1. The writ appeal arises out of the judgment of our learned brother Justice Rajashekhara Murthy rendered in Writ Petition No. 14675 of 1990 dated 3rd day of September 1990.
2. The facts are as follows : the 1st appellant is a Company incorporated under the Companies Act, 1956. It carries on business under the name and style of ''B. S. Kamath & Company''. It is engaged in the manufacture of High Density Polyethylene Woven Sacks and other allied articles. The Unit went into production in June 1987.
3. A raid was conducted by the Customs Department. The premises was under search and seal and certain documents in relation to import of machinery were seized by the Officers of the Customs Department on 25-4-1990. The documents pertain to import of raw-materials and its utilisation. Therefore the Customs Department had no competency to call upon the 1st appellant to furnish details about the import of raw-materials and its utilisation. A writ of prohibition was prayed for to restrain the respondents from proceeding with any further enquiry in relation to the utilisation and the movement of the raw-materials and other related matters.
4. The contentions urged by the 1st appellant in support of the prayer in the writ petition are as follows :
(i) Inasmuch as the 1st appellant imported the raw materials under an advance licence granted by the Controller of Imports and Exports subject to the conditions attached to the said licences, the Customs Department has no right or authority to call upon the 1st appellant to furnish the details of the import of raw-materials and its utilisation.
(ii) If ever a breach of the conditions had taken place, that could be enquired into by the licensing authority. Therefore, the Customs Department could not exercise the powers of such a seizure muchless confiscation. In so far as for the breach of conditions of licence the constituted authority under the Imports and Exports (Control) Act, has ample powers to investigate, it is that authority which has to take action.
(iii) Conditions under the licence and the breach thereon come under the immediate, direct and effective control of the Controller of Imports and Exports. That being so, the liability to pay customs duty would depend upon the nature of performance by the importer which includes the utilisation, misutilisation mis utilization or diversion, as the case may be.
5. In opposition to this, the Department took the following stand :
(1) The import licence is granted subject to certain conditions. One such condition is the goods imported against the advance licence should be utilised in accordance with the Customs Notification No. 116/88 dated 30th March, 1988.
(2) The exemption from payment of customs duty was in accordance with the duty exemption entitlement certificate. This again was subject to the conditions imposed in the licence itself in accordance with Notification No. 116/88.
(3) It was detected by the Customs authorities that the 1st appellant had contravened the provisions of the Customs Act and the Notification No. 116/88. Therefore the Customs Department has every jurisdiction to investigate into the matter. Where there is reliable information about the misuse or diversion of the raw-materials, it can prove into the matter.
(4) The power to investigate and conduct a preliminary enquiry whenever there is a suspicion about evasion of duty is available by virtue of Section 111(O) of the Customs Act read with Section 25. Therefore, the importer is bound to render account of the raw-materials imported under the advance licence for having obtained the exemption from payment of customs duty under the Duty Exemption Entitlement Scheme.
(5) No doubt the 1st appellant obtained the licence under the Imports and Exports (Control) Act. However, if it involves suspected evasion of payment of customs duty, the customs authorities have a co-ordinate authority and power to search and seize the premises of any importer. It has also the power to inspect the accounts and seize such documents as are necessary in the event of non-compliance with the terms and conditions of the licence. This may ultimately culminate in confiscation of the offending goods by virtue of the power u/s 111(O) of the Customs Act.
6. On these arguments and counter arguments, the learned single Judge examined the case with reference to various provisions of the Customs Act and the Imports and Exports (Control) Act. He was of the view that the two enactments form a complete code and are administered as forming one scheme.
7. Dealing with the notification, the learned Judge found that the important clause for the purpose of this case is Clause (d) requiring the manufacture by the utilisation of the exempt materials. The advance licence contained a specific condition requiring the utilisation of the goods imported in accordance with the provisions of the customs Notification No. 116/88. For investigating whether there had been such utilisation, the authority under the Customs Act could enquire for the purpose of satisfying itself whether the importer has complied with the conditions. Such an enquiry and investigation could necessarily be a post-import enquiry.
