Civil Appeal No 172 of 1979 From the Judgment and order dated 441978 of the Delhi High Court in Civil Writ No 261 of 1978
BR Aggarwala for the Appellants
OP Sharma for the Respondents
The Judgment of the Court was delivered by OZA J
This appeal on special leave arises out of a Judgment of 699 the Delhi High Court dated 4th April 1978
The leave is granted on a limited question as regards the question of interpretation of sub clause 
m of Section 111 of the  Act  for short
The appellants imported 27 knitting machines as the appellants owns a hosiery factory in 1972
The appellants held an import licence for import of knitting machinery
According to the Customs authorities the machinery was not new as the licence permitted to import but was old reconditioned
The Customs authorities also held that the price shown by the appellant on the basis of invoice was much lower than what the price actually should be
The price shown by the appellant on the basis of invoice was Rs77441 whereas according
to the Customs authorities the price came to Rs298359
On this basis a show cause notice was issued and after hearing the appellant the Collector of Customs Bombay by order dated 291273 found that the appellants had committed breach of Section 111d of the Act and also Section 111m of the Act and for both the counts the penalty was imposed on the appellants
Under Section 111d the penalty imposed was Rs112000 in lieu of confiscation of goods and for breach Section 111m a penalty of Rs 147000 was imposed under Section 112 of the Act
Against this order passed by the Collector of Customs an appeal was filed by the appellants before the Board and the Board maintained the order passed by the Collector of Customs
On revision the Central Government reduced the penalty from Rs147000 to Rs One lac only
Against this the appellant preferred a writ petition before the Delhi High Court which was dismissed by a Division Bench of the High Court by its judgment dated 4th April 1978 and aggrieved by this the present appeal has been preferred
So far as the penalty under Section 111d in lieu of confiscation was concerned the leave has not been granted and it is not disputed that the appellants have taken away the goods after paying the duty and in this appeal therefore we are not concerned with it
The only challenge before us therefore is in respect of penalty of Rs One lac imposed under Section 111m of the Act
It is not disputed that Section 111m of the Act has been amended in 1973 by Act No 36 of 1973 but this amendment will not be applicable to the present case
Section 111m as it stood before the amendment reads as under 700 Any dutiable or prohibited goods which do not correspond in any material particular with the entry made under this Act or in the case of baggage with the declaration made under Section 77 in respect thereof and After the Amendment Act 1973 this provision now reads like any goods which do not correspond in respect of value or in any other particular with the entry made under this Act or in the case of baggage with the declaration made under Section 77 in respect thereof
 It is therefore clear that the word value  was inserted in this provision
Before the insertion of this word value  Section 111m appears to mean that if the dutiable or prohibited goods are imported which do not correspond in any material particular with the entry made under Section 46 of the Act and in case of baggage with the declaration made under Section 77 then alone Section 111m could be attracted Section 46 of the Act provides 461 The importer of any goods other than goods in tended for transit or transhipment shall make entry thereof by presenting to the proper officer a bill of entry for home consumption or warehousing in the prescribed form Provided that if the importer makes and subscribes to a declaration before the proper officer to the effect that he is unable for want of full information to furnish all the particulars of the goods required under this sub section the proper officer may pending the production of such information permit him previous to the entry thereof a to examine the goods in the presence of an officer of customs or b to deposit the goods in a public warehouse appointed under Section 57 without warehousing the same
XX XX XX XX XX XX XX XX XX XX XX XX 4 The importer while presenting a bill of entry shall at the foot thereof make and subscribe to a declaration as to MANOHAR 701 the truth of the contents of such bill of entry and shall in A support of such declaration produce to the proper officer the invoice if any relating to the imported goods
 XX XX XX XX It is in respect of this that Section 111m indicated that wherever goods actually imported are different in material particulars than the goods which were shown in the bill of entry or a declaration as contemplated in Section 46 then it will be a breach of Section 111m
The difference in particulars could be in respect of anything but value as this sub clause clearly show that the difference in value could not be made the basis of breach of this sub clause before the amendment of 1973 when the term value  has been introduced into this sub clause
It was contended by the learned counsel for the appellants that in fact in the decision of this Court in Union of India  ors
vs Ms Rai Bahadur Shree Ram Durga Prasad P Ltd  ors
  this Court considered the question of description and came to the conclusion that a penal provision has to be construed strictly and in absence of specific words requiring value  to be mentioned it could not be inferred that any difference in value could be made the basis of penalty
Whereas learned counsel appearing for the respondents contended that although the term value  was not in Sec
111m of the Act before the amendment but that will make no difference as according to him even without the term value  a mis description could be interpreted to be a mis description on the basis of value stated and ultimately the goods found to be of a higher value
