Girdharilal Bansidhar vs Union Of India

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: supreme-court

Case Number: Not extracted

Decision Date: 6 March, 1964

Coram: P.B. Gajendragadkar, K.N. Wanchoo, N. Rajagopala Ayyangar, J.C. Shah, S.M. Sikri

In this matter, the Supreme Court recorded that the appeal presented by special leave did not raise any substantive issues and therefore warranted dismissal. The appellant had secured an import licence in November 1951 from the Joint Chief Controller of Imports at Calcutta. The licence authorised the entry of “iron and steel bolts, nuts, set screws, machine screws and machine studs, excluding bolts, nuts and screws adapted for use on cycles.” Relying on that licence, the appellant imported from Japan, through the Bedi port, a total of two hundred twenty‑one cases of bolts and nuts during the period from 4 April 1952 to 14 July 1952. In the Bills of Entry filed for those shipments, the goods were identified as “Stove Bolts and Nuts,” and the appellant produced the November 1951 import licence as the basis for clearing the merchandise. Customs officials cleared one hundred ninety‑two of those cases, but before the remaining eighty‑nine cases could be cleared, the customs authorities grew suspicious that the description on the invoices did not correspond to the actual nature of the goods. Upon examination, the goods were found to be identifiable parts of “Jackson Type single bolt oval plate‑belt fasteners.” Importation of those complete fasteners had been prohibited by a Notification issued by the Ministry of Trade in January 1952. After testing sample bolts and nuts, the customs officials confirmed the misdescription and issued a notice requiring the appellant to show cause for two alleged violations: first, for mis‑describing the goods as “stove bolts and nuts,” and second, for importing and attempting to import goods without a proper licence, an offence punishable under section 167(8) of the Sea Customs Act.

The appellant responded to the notice by filing written pleas that set out two principal defences. The first defence asserted that the label “stove bolts and nuts” had been supplied by the manufacturers in their invoices, and that the appellant, lacking technical knowledge of the items, could not be held liable for the description that was merely copied into the Bill of Entry and was not exact. The second defence contended that, even assuming the imported bolts and nuts were components of the prohibited “single bolt belt fasteners,” a proper construction of the import licence, when read together with the Import Trade Regulations governing its issuance, did not forbid the importation of component parts; the prohibition, according to this argument, applied only to the complete “Jackson type single bolt belt fastener.” These two defences were subsequently examined by the Collector of Central Excise. Regarding the first defence, the Collector found from the correspondence exchanged between the appellant and his foreign suppliers and produced by the appellant himself at the hearing that the name “stove bolts and nuts” had been chosen by the appellant after he had received and inspected samples of the nuts and bolts he intended to import. Consequently, during the hearing before the Collector, the appellant effectively conceded that “stove bolts and nuts” was a misdescription of the actual articles imported.

During the hearing before the Collector of Central Excise, the appellant produced correspondence that he had exchanged with his foreign suppliers. The documents, which the appellant himself introduced in his defence, showed that the description “stove bolts and nuts” had been chosen by the appellant after he received and examined samples of the nuts and bolts that he intended to import. Consequently, at the hearing the appellant admitted that the label “stove bolts and nuts” was a misdescription of the actual articles he had brought into the country. The next issue before the Collector was whether the appellant had committed an offence punishable under section 167(8) of the Sea Customs Act. The Collector recorded a finding that the appellant had indeed contravened that provision, which provides that “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; …” the violator shall be liable.

