East India Commercial Company LTD. , Calcutta vs Collector Of Customs, Calcutta

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1962 Supreme(SC) 226

SUPREME COURT OF INDIA
4th May, 1962
A.K. SARKAR, K. SUBBA RAO AND J.R. MUDHOLKAR, JJ.
M/s. East India Commercial Co. Ltd. Calcutta and another, Appellants
Versus
Collector of Customs, Calcutta, Respondent.
Civil Appeal No. 383 of1960.
Advocates appeared
Mr. A. V. Viswanatha Sastri, Senior Advocate, (M/s. E. R. Mayer, Noni Kumar Chakravarti and B. P. Maheshwari, Advocates with him), for Appellants; Mr. Daulat Ram Prem, Senior Advocate, (Mr. D. Gupta, Advocate, with him), for Respondent. 1896

Headnote:
Imports and Exports (Control) Act, 1947 - Ss. 3, 5 - Sea Customs Act, 1878 - Ss. 19, 167(8) - Import of goods under licence - Condition in licence that goods would not be sold - Breach of condition - Whether contravention of order under S. 3 of the Act - Whether goods liable to confiscation under S. 167(8) of the Sea Customs Act.
Fact of the Case:

The appellants had brought into India from the U. S. A. a large quantity of electrical instruments under a licence. The respondent the Collector of Customs, Calcutta started proceedings for confiscation of these goods under S. 167(8) of the Sea Customs Act, 1878. The appellants contend that the proceedings are entirely without jurisdiction as the Collector can confiscate only when there is an import in contravention of an order prohibiting or restricting it and in the present case the Collector was proceeding to confiscate on the ground that a condition of the licence under which the goods had been imported had been disobeyed. The appellants, therefore, ask for a writ of prohibition directing the Collector to stop the proceedings.
Finding of the Court:

The breach of a condition of a licence issued under an order made under the Act of 1947 is not a breach of the order itself. In my view such a breach is a breach of the order itself. Sub-section (1) of S. 3 of the Act of 1947 empowers the Government to make orders prohibiting, restricting or otherwise controlling the import of goods. Now clearly, one method of restricting or controlling the import of goods would be to regulate their use or disposition after they had been brought into India. Therefore, under the Act of 1947 the Government has power to restrict or control imports in this way; it could lawfully provide that the goods would not after import be dealt with in a certain way. It would follow that Notification No. 2-ITC/ 48 was quite competent and intra vires the Act and, therefore, the condition in the licence issued in this case that the goods would not be sold after they had been brought into India had been legitimately imposed.
Issues: Whether the Collector of Customs has jurisdiction to adjudicate whether the goods are liable to be confiscated?
Ratio Decidendi: The breach of a condition of a licence issued under an order made under the Act of 1947 is not a breach of the order itself.
Final Decision: Appeal allowed.

Judgement Key Points

The case of M/s. East India Commercial Co. Ltd. versus the Collector of Customs primarily addresses the scope of jurisdiction of customs authorities in proceedings related to the confiscation of imported goods. The core issue was whether the Collector of Customs had the authority to confiscate goods on the grounds that a condition of the import license had been violated, or whether such a breach of license conditions fell outside the jurisdiction of the customs authorities and required separate criminal proceedings.

The court clarified that a breach of a condition of a license issued under an order made under the relevant control Act is considered a breach of the order itself. Therefore, the customs authorities do have jurisdiction to adjudicate whether such breaches occur and to proceed with confiscation under the applicable statutory provisions. The court emphasized that conditions imposed in licenses are valid and lawfully imposed under the statutory powers delegated to the government, and violations of these conditions constitute breaches of the orders that empower confiscation.

Furthermore, the court held that proceedings initiated by customs authorities under the relevant sections are quasi-judicial in nature, and the authorities are empowered to decide whether the goods are liable to confiscation based on violations of conditions or restrictions. The decision of the higher courts on legal questions is binding on the authorities, and they are bound to act within the scope of their jurisdiction as defined by law.

In conclusion, the judgment affirmed that the customs authorities have the jurisdiction to confiscate goods if there is a breach of conditions attached to import licenses issued under lawful orders. This includes breaches related to the sale or disposal of imported goods contrary to the conditions, as these are considered breaches of the orders themselves. The court also dismissed the plea for a writ of prohibition, reinforcing that the authorities' actions were within their legal competence and jurisdiction.

Judgment

SARKAR, J. : The appellants had brought into India from the U. S. A. a large quantity of electrical instruments under a licence. The respondent the Collector of Customs, Calcutta started proceedings for confiscation of these goods under S. 167(8) of the Sea Customs Act, 1878. The appellants contend that the proceedings are entirely without jurisdiction as the Collector can confiscate only when there is an import in contravention of an order prohibiting or restricting it and in the present case the Collector was proceeding to confiscate on the ground that a condition of the licence under which the goods had been imported had been disobeyed. The appellants, therefore, ask for a writ of prohibition directing the Collector to stop the proceedings. The question is, has the Collector jurisdiction to adjudicate whether the goods are liable to be confiscated? The decision of that question, however, depends on certain statutory provisions and the facts of the case to which, therefore, I shall immediately turn.

2. Sub-section (1) of S. 3 of the Imports and Exports (Control) Act, 1947 provides that the Government may by order prohibit restrict or otherwise control the import of goods. By Notification No. 23 I.T.C. /43 issued under Rule 84 of the Defence of India Rules which by virtue of S.4 of the Act of 1947 is to be deemed to have been issued under that Act, it was ordered that no electrical instrument could be brought into India except under a licence. By another order made under S. 3 of the Act and contained in Notification No. 2-ITC/48, dated March 6, 1948, it was provided that the licence to import electrical instruments might be issued subject to the condition that the goods would not be disposed of or otherwise dealt with without the written permission of the licensing authority.

3. The first appellant is a company and the second appellant, one of its directors. On October 8, 1948, a licence was granted to the appellants to import from the U. S. A. a large quantity of electrical instruments, namely, fluorescent tubes and fluorescent fixtures. In the application for the licence it was stated that the goods were not required for sale but for modernising the lighting system of the appellant s factory at Ellore in Madras. The licence was issued subject to the condition that the goods would be utilised only for consumption as raw material or accessories in the licence holder s factory and that no portion thereof would be sold to any party.

4. The goods duly arrived in India and were cleared out of the customs sometime about the end of February 1949. Soon thereafter, the authorities concerned are said to have got information that the goods were being sold in the market in breach of the condition of the licence. Thereupon, the Police took steps and after obtaining a search warrant from a Magistrate in Calcutta on August 12, 1949 seized a large stock of the goods from the godown of the appellants.

5. Thereafter, on January 12, 1951, two proceedings were started. One of them was a prosecution of various officers of the appellant company including the second appellant under S. 420 read with S. 120 of the Indian Penal Code on the allegation that the licence had been obtained on false and fraudulent representations as there was no intention at any time to use the goods for any factory. After certain proceedings to which it is unnecessary to refer, the accused persons were discharged by a Presidency Magistrate of Calcutta on July 27, 1953 under S. 253 of the Code of Criminal Procedure and the prosecution under Ss. 420 and 120B of the penal Code came to an end. The learned Magistrate held that it had not been proved that the licensing authority had been deceived by any representation of the accused officers of the company nor that "right from the time of applying for the licence, the intention was to sell the goods or part thereof."

6. The other proceeding was a prosecution of the second appellant and another person under S. 5 of the Act o

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