8. After referring to the relevant case laws, the learned Judge relying on the decision in
9. Mr. K. Parasaran, learned Senior Counsel for the appellants, would draw our attention to the Customs Notification No. 116/88. According to him, while dealing with exemption to goods imported against advance licences, Notification No. 115/88 clearly stipulates two important conditions, (i) a Duty Exemption Entitlement Certificate is to mention the value, quantity, description, quality and technical characteristics and (ii) the goods corresponding to the resultant product and the mandatory spares in respect of these are to be exported within the time specified in the said certificate or by such extended time. Then again, "Committee" means the Inter - Departmental Committee, constituted by the Government of India and the Chief Controller of Imports and Exports. The Duty Exemption Scheme under the Customs Act postulates the issue of advance licences for the import of duty free materials in terms of Department of Revenue Notification No. 116/88 dated 30th March 1988. This is for the purpose of manufacture and export of the resultant products or to replenish the materials which have gone into the production of the resultant products already exported in anticipation of grant of the advance licence.
10. The form in relation to Indemnity Bond under Clauses (c) and (e) also specifically require to fulfil certain obligations. Clause (e) specifically refers to Imports and Exports (Control) Act, 1947. The Export obligation is contained in Duty Exemption Scheme. The follow up action is also stated there. It talks of recovery of customs and other duties u/s 142 of the Customs Act. With regard to this follow up action, it is the satisfaction of the licensing authority that is material. If the licence holder is not able to fulfil the export obligation, both in terms of quantity and value, he is required to pay the customs duty and 18 per cent. interest. If the stand of the respondents is that there is a contravention of the terms of the licence, the question would be as to who is to take action. If it is a case of civil action different authorities could act in different fields.
11. Section 2(33) of the Customs Act defines the prohibited goods. That expressly excludes goods permitted to be imported. The learned Judge erred in assuming that both the authorities have jurisdiction. In this regard it is submitted with respect that the learned Judge had committed three errors. While dealing with Section 3 of the Imports and Exports (Control) Act, Section 3(2) alone links with Customs Act namely, Section 11. A breach of conditions of the licence will not attract Customs Act. S. 5 talks of prosecution and penalty. In
12. Regarding civil sanction, whether there could be two authorities could be answered with reference to the decision in Durga Prasad (P) Ltd. v. Union of India [1968 (3) Mad 421]. It is that principle which should govern. In
13. The learned Counsel for the Customs Department in meeting these submissions, would contend first and foremost that the grant of exemption was subject to the Notification No. 116/88. But for this Notification, things would have been different. In not one case cited by the appellants the Notification of a similar character issued under the Customs Act ever came up for consideration. In
14. In reply, Mr. Parasaran would urge that the decision in
15. In order to appreciate the respective submissions, we propose to refer to the salient features of the statutory provisions. The law relating to customs was originally embodied in Sea Customs Act. That Act was repealed by the Customs Act, 1962. The main object of the Customs Act is to prohibit the importation and exportation of the goods notified by the Central Government. This prohibition may be absolute or partial or even subject to certain conditions. Whenever there is violation of the provisions of the Customs Act, the Act lays down elaborate procedure relating to detection, prevention and levy of duty. The authorities are enabled to take penal action as well.
16. Section 12 of the Customs Act is a charging section. The rates of duties to be levied are provided in the Customs Tariff Act, 1975.
17. Section 25 enables the Central Government to exempt fully or partly the duty leviable. This exemption may be subject to such conditions as it may impose.
18. The licences are issued under the various orders issued u/s 3 of the Imports and Exports (Control) Act, 1979. These are known as Import Control Orders. The Schedules appended to the orders indicated the goods which are permitted to be imported under the licence issued by the specified authorities. Section 11 of the Customs Act prohibits the import of goods other than those specified by the Central Government. However, the import of notified goods is permitted subject to such restrictions as may be imposed by the Central Government u/s 3 of the Imports and Exports (Control) Act, 1979. u/s 3(2) if any goods imported under a licence do not conform to the description or value of the goods as contained in the licence or again if they do not conform to the other conditions applicable to the licence, the import of such goods shall be deemed to be prohibited u/s 11. Thus it will be clear that when Section 3(2) of the Imports and Exports (Control) Act talks of prohibited goods, one must have regard to Section 11. Therefore, both these Acts, as rightly held by the learned single Judge, constitute a single code and they form one scheme.
