The customs authorities have jurisdiction to check the scrap for the purpose of satisfying themselves that the scrap to be exported answers the description of the material which was to be exported under the licence granted to the exporter.

Judgement

SUBBA RAO, J. (With him Bachawat, J.): These five appeals by special leave were filed against the orders of a Division Bench of the High Court of Judicature at Bombay setting aside the order of a single Judge of that Court quashing the order of the Additional Collector of Customs, Bombay, levying fines on the respondents in lieu of confiscation of consignments of scrap iron exported to foreign countries. As the main point raised in all the appeals is the same, it would be enough if we state the relevant facts in one of the appeals, namely, Civil Appeal No. 376 of 1963, arising out of Misc. Petition No. 86 of 1958.

2. Messrs. Shantilal Chhotelal and Co., hereinafter called the firm, are a firm of Importers and Exporters of scrap iron. The said firm obtained an export licence, dated November, 7, 1956, from the Iron and Steel Controller permitting them to export from the port of Bombay 900 long tons of steel skull scrap. The licence was to hold good upto March 31, 1957, and the goods had to be shipped to Japan by s.s. " KUIBISHEV", Between October 1956 and March 1957 the firm purchased scrap iron from various sources at rates varying from Rs. 95 to Rs. 207 per ton. After they brought the goods to the docks, the Officer authorized by the Iron and Steel Controller and the representative of the Regional Joint Scrap Committee certified the goods as steel skull scrap fit for export under the said export licence and the necessary endorsements to that effect were made on the shipping bills in respect of the said goods. Thereafter, the goods were taken to the Customs authorities for the purpose of exporting the same. The customs authorities took the view that a part of the goods was not steel skull scrap; and the matter was referred to the Iron and Steel Controller. By his order, dated March 18, 1957, the said Controller informed the customs authorities that the rejected buffers, plungers and casings were furnace rejects and formed part of skull scrap, etc. By order, dated March 26, 1957, the custom authorities seized the entire goods on board the ship under S. 178 of the Sea Customs Act; but the said authorities allowed the goods to remain in the temporary custody of the shippers and permitted the ship to sail. They also retained the documents relating to the goods, but later on released them on April 25, 1957, on the firm furnishing a bank guarantee for a sum of Rs. 49,995.75 for payment of fine in lien of confiscation if such confiscation was ultimately adjudged by them. On May 27, 1957, the customs authorities served a notice upon the firm to show caused why the said goods should not be confiscated and penal action taken against them under S. 167 (8) and (37) of the Sea Customs Act. By his order, dated December 21, 1957, the Additional Collector of Customs held that of the total quantity shipped 320 tons were unauthorized and directed confiscation thereof; but he imposed a fine of Rs. 49,995.95 in lien of confiscation and a personal penalty of Rs. 35,000 On March 4, 1958, the firm filed a writ petition under Art. 226 of the Constitution in the High Court of Bombay for quashing the said order. To that writ petition the Additional Collector of Customs, Bombay, and the Union of India were made parties. In the first instance, the said petition was heard by Shelat, J., of that Court, who held in effect that the firm was exporting something which was not permitted to be exported and that while the licence authorized them to export steel skull scrap they were exporting non-skull scrap and, therefore, the customs authorities had acted within their jurisdiction in confiscating the said goods and imposing a personal penalty on the firm. The learned Judge also expressed the view that that firm had suppressed certain relevant facts and thus disentitled themselves to have the discretionary remedy. However, the learned Judge gave a limited relief by reducing the penalty of Rs. 35,000 to Rs.1,000 on the ground that under S. 167 (8) of the S