In arriving at this conclusion, the Collector relied on the samples that had been forwarded to the appellant and which he had approved before finalising the import indent. The Collector was satisfied that the appellant was ordering and importing nuts and bolts that were identifiable components of “single bolt belt fasteners,” the importation of which had been prohibited. The Collector explained his reasoning on two grounds. First, the bolts and screws imported by the appellant were specially adapted, by reason of their structure and details, for use as single bolt belt fasteners. Second, the appellant’s nuts and bolts could not be employed for any purpose other than as components of a belt fastener of the type whose import was expressly banned. To reinforce his view that the appellant intended to evade the prohibition contained in the Notification of January 1952, the Collector noted that a single bolt belt fastener is assembled from three parts: a bolt, a nut, and washers. The washers that would fit the appellant’s bolts and nuts were found to have been imported separately by a firm named Nawanagar Industries Ltd., a company owned or controlled by close relatives of the appellant. Having thus obtained confirmation of the appellant’s intention to circumvent the ban, the Collector imposed the penalty of confiscation of the imported goods and, pursuant to section 183 of the Sea Customs Act, gave the owner the option of paying a fine of Rs 51,000 to recover the confiscated articles. Additionally, the Collector levied a personal penalty of Rs 1,000 on the appellant under section 167(37)(c) for misdescribing the goods in the Bills of Entry that he had filed. The appellant subsequently filed an appeal before the Central Board of Revenue, which dismissed the appeal.

The appeal to the Central Board of Revenue was dismissed. The appellant then argued before the revenue authority that the prohibition in the notification applied only to the assembled “Jackson Type single belt oval plate belt fasteners” and could not be read as forbidding the importation of the separate components of such a fastener, even though those components could be identified and had no practical use other than as parts of the prohibited assembled article. The authority rejected this contention, held that the ban extended to the components, and dismissed the appeal. After that dismissal, the appellant filed an application before the High Court of Punjab seeking a writ of certiorari under Article 226 of the Constitution. The High Court dismissed the petition in limine, holding that it lacked jurisdiction to entertain the claim. The appellant then moved this Court for special leave to appeal, and special leave was granted. Consequently, the present appeal is now before this Court for determination, and the question before the Court centers on whether the import control notification extends the prohibition to the separate parts when those parts are identifiable as components of the barred assembled fastener.

Counsel for the appellant raised two points. The first point was that the appellant had been granted a licence to import “nuts and bolts” falling under item 22 of Part I of the Import Trade Control Hand‑book for the relevant year, and that the licence therefore entitled the appellant to import iron and steel bolts and nuts for any purpose. The only limitation imposed by the licence, which reproduced the terms of Entry 22 in the Hand‑book, was that bolts and nuts adapted for use on cycles could not be imported. Counsel argued that this limitation indicated that nuts and bolts intended for use on articles other than cycles could still be imported unless the importation of the other article or its components was expressly prohibited or restricted. In support of this argument, counsel drew the Court’s attention to item 28 of Part II of the same Hand‑book, which reads “Belting for machinery, all sorts, including belt laces and belt fasteners.” The Notification dated 12 January 1952, issued as a clarification of licensing policy for the period January‑June 1952, dealt with serial No. 28 of Part II and stated: “Jackson type oval plate belt fasteners (other than single bolt). General licences will be granted freely subject to the provisions of Public Notice No. 189‑ITC(PN)/51, dated 28 December 1951. Jackson type oval plate single bolt belt fasteners. No imports will be granted from any source.” It was not disputed that, in view of the terms of the appellant’s licence, the prohibition on importing “Jackson Oval Plate Single Bolt belt fasteners” applied to the appellant and that such belt fasteners could not be imported after January 1952. The licence itself contained the clause: “This licence is granted under Government of India, Ministry of Commerce, Notification No. 23‑ITC/43, dated 1 July 1943, and is without prejudice to the application of any other prohibition or regulation affecting the importation of the goods which may be in force at the time of their arrival.”

The Court noted that the argument presented was that the individual components of the belt fastener might still be imported because the Import Trade Control Hand‑book, according to the argument, was designed to list “component parts” together with the finished articles whenever a restriction or prohibition was meant to apply to both. The Court accepted that, in some entries of the Hand‑book, component parts were indeed specifically mentioned. It was observed that such explicit inclusion could be explained either as an abundance of caution in the drafting or because those component parts might have an independent use apart from being part of the specified articles. However, the Court found no logical basis for excluding a component part that has no purpose other than being part of an article whose importation is prohibited. In other words, the Court could not agree with the position that the rule intended to allow importers to achieve indirectly what the rule forbade to do directly, by permitting the separate import of components that have no use except as parts of a prohibited article, and then assembling them domestically into a complete article that would be barred from import if assembled abroad.