19. Under the Duty Exemption Scheme Clause (c) is important for our purpose. That reads as follows :
"(c) If the licence holder is not able to fulfil the export obligation both in terms of quantity and value, he shall be required -
(i) to pay to the Customs Authorities all duties along with 18% interest on such quantity of the exempt materials as are deemed to have remained unutilised as per approved input - output norms on the basis of which the licence was issued."
Paragraph 4 of the Duty Exemption Scheme reads as follows :
"(4) Where the licensing authority is satisfied that the exempt material has been sold or misutilised by diverting it for domestic production, the said authority shall take action for debarment and prosecution under the Imports and Exports (Control) Act and orders issued thereunder in addition to actions enumerated in sub-para (3). In such cases, the enforcement of this would be in addition to the recovery of customs duty and interest thereon. If the licensee shall be declared a defaulter not entitling him to any licenses/release under the Import Policy including the Scheme."
It should be noted here that from the above paragraphs it is clear that the action is to be taken for debarment and prosecution. With reference to exemption in relation to goods imported against advance licences, it is stated that the materials imported are covered by a Duty Exemption Entitlement Certificate issued by the licensing authority in the forms produced to this notification in respect of (1) value, (2) quantity, (3) description, (4) quality and (5) technical characteristics.
20. Then Clause (c) of Notification No. 115/88 is important. It reads :
"(c) The goods corresponding to the resultant products and the mandatory spares, in respect of value, quantity, description, quality and technical characteristics, as specified in Part ''E'' of the said Certificate are exported within the time specified in the said Certificate or such extended period as may be granted by the licensing authority or the Committee."
We may also refer to the proviso, but that proviso has no application to the facts of the case. The proviso reads :
"Provided further that the holder of an Advance Licence, not being a manufacturer exporter, may transfer the replenished materials to the supporting manufacturer concerned whose name appears in the said Certificate or to an actual user, for further production in accordance with the provisions of paragraph 244 in Chapter XIX of the Import and Export Policy April, 1988 - March, 1991."
It would be clear from the Duty Exemption Scheme that the objective of the Scheme is to make available the registered exporters, the necessary materials for export production at international price without payment of customs duty so as to make the price competition in the international market. Only with this view, advance licences are issued. But while coming to advance licences we have to necessarily note the following which has a great bearing to this case :
"Advance licences are issued to Registered Exporters for import of duty free materials in terms of Department of Revenue Notification No. 116/88-Customs dated 30th March, 1988 (as reproduced in Appendix 13-A) as amended, for manufacture and export of the resultant products or to replenish the materials which have gone into the production of the resultant products already exported in anticipation of grant of the Advance licence."
The reason why we referred to this is, Notification No. 116/88 dated 30th March 1988 is specifically referred to in the licences issued also. It was stated as follows :
"The goods imported against this advance licence shall be utilised in accordance with the provisions of the Customs Notification No. 116/88-Cus. Dt. 30-3-1988."
The Duty Exemption Certificate contained in the schedule also refers to this. It reads :
"The above importer and covered by the list of materials specified under Part C of this Certificate would be eligible for exemption from duty subject to the conditions specified in the notification of the Government of India in the Department of Revenue No. 116/88 Customs, dated the 30th March, 1988 (hereafter in this Schedule referred to as the said notification).
The importer shall make the exports in terms of condition (c) of the said notification within........
A bond/legal undertaking in terms of condition (b) of the said notification for Rs............. shall be executed within.......... before the clearance of the goods from Customs."
The Bond contained in Appendix XIX-F lays down three important conditions contained in Clauses (c), (e) and (f), They are extracted below :
"(c) Before clearance of the first consignment of import is allowed, the importer shall furnish a Bank Guarantee for an amount equal to..... of the c.i.f. value of the licenses/release order or for an amount equal to the..... of the customs duties payable, whichever is higher. The said bank guarantee will be liable to be forfeited in full or equivalent to the shortfall if the importer does not fulfil the export obligation as stipulated.
