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Judgment
Mohan, J.—These petitions coming on for orders as to admission on this day upon perusing the petition and the affidavit filed in support
thereof the order of the High Court and made herein and reply affidavit withdrawn, and upon hearing the arguments of Mr, Habibullah Basha for
M/s. D.A. Stewart and M.A. Kalam, Advocates for the petitioner and of Mr. P. Narasimhan Central Government Standing Counsel for the
respondents 1 to 3 and of Mr. B. Sriramulu; Special Prosecutor for (SPE) Cases for the 4th respondent, and having stood over for consideration
till this day the Court made the following order:
All these three writ petitions can be dealt with under a common order, since the writ petitioner in all the writ petitions is the same. The relief asked
for in all the writ petitions is identical except that each of the petitions relates to different consignments.
The short facts are as follows:
One Messrs. Continental Silk House, 47, 3rd Main Road, 4th Block. Rajaji Road, Bangalore, filed three bills of entry all dated 29th of
September, 1986 for the clearance of 25 bales of mulbery silk in each case. The goods were imported by vessel ''VELANJI''. The vessel arrived
on 27.9.1986. Messrs Jeena & Co., the clearing agents of M/s. Continental Silk House filed these three bills of entry for the clearance of 25 bales
of mulbery raw silk of China origin on behalf of M/s. Continental Silk House Bangalore (the importers) The value of each of the consignments was
declared as Rs. 3,43,651/-, Rs. 3,45,910/- and Rs. 3,45,792/- on the strength of the invoices raised by Messrs. Brightex (H.K.) Corporation in
their favour. Both the importer and the Custom House Agent subscribed to a declaration as to the truth of the contents in the bills of entry as
provided for u/s 41(2) of the customs Act of 1962 (hereinatter referred to as the ''ACT''). On the strength of the bills of entry, the goods were
inspected and the sampling was also done. Meanwhile, information was received by respondents 1 to 3 that the said importer was not in existence,
and that the licence had been obtained by fraud and misrepresentation on the strength of fabricated documents. Therefore, the Joint Chief
Controller of Imports and Exports issued a show cause notice to the said Importer and the same was not served since there was no such company
in the address given. Consequently, the Joint Chief Controller of imports and Exports conducted an enquiry and also cancelled the licence given to
the said importer. Besides, a First Information Report was lodged and the C.B.I. was entrusted with the task of investigation. Accordingly the
investigation by the Central Bureau of Investigation was taken up and was being proceeded with. While the matter stood thus, a show cause
novice was issued to the said M/s. Continental Silk House, as to why the goods imported should not be confiscated under the Act. The case is
pending adjudication by the Collector of Customs. Meanwhile, the writ petitioner through its Advocate Mr. L.V. Balani requested the Customs
Department to allow the petitioner to file the bills of entry for clearance. The petitioner''s clearing agents M/s. Srinivasa Mudaliar & Brothers filed
one bill of entry, it was then noticed by the Customs Department that a bill of entry filed already by M/s. Jeena & Co., the clearing agents of M/s.
Continental Silk House had not been processed yet. The other two bills of entry filed by the clearing agent of the writ petitioner were refused by
the respondents since similar bills of entry had already been tiled and the adjudication proceedings were in progress. Under these circumstances,
the Department has sent a reply to Mr. L.V. Balani by letter dated 31.3.1987 under Registered Post with Acknowledgement Due giving reasons
for not noting the bills of entry filed by the petitioner.
It also requires to be noticed that by proceedings dated 13th of March 1987, the Joint Chief Controller of imports and Exports, after satisfying
himself that the licence issued in favour of M/s. Continental Silk House dated 4,4.1986 would not serve the purpose for which it was issued,
cancelled it with immediate effect under the powers vested in him under Clause 2(aaa) read with Clause 9(1)(d) of the Imports (Control) Order,
1955 dated 7.12.1955 as amended.
It further requites to be noted that M/s. Jeena and Company, the clearing agents of M/s. Continental Silk House by their reply dated 13th April
1987 to the show cause notice dated 27.3.1987 issued by the Department have stated that no import licence was sent to them for the clearance of
the goods in question; nor did they receive any money for payment of duty, having no suspicion regarding the bona fides of the importers as stated
in the shipment documents, in good faith, the bills of entry were filed by them to avoid the delay. Only from the details contained in the show cause
notice, they came to know about the various offences involved. Any section that may be required may be taken against the goods and the
Importers.
It is at this stage, all these three writ petitions have been filed for identical relief of mandamus directing the second respondent to receive the bills
of Entry covering the import of 25 bales of Mulberry Raw Silk imported on board the ship''s.s. Velanje'' and to release the goods after collecting
the duty payable thereon.
