1. Import of bolts and nuts mis-described to evade prohibition on specific belt fasteners — proceedings under Section 167(8) of the Sea Customs Act. (Para 2 , 3 , 4 )
Back
Next 
1964 Supreme(SC) 66
SUPREME COURT OF INDIA
6th March 1964.
P.B. GAJENDRAGADKAR C.J.I., K.N. WANCHOO, J.C. SHAH, N, RAJAGOPALA AYYANGAR AND S.M. SIKRI, JJ.
Girdharilal Bansidhar, Appellant
Versus
The Union of India (Service to be effected on the Secretary, Ministry of Finance, New Delhi) and others, Respondents.
Civil Appeal No. 318 of 1962.
Advocates appeared
Mr. Purshottam Trikamdas, Senior Advocate, (M/s. M. V. Goswami, and B. C. Misra, Advocates with him), for Appellant; Dr. W. S. Barlingay, Senior Advocate, (Mr. R. H. Dhebar, Advocate, with him), for Respondents.
Advocates:
B.C.MISHRA, M.V.GOSWAMY, PURSHOTTAM TRIKAMDAS, R.H.Dhebar, W.S.Barlingay
B.C.MISHRA, M.V.GOSWAMY, PURSHOTTAM TRIKAMDAS, R.H.Dhebar, W.S.Barlingay
Importation of component parts that have no use other than as parts of a prohibited article is treated as importation of the prohibited article itself, as importers cannot indirectly achieve what is directly forbidden.
Headnote:(A) Sea Customs Act - Section 167(8) - Importation of prohibited goods - Import of component parts of a prohibited article - Where component parts have no use other than as components of an article whose importation is prohibited, such parts are also considered prohibited - Importers are not permitted to do indirectly what they are forbidden to do directly. (Para 6)
(B) Constitution of India - Article 226 - Scope of writ jurisdiction - Court dealing with a petition under Article 226 does not sit in appeal over the decisions of Customs Authorities - Correctness of conclusions reached by authorities on the appreciation of import handbooks or tariff acts does not fall within writ jurisdiction in the absence of procedural irregularity. (Para 7)
(C) Principles of Natural Justice - Use of corroborative evidence - Use of evidence regarding imports by a related entity to confirm the nature of goods imported by the party does not constitute a violation of natural justice, provided the main charge is specified and a hearing is accorded. (Para 8)
Facts of the case:
An importer obtained a license for iron and steel bolts and nuts. Goods were imported and described as stove bolts and nuts, but customs authorities determined they were identifiable components of a prohibited type of belt fastener. The importer contended that the prohibition on the completed article did not extend to its component parts. The customs authority imposed penalties for mis-description and contravention of the Sea Customs Act.
Findings of Court:
The court held that the prohibition on a completed article extends to its components if they have no other use. It further held that the customs authority's findings were not subject to appellate review under writ jurisdiction and that the use of corroborative evidence did not violate natural justice.
Issues: Whether the prohibition of a completed article extends to its component parts which have no other use; whether the interpretation of import regulations by customs authorities is subject to review under Article 226; and whether the use of corroborative evidence without specific mention in the show-cause notice violates natural justice.
Ratio Decidendi: The court reasoned that it is illogical to allow the import of components that have no use other than as parts of a prohibited article, as this would allow importers to evade prohibitions by assembling articles domestically. Additionally, the scope of Article 226 does not permit a court to substitute its view for that of customs authorities on technical interpretations unless the order is procedurally invalid.
Result: Appeal dismissed.
Legal Category Hierarchy
Table of Contents
2. Whether prohibition on completed articles extends to component parts and whether using evidence of related-party imports violates principles of natural justice. (Para 2 , 6 , 7 , 8 )
3. Component parts with no independent use are prohibited if the final article is banned; writ jurisdiction does not permit re-evaluating Customs' technical interpretations. (Para 6 , 7 , 8 )
4. A prohibition on a completed article extends to its component parts if those parts have no use other than in the prohibited article. (Para 6 )
5. Appeal dismissed with costs. (Para 9 )
6. Does a ban on a completed article include its component parts?
Yes, if the component parts have no use other than as components of the prohibited article. Importers cannot indirectly achieve what is directly forbidden by importing parts separately to assemble them locally. (Para 6 )
7. Can a High Court under Article 226 review the correctness of a Customs Authority's interpretation of a Trade Handbook?