(e) That the importer further agrees and undertakes that in the event of the importer''s default in making the export obligation set out in the condition as specified under the Duty Exemption Certificate, the importer would be liable to the Government instituting legal actions against them for confiscation of the imported material and other rights available to the Government under the provisions of the Imports & Exports (Control) Act, 1947 and Imports (Control) Act, 1955 and other provisions rules formulated by the Government relating to the said import. The importer further agrees that the confiscation proceedings may be initiated by the Government at any time before or after the completion of export obligation period.
(f) That the importer is liable to action taken for recovery of Customs or other duties, penalty and interest etc., thereon under provisions of the Customs Act, 1962."
Concerning the export obligation, we may refer to paragraph 235 of the Duty Exemption Scheme :
"235. A licence issued under this scheme shall bear suitable export obligation. The export obligation period will commence from the expiry of 30 days from the date of import of first consignment. Initially, on provisional basis, the date of execution of bond/legal undertaking will be treated as the date from which export obligation begins. The exact date of commencement of export obligation will, however, be determined on submission of actual Bill of Entry or the DEEC Book."
The follow-up action is contemplated in the following manner :
"If a licence holder fails to discharge the prescribed export obligation within the permitted time, the licensing authority shall initiate action against the licence holder on the lines indicated in Chapter XIX of the Handbook of Procedures, 1988-91. This shall, however, be without prejudice to any other action that may be initiated by the Customs authorities for recovery of Customs duty or other duties and interest thereon u/s 142 of the Customs Act, 1962."
20A. Notification No. 116/88 dated 30th March 1988 is the notification falling under general exemptions relating to Import Tariff issued u/s 25(1) of the Customs Act. Clause (d) is important for our purpose. It is extracted below :
"(d) the exempt materials shall be utilised for the manufacture of resultant products specified in Part ''E'' of the said certificate or for export as mandatory spares, and no portion thereof shall be sold, loaned, transferred or disposed of in any other manner."
It has already been seen as to what is the requirement with reference to the utilisation of the goods. Condition No. 2 of the licence is to the following effect :
"2. To ensure fulfilment of export obligation as mentioned in 1 above, the firm shall before clearance of the first consignment would execute a joint legal undertaking/joint for 100% customs duty backed by bank guarantee as in Appendix XIX/F/G of the Hand Book of Import Export procedures 1988-91 for a sum of Rs......... for fulfilling export obligation and a bond mentioned in duty exemption entitlement certificate for utilisation of imported raw materials duty free with this office. The legal undertakings backed by bank guarantee shall be valid for a period of three years."
If cannot be denied that the licences are issued in favour of the appellants under the Customs Exemption Entitlement Scheme. It also cannot be denied that condition No. 3 specifically mentions that the goods imported against advance licences shall be utilised in accordance with the provisions of the Customs Notification No. 116/88 dated 30th March 1988. No doubt Section 2(33) of the Customs Act while defining prohibited goods, expressly excludes goods permitted to be imported, but if a Notification has been issued under Sect. 25(1) we do not know how Section 111(O) of the Customs Act would be rendered inapplicable. Section 111(O) of the Customs Act states as follows :
"111. Confiscation of improperly imported goods, etc.
The following goods brought from a place outside India shall be liable to confiscation :-
... ... ... ...
(o) Any goods exempted, subject to any condition, from duty or any prohibition in respect of the import thereof under this Act or any other law for the time being in force, in respect of which the condition is not observed unless the non-observance of the condition was sanctioned by the proper officer."
