section 182 of the Act enumerates the different officers of Customs who are empowered to adjudge a question of penalty, but the Chief Customs Authority is not included in that list. Indeed, in s. 182(c) the Chief Customs Authority is empowered to nominate the subordinate officers of CuStoms to adjudge questions within certain pecuniary limits. That apart, s. 3(a) of the Act defines "Chief Customs-authority" to mean the Central Board of Revenue. The Central Board of Revenue is a statutory authority and, though it can only function through officers appointed to the said Board, it is inappropriate to call it an officer of Customs. In this situation, when under the provisions of the Act there is no scope for realization of any penalty imposed for the first time by the Chief Customs Authority, it would be more in accord with the scheme of the Act to construe the words "an officet of Customs" as an officer of the Customs who is authorized to adjudicate in the first instance on the question of confiscation, increased rate of duty or penalty under s. 182 of the Act. This construction, it is said, would lead to an anomaly of the statute conferring a power on the Chief Customs Authority to
1 S.C.R. SUPREME COURT REPORTS
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impose a penalty and at the same time withholding z96z from it a procedure to enforce its collection. As we have pointed out, such an anomaly cannot arise under Collec(or0 ! th e provisIOns o · · f th e c , A. t 1or I.' th ere IS · no sec t" 10n w h" IC h Customs, Baroda v empowers the Chief Customs Authority to impose a Digvija~sinhji penalty higher than that imposed by the Customs spinning o;. Officer. Weaving Mills Assuming that ·the Chief Customs Authority is an Ltd.
Assuming that ·the Chief Customs Authority is an Ltd. Officer of Customs within the meaning of s. 193 of the Subba Rao J. Act, it had to initiate proceedings under the said section; but in this case the Collector. of Customs notified in writing to the Magistrate for recovering the said penalty.
Learned counsel for the appellant contends that an order made by the Chief Customs Authority imposing a penalty shall be deemed in law to be an order made by the original authority, that is, the Collector of Customs and, therefore, the said order for the purpose of enforcement shall be treated as the order of the Collector of Customs. It is said that this legal position would flow from the proposition that an appeal is a continuation of a suit. The said proposition is unexceptionable: see Rangaswamy v. Alagayammal (1 ), Kristnamachariar v. Mangammal ('), Lachmeshwar Prasad Shukul v. Keshwar Lal Chaudhuri('). But neither the said decisions nor the principles laid down therein can have any bearing on the question whether an order made for the first time by an appellate authority could in law be deemed to be one made by the original authority. In the absence of any statutory fiction giving rise to that result, it is not permissible to treat the order made by one authority as that made by another authority. If so, it follows that the order of the Chief Customs Authority imposing a penalty for the first time cannot be treated to be an order of the Collector of Customs within the meaning of s. 193 of the Act.
As we have pointed out, the Chief Customs Authority has no power to impose a penalty for the first time under s. 188 of the Act; but it has power under (1) A.I.R'.. 1915 Mad. 1133. (2) (1902) I.L.R. 26 Mad. 91, 95·96.
(3) (1940) F.C.R. 84, 103.
