TaxTMI 
TaxTMI 
1968 (11) TMI 71
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....4 and 1601 of 1966 and 3948 of 1965, and directed the issue of writs of prohibition to the Union of India, the Collector of Customs, Madras, and the Deputy Collector of Customs, Visakhapatnam, appellants before us, prohibiting them from taking any action in pursuance of certain show-cause notice issued by the Deputy Collector of Customs, Visakhapatnam. Common questions of law are involved in these appeals and it would suffice if I give facts in Writ Petition No. 1592 of 1966 out of which Civil Appeal No. 45 of 1968 arises. The relevant facts in that writ petition, for appreciating the points raised before us, are as follows: On February 17, 1965, the Deputy Collector of Customs, Visakhapatnam, issued memorandum No. S/21/14/65 to M/s. Rai Bahadur Seth Shreeram Durgaprasad (Private) Ltd., Tumsar, and five others, hereinafter referred to as "the shippers." In this memorandum, in brief, it was stated that the shippers had entered into a formal contract on October 13, 1965, with M/s. Inter Continental Ores Supply Corporation, New York, for the shipment of 20,000 tons of Indian Manganese ore of the grade of 43% Mn., from the port of Visakhapatnam at a price of $0.67 per unit of Mangan....
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....ting to the Collector of Customs, Madras, why a penalty should not be imposed on them/him under section 167(8) of the Sea Customs Act, 1878. It appears that a number of such memoranda were issued in respect of diverse shipments. Thereupon five petitions were filed in the High Court of Madras. In Writ Petition No. 1592 of 1966 it was alleged that 125 show-cause notices had been issued to the petitioners on various dates and it was prayed that a writ of prohibition or other appropriate writ, order or direction under article 226 of the Constitution of India prohibiting the respondents from taking any action in pursuance of the said show-cause memos, may be issued. Various allegations were made but I need only mention the following allegations. It was submitted that the petitioners had complied with the statutory provisions inasmuch as a declaration in statutory form had been furnished to the prescribed authority, to wit, the Collector of Customs, and the Collector of Customs, having passed the consignments for shipment, had no further right or jurisdiction to take proceedings relating to the consignments in question. It was contended that if a declaration is found to be false, i....
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....sion Bench on appeal came to the conclusion that, as the declarations were made under section 12(1) and as they were scrutinised by the authorities, it is not possible to contend that these goods were either exported or attempted to be exported in violation of the prohibitions or restrictions imposed by law and are, therefore, liable to be confiscated under section 167(8) of the Sea Customs Act. The Division Bench further held that the alleged fraud on the part of the petitioners did not make any difference. According to the Division Bench "if the petitioners had misled the authorities by false representations or failed thereby to repatriate foreign exchange, by virtue of his obligation under section 12(2), these are different offences for which separate and specific penalties can be imposed." The relevant statutory provisions at the time of exportation were as follows: The Foreign Exchange Regulation Act, 1947: "12. (1) The Central Government may, by notification in the official Gazette, prohibit the taking or sending out by land, sea or air (hereafter in this section referred to as export) of any goods or class of goods specified in the notification from India, directly ....
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....ing the shipping documents to retain possession thereof until such time as the exporter of the goods has made arrangements for the Reserve Bank or a person authorised by the Reserve Bank to receive on behalf of the exporter payment in the prescribed manner of an amount which represents in the opinion of the Reserve Bank the full export value of the goods. (6) For the purpose of ensuring compliance with the provisions of this section and any orders or directions made thereunder, the Reserve Bank may require any person making any export of goods to which a notification under sub-section (1) applies to exhibit contracts with his foreign buyer or other evidence to show that the full amount payable by the said buyer in respect of the goods has been, or will within the prescribed period be, paid in the prescribed manner. 22. No person shall, when complying with any order or direction under section 19, or with any requirement under section 19B or when making any application or declaration to any authority or person for any purpose under this Act, give any information or make any statement which he knows or has reasonable cause to believe to be false, or not true, in any material par....
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.... No court shall take cognizance- (a)of any offence punishable under sub-section (1) except upon com plaint in writing made by the Director of Enforcement, or (b)of any offence punishable under sub-section (1A) of this section or under section 54 of the Indian Income-tax Act, 1922, as. applied by section 19 of this Act, except upon complaint in writing made by the Director of Enforcement or any officer authorised in this behalf by the Central Government or the Reserve Bank by a general or special order : Provided that where any such offence is the contravention of any of the provisions of this Act or any rule, direction or order made thereunder which prohibits the doing of an act without permission, no such complaint shall be made unless the person accused of the offence has been given an opportunity of showing that he had such permission. (4) Nothing in the first proviso to section 188 of the Code of Criminal Procedure, 1898, shall apply to any offence punishable under this section. 23A. Without prejudice to the provisions of section 23 or to any other provision contained in this Act, the restrictions imposed by sub-sections (1) and (2) of sections, sub-section (I) o....