What is now urged on behalf of the appellants is Section 3(2) of the Imports and Exports (Control) Act, 1979 alone links with Section 11 of the Customs Act. Therefore, if there is a breach of the import and export control licence, that will not attract Section 25 of the Customs Act read with Section 111(O). We are unable to agree with this submission because as rightly urged by the Department, but for this Notification namely, Notification No. 116/88, the matter would have been different. It is in this regards the decision in Pooja Exporters v. Assistant Director, D.R.I. [1989 (4) ELT 21] becomes very relevant. A similar contention which is advanced before us was raised in the above case. In dealing with the same in paragraphs 12 and 13 it was observed thus :
"12. However, the main contention of the petitioner is that the Customs Authorities have no jurisdiction to seize as long as there is no material to show that the Notification No. 44, dated 19-2-1987 issued u/s 25(1) of the Act has been contravened. The fact that the goods in question are imported under the advance license issued under the Imports (Control) Order, 1955 does not in any way affect the authority or jurisdiction of the customs authorities to pursue the imported material. As such the seizure of the imported mulberry raw silk in question is in accordance with the provisions of the Act and the notifications issued thereunder. However, Sri Chandra Kumar, learned Counsel for the petitioner has placed reliance on a decision of the Supreme Court in
13. However, in a later case in
"12. In support of the second contentions that the Order does not provide for imposing the condition that the imported goods be not sold, reliance is placed on the decision in
"that such other conditions may be imposed which the licensing authority considers to be expedient from the administrative point of view and which are not inconsistent with the provisions of the said Act."
The actual condition imposed, however, did not fall under sub-clause (1) of Clause (a) and was sought to be supported by relying on sub-clause (v). This Court held that under the clause a licensing authority was competent to impose only such conditions as may be expedient from the administrative point of view. This Court further held that prohibiting an importer from disposing of the goods imported affects the right of that persons and therefore such a condition cannot be prescribed in the licence in the absence of a rule permitting that to be done. In the case before us, the licence has been issued under the Order of 1955. The language of sub-clause (2) of Clause 5 of that order is wide and permits the imposition of a condition which was outside sub-clause (v) of Clause (a) of the Order of 1948. Sub-clause (4) of Clause 5 further makes it obligatory upon the licensee to comply with all the conditions imposed or deemed to be imposed under Clause 5. We therefore do not agree with the second contention and hold that the licensing authority is competent under the Order to impose the condition that the imported goods be not sold to any person and thus to affect the ordinary rights of the importer."
It was further found at page 32 as follows :
"When the importation of goods takes place under Advance Licence Scheme, it is governed by the conditions imposed under the Notification No. 44, dated 19-2-1987 issued u/s 25 of the Customs Act. As such, the Customs Authorities have always the power to find out whether the conditions of the Notification No. 44, dated 19-2-1987 are complied with. If prima facie there is contravention of the conditions imposed by the Notification No. 44, dated 19-2-1987 which form part of the advance licence also, the customs authorities are entitled to seize the goods and proceed with the matter in accordance with the provisions contained in the Act. It is also very pertinent to notice that Clause (o) of Section 111 of the Customs Act is very widely worded. It includes not only contravention of the conditions of the licence but also contravention of the orders issued under the Act."
In our considered view, the position is exactly the same in the instant case excepting that the notification differs. We also derive support from the case in
"5. Shri Avadh Bihari appearing for the appellant has submitted that there was no suppression or wilful misstatement on the part of the appellant and that soon after the execution of the agreement dated July 31, 1979, a joint application dated August 31, 1979, was submitted on behalf of the appellant and the Company whereby the Deputy Chief Controller of Imports & Exports was informed about the transfer of business of the appellant to the Company and it was requested that the import licence dated February 14, 1979, may be transferred in favour of the Company, Shri Avadh Bihari has also laid stress on the joint letter dated September 18, 1979, addressed by the appellant and the Company to the General Manager, District Industries Centre, Ernakulam, informing him with regard to transfer of business by the appellant to the Company as well as the letter dated November 20, 1979, sent by the General Manager, District Industries, Centre, Ernakulam to the Deputy Chief Controller of Imports & Exports, Ernakulam, recommending that the project is eligible to avail concessional rate of import duty, if rules permit, since