1970 (3) TMI 175 - HC - Customs

Summary

Issues Involved:
1. Applicability of the Supreme Court's decision in Sreeram's case.
2. Whether the amendment to Section 12(1) of the Foreign Exchange Regulation Act in 1969 applies retrospectively.
3. Validity of the confiscation and penalty order under Section 167(8) and Section 167(37) of the Sea Customs Act.
4. Jurisdiction of the High Court to order a refund under Article 226 of the Constitution.

Detailed Analysis:

I. Applicability of the Supreme Court's Decision in Sreeram's Case:

The first point raised by the appellants was whether the majority decision in Sreeram's case applied to the facts of the instant case. The Supreme Court in Sreeram's case had held that an exporter's obligation under Section 12(1) of the Foreign Exchange Regulation Act, 1947, was merely to furnish a declaration that the amount representing the full export value of the goods had been, or would be, paid in the prescribed manner. It was determined that no offense under Section 167(8) of the Sea Customs Act was committed if such a declaration was furnished, regardless of its truthfulness. The Supreme Court's decision was affirmed in subsequent cases, including McLeod & Co. v. Collector of Customs and Backer Gray & Co. v. Union of India. The court concluded that for making an incorrect or false declaration, authorities could proceed under other provisions of the law but not under Section 167(8) of the Sea Customs Act. Therefore, the impugned order of confiscation and penalty under Section 167(8) could not be upheld.

II. Retrospective Application of the 1969 Amendment:

The court examined whether the amendment to Section 12(1) of the Foreign Exchange Regulation Act in 1969, which required declarations to be "true in all material particulars," applied retrospectively. The court concluded that the amendment was not retrospective and would not affect declarations made prior to its enactment. The court rejected the argument that the amendment should be construed as retrospective, noting that penal statutes should not be construed to be retrospective unless explicitly stated. The court cited several precedents, including R. v. Vine and Midland Ry v. Pye, to support its conclusion that retrospective application would unjustly penalize actions that were legal at the time they were performed.

III. Validity of the Confiscation and Penalty Order under Section 167(8) and Section 167(37):

The court analyzed the validity of the confiscation and penalty order under both Section 167(8) and Section 167(37) of the Sea Customs Act. The court noted that the Additional Collector had relied on both sections in imposing the order of confiscation and penalty. However, the court found that the order of confiscation could not be struck down as it was also founded on Section 167(37), which was independent of Section 167(8). The court held that the findings of the Customs Authorities, which included that the contract disclosed by the respondent did not relate to the disputed goods and that the declared value was incorrect, established an offense under Section 167(37). Therefore, the confiscation order was upheld. However, the court found that the personal penalty of Rs. 35,000 could not be imposed under Section 167(37), which specified a maximum penalty of Rs. 1,000. The penalty was determined to be imposed under Section 167(8), which was without jurisdiction, and thus, the penalty order was quashed.

IV. Jurisdiction of the High Court to Order Refund under Article 226:

The appellants contended that the High Court was not justified in directing a refund in a proceeding under Article 226 of the Constitution. The court rejected this contention, noting that a duty to refund arises as soon as it is held that the impugned order was ultra vires. The court cited several cases, including R. v. Income-tax Special Purposes Commrs. and Sales Tax Officer v. Kanhaiyalal, to support the proposition that a claim for refund can be allowed in a proceeding for mandamus. The court distinguished the case from Suganmal v. State of Madhya Pradesh, where the sole relief sought was a refund, and noted that refund as an ancillary relief was permissible.

Conclusion:

The appeal was allowed in part. The court quashed the personal penalty of Rs. 35,000 imposed on the respondent and directed the appellants to refund this amount within two months. The order of confiscation and the fine of Rs. 2,00,000 paid to redeem the confiscated goods were upheld. The court also directed the refund of Rs. 2,00,000 out of Rs. 2,35,000 deposited with the Registrar, Original Side, to the appellants upon proper application.