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....f the declaration shall be submitted to the authorities and in the manner specified on the forms. The documents pertaining to every export passed by the Customs shall, within 21 days from the date of the export, be submitted to the authorised dealer mentioned on the relevant declaration form, unless the Reserve Bank, in its discretion, authorises otherwise. 5. Evidence in support of declaration.-(1) The Reserve Bank, or subject to such directions, if any, as may be given by the Reserve Bank, the Collector of Customs or the postal authorities, may, to satisfy themselves of due compliance with section 12 of the Act, require such evidence in support of the declaration as may satisfy them that the exporter is a person resident in India or has a place of business in India. (2) The Reserve Bank, or subject to such directions, if any, as may be given by the Reserve Bank, the Collector of Customs, or the postal authorities may require any exporter to produce in support of the declaration such evidence as may be in his possession or power to satisfy them... (ii)that the invoice value stated in the declaration is the full export value of the goods ; and (iii)that the amount re....
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....e the Exchange Act, for no subject has a right to sabotage the national economy. Coming to the first point, I find that the following words of Lord Blackburn express my views as to how the construction of section 23A should be approached. He was dealing with a case where a single section of an Act of Parliament has been introduced into another Act. He said in Mayor of Portsmouth v. Charles Bovill Smith [1885] 10 App. Cas. 364, 371 : " Where a single section of an Act of Parliament is introduced into another Act, I think it must be read in the sense which it bore in the original Act from which it is taken and that consequently it is perfectly legitimate to refer to all the rest of that Act in order to ascertain what the section meant, though those other sections are not incorporated in the new Act. I do not mean that if there was in the original Act a section not incorporated, which came by way of a proviso or exception on that which is incorporated, that should be referred to. But all others, including the interpretation clause, if there be one, may be referred to." It seems to me that this is the correct way of looking at section 23A of the Exchange Act for another reason....
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....ivisional Court in Norris case (supra) and it appears to me that that decision is prefectly correct. Consequently, the charge against the appellant here was, in effect, that he had committed crimes denned or contained in the Act of Parliament." The Court of Criminal Appeal had stated in R. v. Wicks [1946] 2 All E.R. 529, 531 as follows : " The first observation which the court would make is that they are in complete agreement with the decision of the Divisional Court in Norris case (supra) that, where a statute enables an authority to make regulations, a regulation made under the Act becomes for the purpose of obedience or disobedience a provision of the Act. The regulation is only the machinery by which Parliament has determined whether certain things shall or shall not be done. It is, therefore, clear that the regulations must be read as though they were contained in the Act itself. They derive their efficacy solely from the Act and accordingly expire with the Act, but it may be that the legislature has provided that some restrictions or consequences shall remain effective notwithstanding the expiration of the Act." In a recent case, Rathbone v. Bundoch [1962] 2 All E.R.....
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....e meaning of " by the Act" in the context. Regarding the case of United States v. George R. Eaton 36 L. Ed 591, relied on on the appellants' behalf, I find that the Supreme Court of the United States explained and distinguished that case in Singer v. United States 89 L. Ed. 285, 290 as follows: "United States v. Eaton 36 L Ed 591 turned on its special facts, as United States v, Grimaud 220 U.S. 506, 518, 519; 55 L. Ed. 563, 568; 31 S. Ct. 480 emphasizes. It has not been construed to state a fixed principle that a regulation can never be a' law' for purposes of criminal prosecutions. It may or may not be, depending on the structure of the particular statute. The Eaton case involved a statute Which levied a tax on oleomargarine and regulated in detail oleomargarine manufacturers. Section 5 of the statute provided for the keeping of such books and records as the Secretary of the Treasury might require. But it provided no penalty for non-compliance. Other sections, however, laid down other requirements for manufacturers and prescribed penalties for violations. Section 20 gave the Secretary the power to make 'all needful regulations' for enforcing the Act. A regulation was promulg....
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....declaration. When such a power is conferred on an exporter by a statute, good faith on his part must at least be implied and be a condition pre-requisite. This construction is necessary in order to prevent abuse of the power given by the Act (See Maxwell on the Interpreta-Aion of Statutes, 11th edition, page 116). If the exporter makes a deliberately false declaration he contravenes section 12(1) because he has not made the statutory declaration in good faith. It is not necessary to say that the declaration becomes a nullity because the breach of good faith, a condition prerequisite, is itself a contravention of the conditional prohibition or restriction, within section 167(8) of the Sea Customs Act read with section 23 A and section 12(1) of the Exchange Act. Clerical mistakes and mistakes made bona fide even in respect of material particulars are not within the mischief of section 12(1), but a deliberate falsehood and a deliberate evasion of the provisions of section 12(1) come within section 12(1). Otherwise the ambit of section 12(1), read with section 23A, would be narrowed to the" point of extinction. An exporter and persons concerned in the export could with impunity give a ....
