1957 (2) TMI 78 - HC - Indian Laws

Court affirms Customs jurisdiction in fraud case, dismisses petition. Investigation continues, petitioner can challenge decisions. Interim orders vacated.

East India Commercial Co Ltd Versus Collector Of Customs

The court dismissed the petition, affirming the jurisdiction of Customs officials to investigate the alleged fraudulent misrepresentation by the ... - Issues Involved:1. Validity of the import license conditions.2. Alleged fraudulent misrepresentation by the petitioner.3. Jurisdiction and authority of the Customs officials.4. Applicability of the Sea Customs Act and the Imports and Exports (Control) Act.5. Confiscation of goods and equivalent monetary value.Issue-wise Detailed Analysis:1. Validity of the import license conditions:The petitioner company imported Fluorescent Tubes and Fixtures from the USA under a special license issued by the Chief Controller of Imports, New Delhi. The license was subject to the condition that the goods would be utilized only for consumption as raw material or accessories in the license holder's factory and no portion would be sold to any party. The petitioner argued that these conditions, stamped on the license, were administrative and not part of any order by the Central Government under Section 3(1) of the Imports and Exports (Control) Act. The court noted that the conditions were imposed by the licensing authority as per Notification No. 2-ITC/48 dated March 6, 1948, which allowed the licensing officer to impose conditions from an administrative point of view.2. Alleged fraudulent misrepresentation by the petitioner:The petitioner applied for the license claiming the goods were required for their factory's own use, but reports indicated that the goods were sold to various parties. The Special Police Establishment investigated, leading to the seizure of a large stock of Fluorescent Tubes and Fixtures. The petitioner was charged with offenses under Section 420-120B, IPC, and Section 5 of the Imports and Exports (Control) Act. The Presidency Magistrate discharged the accused, but the High Court later remanded the case. The court emphasized that if the petitioner imported goods under false pretenses, it would constitute a breach of the license conditions and potentially fraudulent misrepresentation.3. Jurisdiction and authority of the Customs officials:The Customs officials issued a notice to the petitioner to show cause why the goods or their monetary equivalent should not be confiscated under Section 167(8) of the Sea Customs Act, read with Sections 3(2) and 4 of the Imports and Exports (Control) Act. The petitioner argued that the Sea Customs Act was attracted by Section 3(2) of the Imports and Exports (Control) Act, which applied to goods imported under an order made or deemed to be made under the Act. The court held that there was no justification for treating orders made under the Act and those deemed to be made under the Act differently, affirming the Customs officials' jurisdiction.4. Applicability of the Sea Customs Act and the Imports and Exports (Control) Act:The court analyzed the interplay between the Sea Customs Act and the Imports and Exports (Control) Act. It noted that Notification No. 23-ITC/43, which prohibited the importation of electrical goods without a special license, was deemed to be an order under Section 3(1) of the Imports and Exports (Control) Act. The court also considered Notification No. 1(13)-ITC/47(i) dated 26-7-1948, which prescribed a new form of application and emphasized that applications from actual consumers would receive consideration. The court concluded that the importation of goods without compliance with these notifications would attract the provisions of the Sea Customs Act.5. Confiscation of goods and equivalent monetary value:The Customs officials sought to confiscate the goods or their monetary equivalent, arguing that the license was issued based on fraudulent misrepresentation and that the goods were sold in violation of the license conditions. The court held that if it was established that the petitioner imported goods under false pretenses, the goods would not be covered by the special license, making them liable for confiscation. The court also noted that the sale proceeds of the goods, converted into money by court order, could be confiscated if the goods themselves were liable to confiscation.Conclusion:The court dismissed the petition, holding that the Customs officials had the jurisdiction to investigate the matter and that the petitioner had not made out a case for interference at this stage. The court allowed the investigation to proceed, emphasizing that the petitioner could challenge any adverse decision by the authorities at the appropriate stage. The rule was discharged, and all interim orders were vacated, with a temporary stay on further proceedings to allow the petitioner to seek relief from the appellate court.