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904 SUPREME COURT REPORTS [1962]
s. 190 of the Act to commute the order of confiscation to a penalty not exceeding the value of the goods Colleclo,.. of Custo1ns, Baroda confiscated. Though the Chief Customs Authority in v. its order dated January 15, 1954, did not expressly rely Digvijaysinhji on s. 190 of the Act, it cannot be disputed that it ha.s Spinning & jurisdiction to pass such an order thereunder subject Weaving Al ills to the conditions laid down therein. The condition Ltd. for the exercise of that power is that it should have Subba Rao ]. obtained the consent of the party whose goods were confiscated. The High Court in its order observed that there was nothing before it to show that the consent of the owner of the goods ordered to be confiscated was not obtained before the order of confiscation was commuted to one of penalty by the Chief Customs Authority. If that be taken as a finding the question of the legal effect of an order of commutation would arise for consideration. Would such an order be deemed to be made in substitution of that of an original authority? Could it be said that the commuted sentence shall be deemed in law a sentence imposed by the original tribunal? But these questions need not detain us, as we are not· satisfied on the material placed before us that the condition of consent has been fulfilled in this case. The High Court in effect drew a presumption in favour of the regular performance of an official act. But this presumption is only optional. In a case like this when the validity of an order depends upon the fulfilment of a condition, the party relying upon :the presumption should at least show that the order on the face of it is regular and is .in conformity with the provisions of the statute. But in the present case the order of the Chief Customs Authority ex facie does not show that it was made under s. 190 of the Act. Indeed it is purported to have been made under s. 167(8) of the Act. If as a matter of fact the said Authority made the order of commutation with the consent of the owner of the goods it would have certainly jurisdiction to make such an order under s. 190 of the Act. Though there was no such recital, it would have been open to the appellant to establish that fact by necessary evidence. In the absence of any such evidence we must hold that it has
l S.C.R. SUPREME COURT REPORTS 905
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not been established that the Chief Customs Authority made its order under s. 190 of the Act with the consent of the respondent.
This will not preclude the State from establishing by relevant evidence that the penalty was imposed under s. 190 of the Act with the consent of the owner of the goods in an appropriate proceeding.
In the result the order of the High Court )s correct and the appeal is dismissed.
Ig6I
Colltctor of Customs, Baroda v. Digvijaysinhji Spinning & fVeaving 1-1 ills Ltd.
Subba Rao ].
Appeal dismissed.
DAJI KRISHNAJI DESAI TAMBULKAR v.
GANESH VISHNU KULKARNI AND OTHERS
April I2.
(K. SUBBA RAO, RAGHUBAR DAYAL and
J. R. MUDHOLKAR, JJ.)
Khoti Land-Transfer prior to Ig46 without consent of KhotRights of purchaser-Bombay Tenancy Act, I939 (Bom. 290] I9J9), s. 3r-Khoti Settlement Act, I88o (Born. I of I88o), ss, 3, 9,
The land in suit was Khoti land and s. 9 of the Khoti Settlement Act, r88o, prior to its amendment prohibited the transfer of the occupancy right without the consent of the Khot. Section 31 of the B)mbay Tenancy Act, r939, which came into force from April 1946, amended s, 9 of the Khoti Settlement Act by which no consent of the Khot was necessary for transferring the occupancy rights in the land. In 1892, R sold his occupancy right without the consent of the Khot to L, the predecessor-in-interest of respondent No. I. In 1945, R's successor again sold the same occupancy right to the appellant also without the consent of the Khot. The appellant's case was that the sale deed in 1892 in favour of the predecessor-in-interest of respondent No, r was void as the transfer of the occupancy right was made ·without consent of the Khat; whereas respondent No. l contended that R by the sale deed in 1892 had already lost, his right to the property in suit and therefore R's successors had no title to pass in 1945 in favour of the appellant.
Held, that the occupancy right in a Khoti land could not be transferred without consent of the Khat prior to April r946, when the Bombay Tenancy Act, 1939, came into force.
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2 issues framed by the court
Whether the Collector of Customs could realise under s. 193 of the Sea Customs Act a penalty imposed for the first time by the Central Board of Revenue on appeal.
Whether the Chief Customs Authority (Central Board of Revenue) is an 'officer of customs' within s. 193 of the Act.
Colour shows how this judgement treated each authority
Rangaswamy v. AlagayammalDistinguished¶60
A.I.R. 1915 Mad. 1133 · Who else cites this
Kristnamachariar v. MangammalDistinguished¶60
(1902) I.L.R. 26 Mad. 91 · Who else cites this
Lachmeshwar Prasad Shukul v. Keshwar Lal ChaudhuriDistinguished¶60
(1940) F.C.R. 84
3 provisions across 1 enactments
Collector of Customs, Baroda
Digvijaysinhji Spinning & Weaving Mills Ltd.
Subba Rao
Raghubar Dayal
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