the machinery which is imported is for the substantial expansion of the unit. Shri Avadh Bihari has also placed reliance on the letter dated February 4, 1980 of the appellant addressed to the Deputy Chief Controller of Imports & Exports in informing him about the transfer of machinery imported by it under import licence dated February 14, 1979, to be Company and the reply dated February 26, 1980, sent by the Deputy Chief Controller of Imports & Exports to the said letter wherein the fact of transfer of the imported machinery by the appellant to the Company has been noted in the said office. The submission of Shri Avadh Bihari is that from the aforesaid documents, it is clear that the appellant has not committed any breach of any condition of the import licence dated February 14, 1979 and that the import authorities have also not found that the appellant has not contravened the conditions on the basis of which the import licence was granted to the appellant and that in these circumstances, it was not open to the authorities under the Act to proceed against the appellant. Shri Avadh Bihari has in this regard placed reliance on the decision of this Court in
6. These contentions, in our view, are misconceived because here the customs authorities have not taken action against the appellant for breach of any condition of the import licence dated February 14, 1979. Action has been taken against the appellant under the provisions of the Act for obtaining clearance of the goods by paying customs duty on a concessional rate under the Heading 84.66 of the Customs Tariff by suppression and wilful misstatement of facts. What is of relevance is whether before obtaining clearance of the machinery imported under import licence dated February 14, 1979, the appellant had informed the customs authorities that the said machinery had been transferred to the Company under agreement dated July 31, 1979. The office of the Deputy Chief Controller of Imports and Exports, Cochin, had no role in the matter of levy of customs duty on the imported machinery and, therefore, the conduct of the appellant in informing the Deputy Chief Controller of Imports & Exports about the agreement dated July 31, 1979, entered into by the appellant and the Company with regard to transfer of business can have no bearing on the action taken by the customs authorities for the contravention of the provisions of the Act. The decision of this Court in East India Commercial Company Ltd., Calcutta and Another (supra) is not applicable because the action that has been taken by the Customs authorities is not for breach of the conditions of the import licence but for the contravention of the provisions of the Act.
Again in paragraph 11 it has been observed as follows :
"The expression "exempted" in Clause (o) does not mean full exemption from duty because u/s 25 of the Act power has been conferred to grant exemption from the whole or any part of the duty of customs leviable on the goods specified in the notification. This means that Clause (o) would also cover cases where partial exemption from duty has been granted in respect of the goods in question. This was a case where partial exemption from duty, in the form of concessional rate had been granted under Heading No. 84.66 of the Customs Tariff and the said exemption was available subject to the conditions laid down in the said Heading. The appellant obtained the benefit of the said concession and got the goods cleared from customs on payment of concessional rate of duty by making of declaration that the goods were required for substantial expansion of the existing industrial unit of the appellant. The said declaration of the appellant was not correct inasmuch as the goods were not to be used for substantial expansion of the unit of the appellant but were to be used for setting up a new unit by the Company. The appellant, after getting goods cleared from the customs transferred the same to the Company and thereby the appellant failed to observe the condition on the basis of which the benefit of concessional rate of duty under Heading 84.66 of the Customs Tariff was obtained. The goods were, therefore, liable to confiscation under Clause (o) of Section 111 of the Act and penalty could be imposed u/s 112 of the Act."
21. We will now proceed to consider the cases relied upon by Mr. Parasaran. In
"In the present case, the provisions of the Sea Customs Act, 1878 are attracted by reason of the provisions contained in Section 3 of the Imports and Exports Control Act, 1947 and on the authority of the decision of this Court in the
This decision again will be of no use to the appellants in view of the notification which was issued under the Customs Act. No doubt in
In Durga Prasad Private Ltd. v. Union of India [I.L.R 1968 Mad 421] it was observed at page 443 as follows :
"It is very difficult to sustain the interpretation that Section 167(8) of the Sea Customs Act was also intended to apply to a case, where the goods are exported strictly within the ambit of the restrictions, but the necessary permission had been obtained by inducing the authorities to accept declarations or documents which were false in certain particulars. We must here point out that if the authorities detect this, they will have the power to cancel the permission altogether, u/s 190A earlier referred to."