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....the foreign buyer, or that the Reserve Bank can in the eventualities mentioned in section 12(5) require the holding up of shipping documents or that the Reserve Bank by exercising powers under section 12(6) secure contracts and other evidence to discover the full amount payable do not throw any light on the construction of section 23A and section 12(1) except that the legislature is anxious that the "full export value" shall be received in this country. Section 23A read with section 12(1) calls in aid of customs authorities to achieve the same object, but ropes in along with the exporter the persons concerned in the prohibited export. I am not able to appreciate how the existence of section 167(37), section 167(72) and section 167(81) is of any assistance for the purpose of interpreting section 23A and section 12(1) of the Exchange Act. It may be -I do not decide it-that an exporter, like the respondents, will also be liable to be proceeded against under these items of section 167. Taking the facts as alleged by the customs authorities to be true, as they must be taken to be true for the purpose of this application under article 226, it seems to me that no case for the issue ....
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....hat decision these appeals have been brought after obtaining the necessary certificates from the High Court. The only question that arises for decision in these appeals is whether on the facts set out in the show cause notices, which facts have to be assumed to be correct for the purpose of these proceedings, the respondents can be held to have contravened section 12(1), which reads; "The Central Government may, by notification in the Official Gazette, prohibit the taking or sending out by land, sea or air (hereinafter in this section referred to as export) of any goods or class of goods specified in the notification from India directly or indirectly to any place so specified unless a declaration supported by such evidence as may be prescribed or so specified, is furnished by the exporter to the prescribed authority that the amount representing the full export value of the goods has been, or will within the prescribed period be, paid in the prescribed manner." On August 4, 1947, the Central Government issued a notification prohibiting the export of all goods to any place outside India unless a declaration supported by such evidence as may be prescribed is furnished by the ....
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....gainst them, as mentioned earlier, is that they had under-invoiced the goods and failed to repatriate a portion of the foreign exchange earned by them. It is also alleged that they gave incorrect information in their declarations. If these allegations are correct which we have to assume to be correct for the purpose of this case, then it is obvious that the declarations given by the respondents do not comply with the requirements of rule 5. Section 22 of the Act provides that no person when making an application or declaration to any authority or person for any purpose under the Act shall give any information or make any statement which he knows or has reasonable cause to believe to be false or not true, in any material particular. Section 23 prescribes that if any person contravenes the provisions of section 12 or of any rule, direction or order made thereunder he shall (a) be liable to such penalty not exceeding three times the value of the foreign exchange in respect of which the contravention has taken place, or five thousand rupees, whichever is more, as may be adjudged by the Director of Enforcement in the manner provided in the Act or (b) upon conviction by a court, be pu....
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....vision contained in this Act, the restrictions imposed by. . .sub-section (1) of section 12. . .shall be deemed to have been imposed under section 19 of the Sea Customs Act, 1878, and all the provisions of that Act shall have effect accordingly, except that section 183 thereof shall have effect as if for the word ' shall' therein the word ' may' were substituted." If the allegations mentioned in the show cause notices come within the scope of section 23(A) then it necessarily follows that they will be governed by the provisions in section 19 and section 167(8) of the Sea Customs Act, 1878. Section 19 of the Sea Customs Act provides : "The Central Government may from time to time by notification in the official Gazette prohibit or restrict the bringing or taking by sea or by land goods of any specified description into or out of India across any customs frontier as defined by the Central Government." This section is similar to section 12(1) of the Act. Section 167(8) provides for punishments for offences under that Act. That section, to the extent material for our present purpose, reads : " The offences mentioned in the first column of the following schedule shall be pun....
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....cribed forms have been furnished. The evidence specified have also been given. Therefore, prima facie, there was no contravention of section 12(1). What is said against the respondents is that the invoice price mentioned by them in the declarations did not represent the full export value: hence the declarations given by them are invalid declarations which means that the concerned goods were exported without furnishing the declaration required by section 12(1). It is not possible to accept this argument. The declarations given do satisfy the requirements of section 12(1), though they do not correctly furnish all the informations asked for in the form. Such declarations cannot be considered as non-est. The informations called for in the prescribed form cannot be considered as restrictions imposed by section 12(1). They are merely informations called for for the proper exercise of the powers under the Act. Many of them do not relate to the restrictions imposed by section 12(1). Neither section 12(1) nor any other provision in the Act empower the rule making authority to add to the restrictions imposed by section 12(1). For finding out the restrictions imposed by section 12(1) we have ....
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....le of construction of a section like section 12(1) is, if we may say so with respect, as mentioned by Plowman J. in In re H. P. C. Productions Ltd. [1952] Ch. D. 446, 473 (Ch. D.) Therein the learned judge observed : " I approach the question of the construction of the Exchange Control Act in the light of the principles stated by Upjohn J. in London and Country Commercial Properties Investments v. Attorney-General [1953] 1 All E.R. 436, 441 to which Mr. Bagnall referred. In that case the court was concerned with the construction of the Borrowing (Control and Guarantees) Act, 1946, and Control of Borrowing Order, 1947. Upjohn, J. said [1953] 1 W.L.R. 312, 318, 319.: The first question I have to consider is what are the principles of construction which I must adopt in construing this Act and this order...I have to bear in mind that this is a penal statute. It indeed, I suppose, represents the high-water mark of the parliamentary invasion of the traditional rights of the subjects of this realm. Then he went on to explain why that was so and continued: In those circumstances what are the canons of construction to be adopted ? I do not propose to refer to the authorities at length. I....