Mr. Habibullah Badsba, learned Counsel for the petitioner, would urge as follows;
(i) The definition of an Importer is found u/s 2(26) of the Act having regard to the same, if the petitioner, before the goods are cleared for home
consumption, would hold itself out to be the importer, it has every right to clear the goods. The petitioner is an Importer under law since the
documents have been transferred to it and the bank documents, the bills of lading, invoices etc. are all in the name of the petitioner. Further, it has
the requisite import licences specifically endorsed for the import of the goods now lying in the Madras Harbour. As to who is an Importer has
come to be laid down in J.V. Gokal and Co. (Private) Ltd. Vs. The Assistant Collector Sales-tax (Inspection) and Others, . Therefore, the stand
of the Customs Department is untenable.
(ii) u/s 46 of the Act, all that the Importer has to do is to file a bill of entry. Accordingly the clearing agents of the petitioner wanted to file the bills
of entry. But strangely the Department is not accepting the two bills and on the third bill, no action had been taken so far. Under law, all that is
required is to examine the bills of entry to find out whether the goods are not prohibited. If the same is established, there is no other option
available to the Officer concerned except to release the goods on payment of duty; more so when the goods are covered by a valid licence.
(iii) It is one thing to say that the bills of entry filed by M/s. Continental Silk House had been obtained by fraud or misrepresentation and yet
another thing to say that the petitioner who has valid licence and as an importer is prepared to pay the necessary duty could be denied the benefit
of import. By allowing the import in favour of the petitioner, the Department is not in any manner prejudiced. Still, whatever action could be taken
against M/s. Continental Silk House, that can be taken. Therefore, the denial of the benefit of import is nothing but arbitrary, violative of Articles 14
and 19(1)(g) of the Constitution.
The learned Senior Standing Counsel for the Central Government would draw my attention to the definition of Importer occurring in Section
2(26) of the Act and contend that it talks of an ''Importer'' in relation to any goods at any time between their importation and the time when they
are cleared for home consumption. This time factor is relevant in this case because the goods in question arrived on 27.9.1986 on which date the
importation was complete. The person holding the document prior to importation, namely, 27.9.1986, could alone be deemed to be an importer.
The documents in the hands of the importer are invoices dated 15.12.1986 and 16.12.1986 the bills of lading are only after the date of
importation. At the time of importation, therefore it was Continental Silk House who could, in law, be the importer. Therefore, the reliance placed
on this definition is in-appropriate, and the citation in this behalf is inapplicable.
The learned Counsel then refers to Sub-section (1) and (3) of Section 30 of the Act and then urges that in this case as early as on 12.6.1986,
the C.B.I. enquiry had been commenced. It is at this juncture that in January 1987 the petitioner''s claimed the release of the goods. So far as the
goods are concerned, they are liable for confiscation, concerning which adjudication proceedings are pending. A show cause notice has been
issued on 27.3.1987. The Department has also sent a reply to the advocate of the petitioner on 31.3.1987. In order to circumvent the adjudication
proceedings, the petitioners have ingeniously filed these bills of entry and have come up to this Court as though nothing had happened. It is
incorrect to contend that no prejudice will be caused to the Department, nor again it is proper to urge that there is any arbitrariness.
Mr. B. Sriramulu learned Counsel appearing for the Central Bureau of Investigation would urge that a case in R.C. No. 19 of 1986 is pending
investigation concerning the fraud committed by M/s. Continental Silk House, Bangalore, concerning the very goods in question. The contract for
the import of the goods was between M/s. Continental Silk House and the Joint Chief Controller of Imports and Exports, it has now turned out
that the said M/s. Continental Silk House is a bogus firm and on the strength of the forged documents, licence had been obtained by fraud. Under
those circumstances, under the law as laid down in Fedco (P) Ltd. and Another Vs. S.N. Bilgrami and Others, and Sheikh Mohammed Sayeed
Vs. Assistant Collector of Customs for Preventive (I) and Others, , the goods are liable for confiscation. This is because the goods have been
imported fraudulently attracting Section 111(d) of the Act whereby they are liable for confiscation. Under these circumstances, there is no question
of any statutory obligation cast on the Customs Department to allow the release of the goods on payment of duty.
Mr. Habibullah Badsha, learned Counsel for the petitioner in reply cites the decision in East India Commercial v. Collector of Customs AIR
1962 S.C. 1898 and submits that the cancellation of the licence of Continental Silk House is not always obligatory and it is voidable and therefore
the cancellation of the licence of M/s. Continental Silk House cannot be put against the petitioner.
