Order of Reference†:- This is a petition for the issue of a writ of certiorari to quash an order of the Collector of Central Excise, Madras, whereby a penalty of Rs. 5,000 was levied against the petitioner for violation of section 167 (8) of the Sea Customs Act.

The petitioner landed at Nagapattinam from Penang in October, 1957 and brought with him 84 wrist watches valued at Rs. 4,200. He held no permit for their importation and these goods were concealed. They were seized by the Superintendent of Central Excise at Nagapattinam. Thereafter he was served with a notice to show cause why (1) the wrist watches should not be confiscated and (2) why a penalty should not be imposed on him under section 167 (8) of the Sea Customs Act. As there was no dispute that the petitioner had smuggled these goods into India, the Collector ordered their confiscation and also imposed the penalty. The penalty that he imposed was as stated earlier, the payment of a sum of Rs. 5,000. Though in the petition the validity of the order of confiscation was also challenged this ground has now been abandoned and the only point urged before me was as regards the legality of the amount of personal penalty to which the petitioner was subjected.

The point urged turns upon the proper construction of the third column of section 167 (8) of the Sea Customs Act. Section 167 sets out in three columns the offences and the penalties that might be imposed by the departmental authorities. The first column of the section sets out the offence, the second the number of the section to which offence has reference and the last column sets out the penalty that might be imposed. There is no dispute that the petitioner was guilty of the offence of importation of goods into India contrary to the prohibition or restriction imposed by section 18 or 19 of the Sea Customs Act. What is however relevant for the purpose of the present petition is the third column which reads:

“ such goods shall be liable to confiscation ; any person concerned in any such offence shall be liable to a penalty not exceeding three timees the value of the goods or not exceeding one thousand rupees.”

It would be seen that there are two limits laid down by this section as to the amount of penalty that could be imposed. One is that the penalty shall not exceed three times the value of the goods and the other is that it shall not exceed Rs. 1,000. It is common knowledge that this section was derived from its counterpart of the provision in the U.K. Act 39, and 40 Victoria, Chapter XXXVI, section 186, wherein it is clearly laid down that the customs authority is at its option entitled to levy penalty at the higher figure. In other words, the construction that the department put upon this provison was to read it as if it contained the words “ whichever is higher .”

Bhagwati, J., however delivering the judgment of the Constitutional Bench of the Supreme Court in Maqbool Hussain v. The State of Bombay,1observed (at page 742) after referring to the terms of section 167 (8) and the investigation and adjudication under the Sea Customs Act:

“ Even though the customs officers are invested with the power of adjudging confiscation, in-creased rates of duty or penalty, the highest penalty which can be inflicted is Rs. 1,000” .

The question immediately arose as to whether this decision should be taken to have authoritatively laid down the construction of section 167 (8) of the Sea Customs Act as if that provision contained the words “ whichever is lower” , instead of “whichever is higher” as previously understood. A Bench of the Bombay High Court Mohandas Issardas v. A. N. Sattanathan2, had to consider this point and the Court was pressed with the observation in the judgment of Bhagwati, J., which I have extracted. Chagla, C.J., however, held that the proper interpretation of section 167 (8) of the Sea Customs Act never arose before the Supreme Court and it treated it as a casual observation which though entitled to great respect a

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