What is to be carefully noted in the above case is no notification like Notification No. 116/88 ever came to be considered. In Lokash Chemical v. M. S. Mehta, Collector of Customs (Preventive) Bombay & Others [1981 (8) ELT 235 (Bom.)] the learned single Judge of the Bombay High Court held as follows :
"The effect of Section 47 read with Section 2(33) is that once licence is granted the proper officer has to ascertain (i) whether the goods sought to be imported correspond to the description in the licence, (ii) whether the conditions imposed in the licence and required to be complied with by the importer have been complied with by the importer and if his finding on the aforesaid issues is in the affirmative he is bound to allow clearance of the goods on payment of duty. It is not for the Customs authorities to interpret licensing policy or to enforce the same once a valid licence is produced. This function is of the licensing authority. If this bifurcation of function is not adhered to there is every likelihood of utter confusion. The licensing authority may interpret the policy one way and the Customs authorities may take contrary view producing a conflict between the two authorities resulting in harassment to the importer. It is, therefore, that the functions of the two authorities which operate in two different spheres must be kept within their proper ambit. If a licence is granted in respect of a particular item by the licensing authority the Customs authority will have no right or power to go beyond the licence and determine as to whether the said licence related to prohibited item. It is only the licensing authority who has to determine the said question at the time of granting licence."
This case again has no application to the facts of the instant case having regard to the Notification. Equally is inapplicable the unreported decision of the Madras High Court rendered in W.As. Nos. 1043 to 1049 of 1988 (Union of India v. Oceanic Export Corporation). Thus it will be clear, as rightly urged by the Revenue, in not one case cited by the appellants the Notification under the Customs Act ever came up for consideration. In
"In the present case the Customs authorities did not direct prosecution for contravention of any condition of a licence : they directed confiscation of the machinery and imposed penalty in lieu thereof. But on the terms of S. 5 as amended, the right to impose penalty for contravention of any condition of a licence may be exercised under the Sea Customs Act, 1878, and not under the Imports and Exports (Control) Act, 1947. For breach of any condition of a licence it is open to the authorities to direct prosecution, but no order confiscating goods and imposing penalty in lieu of thereof could be made. The order of confiscation could only be made under S. 167 Clause 8 of the Sea Customs Act 1878 : in terms Clause 8 of S. 167 provides for confiscation of the goods importation or exportation of which is for the time being prohibited or restricted by or under Ch. IV of the Sea Customs Act, 1878. The notification of which the contravention is said to have been made, is not issued under S. 19 of the Sea Customs Act, but under the Imports and Exports (Control) Act, 1947. It has not been urged before us, and rightly, that penalty of confiscation is incurred under the provisions of the Sea Customs Act, 1878, for breach of the conditions of the licence."
From a reading of the above it is clear that the Notification of which the contravention is alleged was issued under the Imports and Exports (Control) Act, 1947.
22. Now we may look at the decision in
"15. In view of Clause (o) of Section 111 if any goods exempted from payment of duty is imported without observing the condition, subject to which the exemption has been made, it will be a case of smuggling within the meaning of Section 2(e) of the COFEPOSA Act."
This case greatly supports the stand of the Revenue. In this context we may usefully refer to paragraph 26 at page 10 of the Import and Export Policy in 1988-91.
"Compliance with other laws.
26. It is implied that every applicant for an import licence has complied with and continues to comply with the provisions of all other laws applicable to himself or any other person on whose behalf he submits an application. The grant of an import licence does not also confer any immunity, exemption or relaxation at any time from an obligation or compliance with any requirements to which the licence holder may be subject to under other laws or regulations. This would apply also to materials allotted directly by the canalising agencies under the policy, as also to the imports made under the Open General Licence, with or without an ''actual user'' condition attached thereto."
Therefore, compliance with other laws is required on the part of the appellants. Hence, it is impossible to contend that the Customs authorities cannot take action.
23. For the reasons stated above, we conclude that no writ of prohibition could be issued. The appellants are bound to comply with the conditions of the Notification No. 116 of 1988 dated 30th March, 1988 issued u/s 25 of the Customs Act which in turn attracts Section 111(O) of the Customs Act. Accordingly, the writ appeal fails and is dismissed. No costs.