Before I proceed to consider the legal issues involved the facts may be detailed out. M/s. A.S. Shipping Agencies (P) Ltd., Madras Steamer
Agents, for vessel ''M.V. Velenje'' (by which the goods in question arrived) filed an import Manifest I.M. No. 887/86 on 17.9.1986. This is in
accordance with Section 30 of the Act. The impugned consignments are covered by Line Nos. 150, 151 and 152 of the Import Manifest. The
entries indicated in the Manifest against the above three lines are as under:
Line No. B/L No No. of Bales Marks & Nos.
2. 3. 4.
150 0099/4871
G2 MDS-010 25. C.S. C/Madras No.
80424/80448
151 C. 990/4873
G ZMDS-008 25 CSC/Madras No.
80374/80398
152 C/0099/4872
G ZMDS-009 25 CSC/Madras No.
80399/80423
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Description of Goods Name of the Consignee/Importers
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White Steam Filature M/s. Continental Silk House, 47, 32nd Main
(in all) Road, Rajaji Nagar, Bangalore-(in all)
It will be seen that the Importer is M/s. Continental Silk House, the holders of the bills of lading. The Customs House Agents M/s. Jeena & Co.,
Madras filed the bills of entry with invoices dated 4.9.1986 of M/s. Brightex, Hong Kong, on 20th September, 1986. The goods arrived on 27th
September, 1986. The bills of entry were admitted by the Department. They were assigned Nos. 5059 to 5061. They were manifested as GM-
887/86 Line Nos. 150 to 152 on 29.9.1986. It came to the light of the Customs Department that M/s. Continental Silk House was not in existence
and the licence itself had been obtained by fraud and misrepresentation on the strength of fabricated documents. Therefore, a complaint was
lodged on 27.11.1986 by the Deputy Chief Controller of Imports and Exports with the Superintendent of Police, C.B.I. (EOW), Madras to
takeup investigation against the bogus firm. Accordingly, a First Information Report was prepared in Crime No. R.C. 19 of 80 dated 2.12.1986
and investigation was taken up. On 13.3 1987, the Joint Chief Controller of Imports and Exports passed an order of cancellation of the imprest
licence dated 4.4.1986 for C.I.F. value of Rs. 9.59.280/- for the import of mulberry raw silk issued in favour of M/s. Continental Silk House after
satisfying himself that it will not serve the purpose for which it was granted. This was in exercise of the powers conferred under Clause 2(aaa) read
with Clause 9(1)(d)of the Imports (Control) Order, 1955. It had also come to the notice of the Customs Department that neither M/s. Continental
Silk House nor the supporting manufacturer indicated by them, namely, M/s. J.K. Silk Industries were functioning at the addresses given by them
and also at the other addresses furnished by M/s. Continental Silk House, at Madras, 19. The show cause notice is issued on 6th March 1987 for
the proposed cancellation of the licence dated 4.4.1986 had been returned by the postal authorities with the remarks ''No such Continental Silk
House, No. 26, II Street, Kanniappa Gramni Nagar at Tiruvottiyur, Madras-600019 and hence returned to sender.'' On 27.3.1987 in view of the
above, M/s. Continental Silk House M/s. J.K. Silk Industries and M/s. Jeena & Co., were called upon to show cause as to why the consignments
should not be confiscated u/s 111(d) of the Act read with Section 3(2) of the Imports & Exports (Control) Act, 1947. This was because the
licence was obtained by fraud on the strength of the forged documents. The importer and the supporting manufacturers are fictitious firms. The said
licence had, therefore, been cancelled. Meanwhile, by letter dt. 21.2.1987 Mr. Balani, Advocate addressed a letter to the Assistant Collector of
Customs on behalf of the petitioner stating that the three bills of entry filed for the clearance of the consignments could be noted and the clearance
of the goods be allowed. To the said letter, the Assistant Collector of Customs replied on 31.3.1987 as follows:
''Please refer to your letter dated 21.2.1987 on behalf of M/s. J.B. Trading Corporation, Bombay addressed to the Assistant Collector of
Customs (Imports).
You are hereby informed that one M/s. Continental Silk House filed three bills of Entry for the clearance of the consignments under reference and
adjudication proceedings were already initiated by this office for confiscation of the goods and imposing penalties on the importers and others by
way of issue of show cause notice. Since, adjudication proceedings are underway, your request for noting the bills of entry in favour of your client
M/s. J.B. Trading Corporation, Bombay cannot be acceded to.