The Court further rejected the reliance placed by counsel on an unreported Bombay High Court judgment delivered by Justice Mudholkar in Appeal No. 4 of 1959 (D. P. Anand v. M/s. T. M. Thakore & Co.). In that case, the Bombay judge had argued that a prohibition on a finished article, based on the wording of the Hand‑book, could not be read to forbid the separate importation of component parts that, when assembled, would constitute the prohibited article. The Court did not accept this interpretation. The Bombay judgment had recorded that the imported items were components of a motor‑bicycle, but they could not form a complete cycle because certain essential parts were not available in India and could not be imported. The Court therefore held that the Bombay decision did not support the present contention. Subsequently, counsel submitted that the Customs Collector’s decision was tainted by a clear error because the collector had misinterpreted Entry 22 of Part I of the Import Trade Control Hand‑book. To support this claim, counsel referred to a decision of this Court in A. V. Venkateswaran, Collector of Customs, Bombay v. Ramchand Sobhraj Wadhwani and Anr., but the Court found no merit in that line of argument.

In this matter, the Court observed that the argument raised by the learned counsel could not be sustained. The Court referred to a previous decision of this Court that was reported on page 757 of the Report. In that decision, the Court recorded that the learned Solicitor‑General, who appeared for the appellant, had argued that the view adopted by the learned judges of the Bombay High Court—namely that, on any reasonable interpretation of the items listed in the Schedule to the Tariff Act, the consignment imported by the respondent could have been liable only to a duty of thirty per cent under item 45(3)—was correct. The present counsel could not draw any assistance from that decision, because the factual and legal context in the earlier case was different. Moreover, the Court noted that the earlier discussion already demonstrated that the conclusion reached by the customs authority—that an offence under section 167(8) of the Sea Customs Act had been established—was not erroneous. The Court further emphasized that a petition filed under article 226 of the Constitution is not an appeal against the customs authority’s decision. Consequently, the correctness of the authority’s finding on the various items in the Import‑Trade Control Hand‑book or in the Indian Tariff Act does not fall within the writ jurisdiction of the High Court. The Court also observed that there was no allegation of any procedural defect that would invalidate the order. The order of the Collector, as shown by its contents, reflected a detailed investigation and a personal hearing that had been afforded before the impugned order was issued.

The next submission made by the learned counsel claimed that the Collector of Customs had considered the importation of washers by Nawanagar Industries Ltd. in reaching the conclusion that the appellant had violated section 167(8) of the Sea Customs Act, and that the notice served on the appellant failed to address this point. The counsel argued that, because of this omission, the confiscation order was illegal, void, and contrary to the principles of natural justice, indicating a procedural irregularity in the hearing. The Court was not persuaded by this line of argument. It held that the contention rested on a complete misunderstanding of the relevance of the separate import of the washers by the sister concern. The import of the washers could not be the basis of any charge against the appellant, nor was the appellant punished for that separate importation. Instead, the import of the washers was introduced merely as evidence to substantiate the Collector’s finding that the nuts and bolts imported were, in fact, components of the Jackson‑type belt fastener whose importation was prohibited. The charge framed against the appellant specified the exact nature of the offence alleged to have been committed. The Court noted that if evidence, which the appellant had the opportunity to rebut, was placed on record, examined in his presence, and that evidence conclusively demonstrated the true character of the imported articles, then there could be no credible allegation that the principles of natural justice had been breached.

In this case the Court noted that the description of the article in the Bill of Entry had been incorrectly stated, but that misdescription was essentially admitted by the parties and therefore could not be denied. It further observed that there was little dispute as to the true character of the imported items, which were identified as components of the Jackson type single belt fasteners. Because the factual finding that the imported goods were indeed those components was accepted, the Court held that no additional evidence was necessary to establish a violation of section 167(8). The Court explained that the earlier reference to Nawanagar Industries Ltd., which had imported the washers, served only to confirm the same finding and added nothing new to the record. In view of these considerations the Court concluded that the objection raised on this basis lacked any substantive merit. Consequently the Court determined that the appeal could not succeed. Accordingly the appeal was dismissed and the appellant was ordered to pay the costs of the proceedings. The final order therefore dismissed the appeal with costs awarded against the appellant.