Judgment

SHAH, J.:- On March 31, 1959, the Ministry of Commerce and Industry Government of India, granted to the respondents a licence permitting them to import from West Germany certain machinery described therein of the maximum C. I. F. value of Rs. 45,000/-. Condition No. 1 of the licence provided that :

"The x x application is accepted and import licence is hereby granted having quantity and value as the limiting factors and is not valid for clearance if the actual value of any item exceeds the C I.F value indicated in the licence by more than 5% ". The respondents submitted a bill of entry dated July 1, 1960, disclosing the C.I.F. value of the consignment as Rs. 45,179-92 inclusive of landing charges, and cleared the consignment after paying duty assessed by the Customs authorities on the real value of the goods as disclosed in the bill of entry.

2. On June 20, 1961 the Customs authorities issued a notice requiring the respondents to show cause why penal action should not be taken against them under S. 167 (8) of the Sea Customs Act, 1878, as being persons concerned in the unauthorised importation of the goods. This notice was amended by notice dated September 21, 1961, whereby t