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SUPREME COURT OF INDIA
26th April, 1961
P.B. GAJENDRAGADKAR, A.K. SARKAR, K.N. WANCHOO, K.C. DAS GUPTA AND N. RAJAGOPALA AYYANGAR, JJ.
M/s. French India Importing Corporation, Delhi Petitioner
Versus
The Chief Controller of Imports & Exports and others, Respondents.
Writ Petition No. 36 of 1960.
Advocates Appeared
M/s. N. C. Chatterjee and D. R. Prem, Sr. Advocates (Mr. R. Ganpathy Iyer, Advocate, and Mr. G. Gopalakrishnan, Advocate of M/s. Gagrat and Co. with them), for Petitioner; Mr. B. Sen, Sr. Advocate (M/s. R. H. Dhebar and T. M. Sen, Advocates, with him), for Respondents.
CUSTOMS DUTY - Levy of - Import of goods into Pondicherry after its merger with India - Whether liable to customs duty - Whether the saving clause in the notification issued by the Government of India exempting certain things done before the merger from the operation of the Indian laws applied to the levy of customs duty - Held, yes.
Fact of the Case:
The petitioners, citizens of India, placed an order on August 6, 1954, with certain firms in the United Kingdom for the despatch of cycles and cycle parts to Pondicherry, which was at that date the principal French establishment in India. According to the law which then obtained in Pondicherry territory, merchants desiring to do business there had to have "a patent" or licence from the authorities for carrying on such business. The petitioners applied for such a "patent" to the authorities on August 14, 1954, and they were granted one on August 18, which was to be effective from August 1, 1954. The order placed with U. K. firms was accepted and the goods covered by the indents were shipped form the U. K. ports on October 11, 1954. The foreign exchange needed for effecting this import could under the French Law have been obtained either from or on the authorization of the Head of the Department of Economic Affairs at Pondicherry or by what has been termed purchase in the open market. In pursuance of these facilities the moneys required were transmitted through bankers who made payments on behalf of the petitioners in the United Kingdom and the goods arrived in Pondicherry on December 4, 1954, the Bill of Entry being presented to the Customs Authorities for clearance on the 17th of that month.
Finding of the Court:
The Court held that the petitioners were entitled to relief so far as the petition related to the quashing of the order imposing the penalty and for a direction to refund the same. However, the Court held that the petitioners were not entitled to have their goods imported into Pondicherry after November 1, 1954, without payment of customs duty notwithstanding that the contracts by reason of which the goods were imported, were entered into or the shipment took place before that date.
Issues: 1. Whether under the terms of the relevant notifications, the importation was un-authorized for want of an import licence so as to render the petitioners subject to the levy of a penalty under S. 167(8) of the Sea Customs Act. 2. Whether the petitioners have a right under the relevant notifications to have the imported goods cleared from the Pondicherry port without the payment of the customs duty leviable under Indian law in the area from and after November 1, 1954.
Ratio Decidendi: 1. The Court held that the words "things done" in paragraph 6 of S.R.O. 3315 were comprehensive enough to take in a transaction effected before the merger, though some of its legal effects and consequences projected into the post-merger period. The Court further held that the imports were the effect or the legal consequences of the "things done", i.e., the contracts entered into by the petitioners with the foreign dealers. 2. The Court held that the petitioners were not entitled to have their goods imported into Pondicherry after November 1, 1954, without payment of customs duty notwithstanding that the contracts by reason of which the goods were imported, were entered into or the shipment took place before that date.
Final Decision: The petition was allowed in part and the order of the Government in so far as they impose a penalty on the petitioners for imparting goods without a licence, are set aside; except to this extent, the petition shall stand dismissed.
Judgment
AYYANGAR, J. : (On behalf of majority) (Gajendragadkar and Wanchoo JJ. And himself). This is a petition under Art, 32 of the Constitution praying for a writ, order or direction in the nature of certiorari calling for the records relating to the levy of customs duty and penalty on certain cycles and cycle parts imported by the petitioners, to quash the said order and for a direction to the respondents to restore and refund to the petitioners the customs duty and the penalties realised from them for releasing their goods. The Chief Controller of Imports & Exports, Pondicherry. The Collector of Customs, Pondicherry. The Central Board of Revenue, New Delhi, Chief Commissioner, Pondicherry and the Union of India have been made respondents to the petition.
2. From the nature of the order sought and the array of the respondents it would be apparent that the matter involved in this petition is whether the respondents were justified in (a) levying customs duties on the goods imported by the petitioner and (b) imposing a penalty on them for effecting these imports.
3. We shall now briefly narrate the facts necessary to understand the points arising for decision. The petitioners who are citizens of India placed an order on August 6, 1954, with certain firms in the United Kingdom for the despatch of cycles and cycle parts to Pondicherry - Which was at that date the principal French establishment in India. According to the law which then obtained in Pondicherry territory, merchants desiring to do business there had to have "a patent" or licence from the authorities for carrying on such business. The petitioners applied for such a "patent" to the authorities on August 14, 1954, and they were granted one on August 18, which was to be effective from August 1, 1954. The order placed with U. K. firms was accepted and the goods covered by the indents were shipped form the U. K. ports on October 11, 1954. The foreign exchange needed for effecting this import could under the French Law have been obtained either from or on the authorization of the Head of the Department of Economic Affairs at Pondicherry or by what has been termed purchase in the open market. In pursuance of these facilities the moneys required were transmitted through bankers who made payments on behalf of the petitioners in the United Kingdom and the goods arrived in Pondicherry on December 4, 1954, the Bill of Entry being presented to the Customs Authorities for clearance on the 17th of that month.
4. Meanwhile political changes took place in the governance of Pondicherry and other French settlements. An agreement was entered into between the Governments of the Union of India and of France under which the administration of the French Settlements, including Pondicherry was ceded to the Union Government. This agreement which was signed on behalf of the two Governments on October 21, 1954 was to be effective from November 1, 1954. On October 30, 1954 two notifications were issued by the Ministry of External Affairs in pursuance of the agreement dated October 21, 1954, between the two Governments. They were respectively S. R. O. 3314 and S. R. O. 3315. As the questions arising for decision in the petition turn on the proper construction and legal effect of these two notifications, it would be necessary to deal with them in some detail but for the purpose of the narration of facts, it would be sufficient to say that while S. R. O. 3314 saved the operation of the pre-existing French Law except in so far as it had been affected by S.R.O. 3315 the latter repealed such laws to the extent they were inconsistent with the Indian enactments set out in the Schedule whose operation was extended to Pondicherry and the French settlements. Among the Indian enactments so applied to Pondicherry were the Foreign Exchange Regulation Act 1947 the Imports & Exports (Control) Act. 1947, the Sea Customs Act. 1878 and the Tariff act. 1934.
5. The Bill of Entry was as stated earlier presented to the Cu
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