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TMI Blog1965 (7) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... tion No. 86 of 1958. Messrs. Shantilal Chhotalal Co., hereinafter called the firm,, are a firm of Importers and Exporters of scrap iron. The said' firm obtained an export licence dated November 7, 1956, from the Iron and Steel Controller permitting them to export from the port of Bombay 900 long tons of steel skull scrap. The licence was to hold good up to March 31, 1957, and the goods had to be shipped to Japan by s.s. KUIBISHEV . Between October 1956 and March 1957 the firm purchased scrap iron from various sources at rates varying from ₹ 95 to ₹ 207 per ton. After they brought the goods to the docks, the Officer authorized, by the Iron and Steel Controller and the representative of the Regional Joint Scrap Committee certified the goods as steel skull scrap fit for export under the said export licence and the necessary endorsements to that effect were made on the shipping bills in respect of the said goods. Thereafter, the goods were taken to the customs authorities for the purpose of exporting the same. The customs authorities took the view that a part of the goods was not steel skull scrap; and the matter was referred to the Iron and Steel Controller. By h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the Additional Collector of Customs and the Union of India also preferred an appeal, being Appeal No. 56 of 1959, against the said order of the single Judge raising the question of penalty in so far as it went against them. The appeals came up for hearing before a Division Bench of the High Court, consisting of Mudholkar, Acting Chief Justice,, and S. M. Shah, J. The learned Judges held in favour of the firm mainly on the following grounds : (1) Since the satisfaction 289, as to whether a particular consignment of scrap is capable of being used in India or not is to be, under the Statement of export policy, that of the Iron and Steel Controller, the Customs Authorities were not entitled to consider afresh whether that scrap was or was not usable in India ; (2) the licence in question not having been granted by the Customs Collector, but by the Iron and Steel Controller, it was not open to the customs authorities to rely upon the provisions of the Imports and Exports Control Act, 1947, or the Exports Control Order, 1954, for the purpose of making inspection of the consignment which the petitioners were exporting ; and (3) if what was being exported was not Skull Scrap, but s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be put thus: Under the Export Control Order, 1954, the Iron and Steel Controller can issue a licence for exporting iron skull scrap if he is of the opinion that the said scrap is not usable in India. The Schedule annexed to the said Order treats scrap of iron and steel as one unit and it does not make a distinction between non-skull scrap and skull scrap nor does that Order define what skull scrap is. In the circumstances when the Iron and Steel Controller described certain scrap as skull scrap and gave the licence for exporting the same, it is not open to the appropriate customs authority to hold that the said description is wrong and, therefore, the scrap sought to be exported is not covered by the licence. To appreciate the rival contentions it is necessary at the outset to ascertain the scope of the respective jurisdictions of the Iron and Steel Controller under the Exports Control Order and the Customs Collector under the Sea Customs Act qua the goods covered by the licence issued by the former. The Iron and Steel Control Order, 1956, was issued by the Central Government in exercise of the powers conferred on it by s. 3 of the Essential Commodities Act and in supersessio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their functions are complementary to each other. Can it be said, as it was contended by the learned Additional Solicitor General, that in the present case the respondents sought to export goods that were not covered by the licence ? We have noticed earlier that under the Exports (Control) Order, 1954, no person shall export goods of the description specified in Schedule 1, except under and in accordance with a licence granted by the Central Government or by an officer specified in Schedule 11. Under the heading Raw Materials and Articles Mainly Unmanufactured in Part B of Schedule 1, item 3 is scrap containing any of the metals or alloys specified in entry C-9 of this Schedule . C-9 of the Schedule enumerates the various metals; and C-9(a)(x) is Iron and Steel . The sub-headings (1) to (27) thereof give different categories of that article. Officers competent to grant a licence are mentioned in Schedule 11 and they are (i) the Iron and Steel Controller; (ii) a Deputy Iron and Steel Controller; and (iii) an Assistant Iron and Steel Controller. 'Me Statement of Export Licensing Policy issued by the Government of India as on October 31, 1956, throws some more light on this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iven for the export of a particular item, obviously the licensee cannot export a different item. But scrap is only one item and, therefore, if the appropriate authority issues a licence for the export of the same, it cannot be held that the licensee is exporting some other item. A different approach leads to the same position. The record discloses, and it is not disputed, that the Iron and Steel Controller and his subordinates examined the goods at the time the licence was issued and at the time of loading of the goods in the ship for export. The licence was, therefore, issued in respect of particular goods identified by the appropriate authorities who were authorised to issue the licence and to inspect the goods. The name given by the authorities to the goods was, therefore, the name by which the appropriate authorities identified the goods. The licence was issued in respect of the specified goods identified by the appropriate authorities. It is not possible, therefore, to say that goods other than those in respect whereof the licence was issued were sought to be exported. In this view, can it be said that the Customs Authorities had jurisdiction to confiscate the scrap of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, J. I regret I have to come to a different conclusion. I need not repeat the facts leading to these appeals as they have been stated in the judgment of brother Subba Rao, J. The main question for determination in these appeals is whether the Collector of Customs had power to check the scrap for the purposes of satisfying himself that the scrap to be exported answered the description of the material which was to be exported under the licence granted to the exporter. The appellant claims such a right. The respondent denies it and urges that the decision of the Iron and Steel Controller contemplated by the conditions of the licence was final and the scrap in regard to which that decision is given could be exported without any further check by the Collector. It is necessary, before determining this controversial point, to first refer to the various provisions relating to the powers and jurisdiction of the Collector of Customs with respect to the export of iron and steel for whose export there exists some prohibition or restriction. Section (3) 1 of the Imports Exports (Control) Act, 1947 (Act. XVIII of 1947) empowered the Central Government to make provision for