1. Import of goods under license — Breach of license condition — Confiscation proceedings under Section 167(8), Sea Customs Act, 1878 and Section 3(2), Imports and Exports (Control) Act, 1947. (Para 1 , 2 , 3 , 4 , 8 , 23 )
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1962 Supreme(SC) 221
SUPREME COURT OF INDIA
A.K.Sarkar : J.R.Mudholkar : K.Subba Rao
East India Commercial Company Limited, Calcutta
Versus
Collector Of Customs, Calcutta
Case No. : 383 of 1960
Date of Decision : 5/4/62
Advocates Appeared: Chakravarti Nooni C. : Gutpa D. : Maheshwari B.P. : Mayor E.R. : Prem Daulat Ram : Sastri A.V.Viswanatha
Advocates:
A.V.VISHWANATHA SASTRI, B.P.MAHESHVARI, D.GUTPA, Daulat Ram Prem, E.R.MAYOR, NONI KUMAR CHAKRAVARTI
A.V.VISHWANATHA SASTRI, B.P.MAHESHVARI, D.GUTPA, Daulat Ram Prem, E.R.MAYOR, NONI KUMAR CHAKRAVARTI
A breach of a condition imposed in an import license does not constitute a contravention of a statutory order under the Import and Exports (Control) Act, 1947, and therefore does not justify confiscation of goods under Section 167(8) of the Sea Customs Act, 1878.
Headnote:(A) Import and Exports (Control) Act, 1947 - Sections 3 and 5; Sea Customs Act, 1878 - Sections 19 and 167(8) - Confiscation of goods - Breach of license condition vs. breach of statutory order - Whether a contravention of a condition imposed in a license constitutes a contravention of an order made under the Act for the purpose of confiscation under the Sea Customs Act - It is held that the infringement of a condition in a license not to sell imported goods to third parties is not an infringement of the statutory order itself, and therefore does not attract the provisions of Section 167(8) of the Sea Customs Act. (Paras 28, 34)
(B) Administrative Law - Binding nature of High Court decisions - Whether law declared by a High Court is binding on tribunals under its superintendence - Law declared by the highest court in the State is binding on authorities or tribunals under its superintendence, and they cannot ignore it either in initiating a proceeding or deciding on the rights involved in such a proceeding. (Para 29)
(C) Import and Exports (Control) Act, 1947 - Public Notices vs. Statutory Orders - Whether public notices issued by the government regarding principles governing the issue of import licenses are statutory orders under Section 3 of the Act - Public notices are policy statements administratively made for public information and do not have the statutory force of orders issued under Section 3 of the Act. (Paras 32, 33)
(D) Sea Customs Act, 1878 - Section 167(8) - Confiscation of sale proceeds - Where goods are sold by court order due to deterioration, the sale proceeds represent the goods and are liable to confiscation if the goods themselves were confiscable. (Para 38)
Facts of the case:
An importer brought electrical instruments into the country under a license which contained a condition that the goods be utilized only as raw materials or accessories in the importer's factory and not be sold to any other party. Following allegations that the goods were sold in breach of this condition, the goods were seized and subsequently sold by court order, with the proceeds held by a magistrate. After criminal proceedings for fraud and contravention of the Act ended in discharge, customs authorities initiated proceedings to confiscate the sale proceeds under Section 167(8) of the Sea Customs Act. The importer sought a writ of prohibition to stop these proceedings.
Findings of Court:
The court found that the condition prohibiting the sale of goods was a license condition and not a requirement of a statutory order. It held that public notices providing guidelines for licenses are administrative policy statements and not statutory orders. Furthermore, a license obtained by misrepresentation is voidable and remains valid until cancelled by the appropriate authority; since no cancellation occurred, the import was under a valid license.
Issues: 1. Whether the breach of a condition imposed in a license constitutes a breach of a statutory order attracting confiscation under Section 167(8) of the Sea Customs Act. 2. Whether law declared by a High Court is binding on administrative tribunals under its superintendence. 3. Whether public notices issued by the government are statutory orders under Section 3 of the Import and Exports (Control) Act, 1947.
Ratio Decidendi: A breach of a condition in a license is not a breach of the statutory order under which the license was issued unless the order itself imposes such a condition. Public notices are administrative policy statements and lack statutory force. Tribunals subject to the superintendence of a High Court must conform to the law laid down by that court to ensure consistency in the administration of law.
Result: Appeal allowed.
Legal Category Hierarchy
- administrative law
- customs law
- constitutional law
Table of Contents
2. Jurisdiction to confiscate for breach of license condition — Binding nature of High Court precedents on tribunals — Distinction between statutory orders and public notices. (Para 11 , 12 , 14 , 24 , 25 )
3. Public notices are administrative policy statements, not statutory orders — License obtained by misrepresentation is voidable, not void — High Court rulings bind subordinate tribunals. (Para 27 , 29 , 30 , 31 , 32 , 33 , 35 )
4. Breach of a license condition not mandated by a statutory order under the Imports and Exports (Control) Act does not trigger confiscation under the Sea Customs Act. (Para 34 )
5. Appeal allowed — Writ of prohibition issued restraining the Customs Authority from proceeding with the inquiry under Section 167(8) of the Sea Customs Act. (Para 39 , 40 )
6. Is the law declared by a High Court binding on administrative tribunals within its territorial jurisdiction?
Yes. Tribunals under the superintendence of a High Court must conform to the law laid down by that court to ensure administrative consistency and respect for the law. (Para 29 )
7. Do public notices issued by the government for guidance constitute statutory orders under the Imports and Exports (Control) Act, 1947?
No. Public notices are administrative policy statements for public information and lack the statutory force of orders issued under Section 3 of the Act. (Para 32 , 33 )
8. Does a license obtained through fraudulent misrepresentation render the subsequent import of goods illegal for the purpose of confiscation?
No. A license obtained by fraud is voidable, not void. Unless the specified authority cancels the license, the import remains valid and cannot be deemed an import without a license. (Para 35 )
9. Can the sale proceeds of seized goods be confiscated if the original goods were liable for confiscation?
Yes. When goods are sold by court order because they are deteriorating, the sale proceeds represent the goods and can be confiscated. (Para 21 , 38 )
A.K.SARKAR, J.
(1) 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 tinder 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 fact of the case to which, therefore, I shall immediately turn.
(2) SUB-SECTION (1) of s. 3 of the Import 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 r. 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 DO 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 6/03/1948, 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 8/10/1948, a licence was granted to the appellant 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 appellants 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 holders 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 12/08/1949, seized a large stock of the goods from the godown of the appellants.
(5) THEREAFTER on 12/01/1951, two proceed. ings 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 bid 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 27/07/1953, under s. 253 of the Code of Criminal Procedure and the prosecution under so. 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