No, a court exercising writ jurisdiction under Article 226 is not sitting in appeal over the decisions of Customs Authorities regarding the appreciation of items in a Trade Handbook or Tariff Act. (Para 7 )
8. Does the use of evidence regarding a third party's imports to prove the nature of the appellant's goods violate natural justice?
No, provided the evidence is used to confirm the nature of the goods and the appellant is given a chance to rebut it, rather than being punished for the third party's actions. (Para 8 )
Judgment
AYYANGAR, J. There are no merits in this appeal by special leave and it deserves to be dismissed.
2. The appellant obtained, in November 1951, an import licence from the Joint Chief Controller of Imports at Calcutta, for importing " iron and steel bolts, nuts set screws, machine screws and machine studs, excluding bolts, nuts and screws, adapted for use on cycles." In purported conformity with this licence the appellant imported from Japan through Bedi port 221 cases of bolts and nuts during the period April 4, 1952 to July 14, 1952. The cases were described in the Bills of the Entry which he filed as " Stove Bolts and Nuts" and he produced the import licence of November 1951 as his authority to clear the goods, One hundred and ninetytwo of these cases were cleared out of the port customs but before the rest of the 89 cases could be cleared, the Customs authorities got suspicious that the goods were mis-described and though called " stove Bolts and Nuts" in the invoices and relative documents they were really identifiable parts of bolts and nuts of the " Jackson Type single bolt oval plate belt fasteners" whose importation had been prohibited by a Notification of the Ministry of Trade issued in January 1952. Their suspicions got confirmed after examination of the samples of the nuts and bolts imported and thereafter notice was issued to the appellant to show cause why he should not be proceeded against (a) for mis-describing the goods as " stove bolts and nuts" and (b) for importing and attempting to import goods without a proper import licence this being an offence under S. 167(8) of the SEA CUSTOMS ACT . The appellant showed cause and in the written pleas which he filed he raised two defences: (1) that the description of the goods as " stove bolts and nuts" was merely a description given by the manufacturers in their invoices and he himself not being acquainted with the technical details could not be held responsible for the description given in the invoices which was copied in the Bill of Entry not being precise or exact and (2) that even if the bolts and nuts which he imported were identifiable parts of the " single bolt belt fasteners" whose importation was banned, there had been, on a proper construction of the import licence, read in conjunction with the Import Trade Regulations under which it was issued, no contravention since the ban on importation by the notification was confined to a complete: Jackson type single bolt belt fastener" and did not extend to the importation of the component parts of such a belt fastener.
3. These two defences were examined by the Collector of Central Excise. As regards the first he found the correspondence exchanged between the appellant and his foreign suppliers and produced by the appellant himself in his defence at the hearing, that the name " stove bolts and nut" had been decided upon by appellant himself after samples of the nuts and bolts which he desired to import had been received and examined by him. Practically therefore during the hearing before the Collector the appellant conceded that the name stove bolts and nuts was a mis-description of the articles which he actually imported. The next question was whether the appellant was guilty of an offence of the nature described in S. 167(8) of the SEA CUSTOMS ACT . The Collector recorded a finding that the appellant was guilty of a contravention of this provision which reads :
" If any goods, the importation or exportation of which is for the time being prohibited or restricted by or under Chapter IV of this Act, be imported into or exported from India contrary to such prohibition or restriction; or
if any attempt be made so to import or export any such goods; ..."
In reaching this finding the Collector was satisfied from the samples which were forwarded to the appellant and which were proved by him before finalising the indent, that the appellant was really ordering and importing nuts and bolts which were identifiable comp
