1961 (5) TMI 2 - HC - Customs

Summary

Issues Involved:
1. Classification of goods by the Collector of Customs
2. Usage of trade and classification of goods
3. Violation of Article 14 of the Constitution
4. Discretionary power of the Collector in imposing penalties

Issue-wise Detailed Analysis:

1. Classification of goods by the Collector of Customs:
The appeal challenges the judgment dismissing a writ petition to quash the order of the Collector of Customs, Madras, which confiscated goods imported by the appellants on the ground that they were imported without a valid licence, contravening Section 3 of the Imports Control Order, 1955, read with subsection (2) of Section 3 of the Imports and Exports Control Act, 1947, constituting an offence under section 167(8) of the Sea Customs Act. The appellants had a licence to import musical instruments, which was converted to a licence for electric insulations excluding face value restricted items. The Customs authorities classified the imported black insulating tape as adhesive tape, which was restricted under the licence. The Collector held that the goods were adhesive tapes and thus restricted, leading to their confiscation.

2. Usage of trade and classification of goods:
The appellants argued that black insulating tape was considered distinct from adhesive tape by both trade usage and previous Customs practices. The Assistant Collector of Customs initially considered black insulating tape separate from adhesive tape, but this practice changed in December 1957. The Collector's order stated that the previous clearance of similar goods was erroneous and could not justify the current clearance. The learned Judge acknowledged the previous practice but upheld the Collector's classification, stating there was material to classify the goods as adhesive tape.

3. Violation of Article 14 of the Constitution:
The appellants contended that the order violated Article 14 of the Constitution due to discriminatory treatment compared to other importers who were allowed to clear similar goods without a fine. The learned Judge observed that different penalties imposed on different importers did not constitute a violation of Article 14, as the discretion in imposing penalties was within the jurisdiction of the authority.

4. Discretionary power of the Collector in imposing penalties:
The Collector's discretion in imposing penalties was questioned, particularly since other importers were let off with warnings while the appellants faced confiscation. The learned Judge noted that the Collector acted in a quasi-judicial capacity and must exercise discretion judicially. The Collector's failure to justify the drastic punishment of confiscation, especially given the previous practice, indicated an arbitrary exercise of discretion.

Conclusion:
The High Court allowed the appeal, quashing the Collector's order on two grounds: there was an error apparent on the face of the record, and the Collector did not exercise his discretion judicially. The appeal and writ petition were allowed, and the impugned order dated 10th March 1958 was quashed. No order as to costs.