Mr. Habibullah Badsha, learned Counsel for the petitioner strongly relies on the word ''Importer'' found in Section 2(26) of the Act. The word
''Importer'' is defined as follows:
''Importer'' in relation to any goods at any time between their importation and the time when they are cleared for home consumption, includes any
owner or any person holding himself out to be the importer.
In interpreting this, it is observed as follows in J.V. Gokal and Co. (Private) Ltd. Vs. The Assistant Collector Sales-tax (Inspection) and Others, .
''The legal position vis-a-vis the import-sale can be summarised thus:
(1) The course of import of goods starts at a point when the goods starts at a point when the goods cross the customs barrier of the foreign
country and ends at a point in the importing country after the goods cross the customs barrier; (2) the sale which occasions the import is a sale in
the course of import; (3) a purchase by an importer of goods when they are on the high seas by payment against shipping documents is also a
purchase in the course of import and (4) a sale by an importer of goods, after the property in the goods passed to him either after the receipt of the
documents of title against payment or otherwise, to a third party by a similar process is also a sale in the course of import.
In my considered view, as rightly contended by the learned Senior Standing Counsel tor the Central Government, the words, namely, ''at any
time between their importation and the time when they are cleared for home consumption'' occurring in Section 2(26} are important. It has already
been noted that the goods had arrived on 27.9.1986 on which date the importation had become complete having crossed the customs barrier. At
that relevant time it was only M/s. Continental Silk House which was the importer and for that alone the goods were intended. As a matter of fact,
the bills of entry had been filed by M/s. Jeena & Co. They still stand. Those bills have not been cancelled; nor the imported goods were
abandoned. In law, therefore, no other person can claim to be the importer of the goods except the person shown in the Manifest originally as seen
from the above Tabular Statement against Line Nos. 150, 151 and 152. After the completion of importation on 27.9.1986, there cannot be
another importer for the very same goods. Therefore, apart from the definition u/s 2(26) not being helpful to the petitioner, 1 am unable to see how
the ruling of the Supreme Court, referred to above, could be pressed into service. It also requires to be noted that the documents in the hands of
the petitioner are invoices bearing dated 15.12.1986 and 16.12.1986 while the bills of lading are after the date of importation.
On 29.1.1987, one bill of entry Rotation No. 887/86; Line No. 150 in the name of the writ petitioner as importer was filed by the Custom
House Agent M/s. Srinivasa Mudaliar & Bros., Madras on behalf of the petitioner. This bill of entry was not manifested by the Customs
Department because, against this Line No. 150 a bill of entry had been tiled by the importer in the correct sense, namely, M/s. Continental Silk
House, Bangalore. The same had not been cancelled. The C.B.I. case is pending. Therefore, there is no question of one bill of entry of the
petitioner having been accepted and the other two being refused. The stand of the Department that the three bills of entry had already been filed by
M/s. Jeena & Co., with regard to the same, consignment and therefore it cannot accept any other person as the importer for the same goods is
perfectly in consonance with the Customs law as well as the common sense. Further, the petitioner had been informed that the bills of entry against
Line Nos. 150, 151 and 152 had already been filed on 29th September, 1986 by the said M/s. Jeena & Co., on behalf of M/s. Continental Silk
House, Bangalore.
The fallacy underlying the argument of the petitioner is, it is presumed on behalf of the petitioner that the goods had already been allowed for
clearance and the Importer of M/s. Continental Silk House had not cleared the goods. This is far from fact. On the contrary, the matter is now in
the hands of C.B.I. and a first information report has been registered in R.C. No. 19 of 1986, The licence of M/s. Continental Silk House had
been cancelled by proceedings dated 13.3.1987, the import of the goods on the strength of the fake documents by fictitious firm on whom even
notices could not be served would undoubtedly constitute fraud. In such a case, Section 111(d)of the Act will clearly get attracted. Consequently,
the goods are liable for confiscation. There is an obligation cast on the Custom House Agent M/s Jeena & Co., who acted on behalf of M/s.
Continental Silk House to comply with Section 30 of the Act. It is also clear that under Sub-section (2) of Section 30, the person delivering the
import manifest or the import report has to make and sudscribe to declaration as to the truth of its contents. When this turned out to be untrue,
M/s. Jeena & Co., was pushed to the extreme and wrote in reply to the show cause notice on 13th April 1987 that they were not aware of the
bond fides of the Importer. In good faith the bills of entry were filed to avoid delay and any action could be taken against the goods or the
importer. If the goods which have been imported were imported contrary to Section 111(d)of the Act, they are liable for confiscation as
categorically laid down in Fedco (P) Ltd. and Another Vs. S.N. Bilgrami and Others, . This ruling of the Supreme Court was relied on in Sheikh
Mohammed Sayeed Vs. Assistant Collector of Customs for Preventive (I) and Others, . The weighty observations in the following two paragraphs
are relevant to the point in issue.