prohib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y or under Chapter IV of the Act be exported dfrom India contrary to such prohibition or restriction or if any attempt be made so to export any such goods, those goods would be liable to confiscation and that any person concerned in any such offence would be liable to a penalty not exceeding three times the value of the goods or not exceeding ₹ 1,000. It follows that scrap of iron and steel is liable to confiscation if it is exported or any attempt is made to export it contrary to the prohibition or restriction imposed by the Central Government. Section 178 of the Act empowers any officer of Customs to seize in any place in India either upon land or water, or within the Indian Customs waters, anything liable to confiscation under the Act. It is clear therefore that the officers of Customs have power to seize steel scrap if it be liable to confiscation, that is, if it is being exported or any attempt is being made to export it contrary to the prohibition or restriction imposed. If steel scrap is not exported under and in accordance with the licence issued by the proper authority, it would be liable to confiscation. It becomes the duty of the Customs Authorities to check the st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India. The decision contemplated by these conditions is not about the identity of the scrap material with the scrap described and loaded under the licence for export, but is only with respect to the possibility of the use of any portion of the scrap within the country. This is the clear interpretation of the conditions, according to the language used. It is to be noted that there is nothing in the Imports Exports Control Act or in the Exports Control Order which lays down among the duties of the Iron Steel Controller the duty to check that the material collected at the docks for export tallied with the material for export of which the licence had been granted. Neither the Import and Export Control Act nor the Export Control Order contains any such express provision which debars or prohibits the Customs Authorities from exercising, their powers of checking the goods sought to be exported for satisfying themselves that they were being exported in accordance with the licence granted for the export of the material. On the other hand, sub-s. (2) of s. 3 makes all the provisions of the Act effective in regard to the goods whose export is prohibited or restricted under the Control ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for the grant of licences cannot have the effect of affecting the provisions of the Import Export Control Act or the Control Order issued under it. Reference has been made to Part II of the Hand Book of Export Trade Control published by the Ministry of Commerce and Consumer Industries of the Government of India in October 1956. The statement of the export licensing policy as on October 31, 1956, states with reference to export of all iron and steel scrap except scrap, presumably from sheet cuttings : Export of any other ferrous scrap is allowed by the Iron Steel Controller provided he is satisfied that the material is of no use in India. This may be the general policy for the granting or non-granting of a licence for the export of iron and steel scrap other than from iron sheet cuttings, but this does not mean that if the licence is for the export of any particular type of steel scrap, it may still be considered to be the licence permitting export of steel scrap of any other kind except scrap from sheet cuttings. If this policy statement meant that the licence granted would have just mentioned the quantity of iron and steel scrap other than scrap from sheet cuttings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed by the Customs Authorities makes it clear that the Preventive Officer, the Examining Officer or the Appraiser of the Customs Department at the docks have to do the physical examination in respect of the description of the consignment to be exported and to sanction the export if satisfied that the consignment is in accordance with the terms of the licence. This is in accordance with the requirements of the provisions of the Act as stated above and goes against the contention for the respondent on the basis of the conditions in the licence about the finality of the decision of the Iron Steel Controller about certain goods sought to be exported to be usable in the country. It is also urged that scrap of 'iron and steel' is one unit under .the Export Control Order, that the Order does not contemplate any different varieties of such scrap and that therefore the granting of the licence for exporting steel skull scrap amounts, in law, to the granting of the licence or exporting any steel scrap, even if that is not 'steel skull scrap' Which is not defined under the Export 'Control Act or the Order. I do not agree. It is not disputed that steel scrap can be of di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in which the Additional Collector proceeded on no evidence for holding that the quantity of scrap confiscated was not steel skull scrap. It is not really disputed that the entire quantity of scrap exported by the respondent came within the definition of skull scrap as given in 'Metals Hand Book' by Taylor and Lyman (American Institute of Metals, 1948 Ed) which reads : A film or dross remaining in a pouring vessel after the metal has been poured-A frozen shell of metal sometimes remaining in the bottom of the ladle. The respondent however urges that a wider meaning is given to this expression in India. There is not sufficient material on record to substantiate this allegation. In matters of international trade, it appears a bit difficult to expect that the expression 'skull scrap' would have different meanings in different countries or that India alone would put a wider meaning on the expression with the result that there might be disputes between the exporters of this country and the importers of countries abroad. It has been urged that as the Iron Steel Controller had power to grant the licence for the export of steel scrap, his order on the shi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary documents to the purchasers of the goods in Japan and on the respondents giving a bank guarantee that the full f.o.b. value to be released from the said parch would be paid to the customs authorities towards penalty or fine in lieu of confiscation that might be imposed upon the respondents by the adjudicating authority. The customs authorities had seized the goods when they were within their jurisdiction. It is immaterial where the seized goods be kept. In the circumstances of the case, the seized goods remained on the ship and were carried to Japan. The seizure was lifted by the Additional Collector only when the respondents requested and gave bank guarantee. 'Me effect of the guarantee was that in case the Additional Collector adjudicated that part of the goods exported was not in accordance with the licence and had to be confiscated, the respondents, would, in lieu of confiscation of the goods, pay the fine equivalent to the of the bank guarantee. Section 183 of the Act provides that whenever confiscation is authorised by the Act the Officer adjudging it would give the owner of the goods option to pay in lieu of confiscation such fine as the officer thinks fit. This o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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