Paragraph 32:
....The different sections of the Act cannot be read in isolation. The definition of ''imported goods'' in Section 2(25) has to be read along with
Section 111 of the Act which deals with goods brought from a place outside India. This section is in Chapter XIV of the Act which provides for
confiscation of goods and conveyances and imposition of penalties. u/s 111(d)of the Act any goods which are imported contrary to any prohibition
imposed by or under this Act or any other law for the time being in force shall be liable to confiscation. The goods which have been seized in this
case cannot be imported into India without a licence under the import (Control) Act and there is therefore a prohibition in law for the import of the
goods except in compliance within Import (Control) Act. It is true that the goods were cleared from the Customs Barrier on the basis of import
licence produced by the petitioner, but the respondents'' case is that the import licences, on the basis of which the goods were cleared were not
genuine. The licences which were utilised by the petitioner for the purpose of clearing the goods, according to the respondents, were forged
licences. If a licence is forged it is no licence at all, and any import of goods, of which the importation is prohibited by law, cannot be a valid import
under the Act. Goods so imported cannot therefore be treated to be lawfully ''imported goods'' within the definition of that term in Section 2(25) of
the Act, Since the respondents'' case is that the licences on the basis of which the goods were imported were forged licences, if the allegation of
forgery is true, the goods must be held to have been brought into India contrary to a prohibition imposed by law as contemplated by Section
111(d) of the Act, and in that case such goods are liable to confiscation and the power to seize u/s 110(1) of the Act can be invoked by the
Customs authorities and the goods, though cleared after payment of duty can be seized u/s 110(1) of the Act. The contention on behalf of the
petitioner that the goods having been imported into India for home consumption would cease to be imported goods and the decision of the
Customs authorities to release the goods upon payment of the duty imposed cannot be revised by any authority other than the Board in exercise of
its power u/s 130(1) of the Act therefore fails and is rejected.
Paragraph 36:
The next contention of the learned Counsel for the respondents was that the licence used by the petitioner for the purpose of clearing the goods
was not a genuine licence, but was a forged one and therefore there was no licence at all; and that being so, the import of the goods was unlawful
and the goods even though cleared from the Customs Barrier, were liable to confiscation and the petitioner who was responsible for using a forged
licence for clearing the goods was in addition liable to an order of penalty. In support of this contention reliance was placed on a decision of the
Supreme Court Fedco (P) Ltd. and Another Vs. S.N. Bilgrami and Others, . In that case it was held that the entire scheme of control and
regulation of impors by licences was on the basis that the licence was granted on a correct statement of relevant fact and that if the grant of the
licence was induced by fraud or misrepresentation that basis disappeared. It was also held that it would be absolutely unreasonable that such
licence should be allowed to continue. In my view this contention of the learned Counsel for the respondents is well founded. The import of goods
on a licence, in the case of goods the import of which is prohibited, must be confined to imports made on a licence lawfully obtained. If a licence is
forged, and I wish to make it clear that in this case I do not say that it has been forged, as that would be a matter for determination in other
proceedings against the petitioner, there is no licence at all. The respondents'' case is that the licence used by the petitioner is a forged one, and if
such forgery is proved in appropriate confiscatory and penal provisions of the proceedings, the import of the goods would be unlawful and would
attract the Customs Act and other statutes. The position here is similar. If the contention of the petitioner is to be accepted, whenever any
consignment is liable for confiscation for some violation, the importer could be substituted by some other person to file the bill of entry for
clearance It is almost certain that having come to know of the proceedings, the petitioner, with a view to circumvent the same, is claiming itself as
''IMPORTER'' in order to set at naught the adjudication proceedings and the confiscation of goods. It is rather surprising that when the petitioner
has accepted that it''s payment is against D/P. basis, instead of refusing to retire the documents, it is making ingenious attempts to clear the goods
which have been illegally imported into India by a fictitious firm on the strength of forged documents concerning which R.C. No. 19 of 1986 is
pending. There is absolutely, no scope for the petitioner to claim the right of an ''IMPOTER'', more so, after the first information report came to be
filed on 2.12.1986 while the invoices of the petitioner bear the dates 15.12.1986 and 16.12.1986. ''Fraud is infinite in its variety and this is one
such variety.
There are absolutely no merits in these writ petitions and hence they are dismissed.