By the amendment the Legislature had only tried to explain or clarify the position and he contended that this was the view taken by the High Court while considering this question
In Union of India s case the Court held If we are to hold that every declaration which does not state accurately the full export value of the goods exported is a contravention of the restrictions imposed by section 121 then all exports on consignment basis must be held to contravene the restrictions imposed by section 121
Admittedly section 121 governs every type of export
Again it is hard to believe that the legislature intended that any minor mistake in giving the full export value should be penalised in the manner provided in section 23A
The wording of section 121 does 702 not support such a conclusion
Such a conclusion does not accord with the purpose of section 121
It is true that the regulations contained in the Act are enacted in the economic and financial interest of this country
The contravention of those regulations which we were told are widespread are affecting vital economic interest of this country
Therefore the rigour and sanctity of those regulations should be maintained but at the same time it should not be forgotten that section 121 is a penal section
The true rule of construction of a section like section 121 is if we may say so with respect as mentioned by Plowman J in Re HPC Productions Ltd 1962 Ch
Dn 466 at 473
 It is therefore clear that their Lordships relied on the rule of construction holding that penal provision has to be strictly construed and held that where the provision itself did not require the value to be stated for any error in respect of that no penalty could be imposed
Learned counsel contended that it was because of this decision that the Amendment Act 1973 was passed by the Parliament and the term value  was inserted in Sec
111m of the Act
Learned counsel referred to objects and Reasons for the amendment mentioned in the Bill which resulted in Act No 36 of 1973
The material words mentioned in the objects and Reasons for the amendment as stated in the Bill reads as under The amendments to these Acts proposed in the Bill mainly seek to make the punishments prescribed thereunder more severe and to make certain other provisions the rein with regard to the rules of evidence and procedure with a view to removing the loopholes noticed in the working of these Acts and making their enforcement more effective
The notes on clauses explain in detail the various provisions of the Bill
Clause2
This clause seeks to amend Section 111 of the  with a view to providing for the confiscation of goods in cases of mis declaration of the value or imported goods irrespective of whether or not such goods 703 are dutiable or prohibited in order to cover cases of over invoiced imports
 It is not in dispute that in order to interpret a particular provision and to infer the intention of the Legislature the objects and Reasons stated in the bill when it is presented to the Legislature could be used
In this view of the matter it appears that before the amendment in 1973 Sec
111m did not contemplate any difference in material particulars in respect of value but it referred matters other than the value
It is not disputed that penalty under Sec
111m has been imposed solely on the ground that the price shown by the appellant in the declaration was much less than what was ultimately found by the Department to be the price of imported goods and in respect of this difference of price it was held that there is a difference in material particulars which brought the matter within the mischief of Sec
111m of the Act
But in view of the fact that the term value  was not in Sec
111m before the amendment of 1973 this difference on the basis of value could not be said to be a difference in material particulars within the meaning of the language of Sec
111m and in this view of the matter the view taken by the authorities could not be maintained
The High Court in its judgment realising this difficulty observed that this amendment where the term value  has now been inserted is merely explanatory and that was what was also contended by learned counsel for the respondents
It is not in dispute that a penal provision has to be strictly construed and reading Sec
111m before the amendment it is not possible to draw an inference that any difference in material particulars may be referable to value 
This argument therefore can not be accepted
The scheme of Sec
111m as it stood then nowhere referred to the difference of value as one of the ingredients which may attract this provision
In such a situation therefore if it was not the specific intention of the provision a difference in respect of value therefore could not be said to attract this provision and on that basis no penalty could be imposed
704 The appeal is allowed and the orders passed by the Collector Board Central Government and the High Court are hereby set aside
The penalty imposed on the appellants under Sec
111m read with Sec
112 is hereby quashed
The appellant shall be entitled to get refund of the penalty if already deposited
No order as to costs
APJ Appeals allowed


Summary:
The appellants owners of a hosiery factory imported 27 knitting machines in 1972 under the import licence held by them
According to the Customs authorities the machinery was not new as the licence permitted to import but was old reconditioned and that the price shown was much lower than the actual value
After hearing the appellants the Collector of Customs found that the appellants had committed breach of section l l ld and also of section l llm of the and for both the counts he imposed the penalty which was maintained by the Board
On revision the Central Government reduced the penalty from Rs 147000 to Rs 100000 which had been imposed for breach of section 111 m
A writ petition filed by the appellants was dismissed by the High Court
In the appeal to this Court on behalf of the appellants it was contended that a penal provision has to be construed strictly and in absence of specific words requiring value  to be mentioned it could not be inferred that any difference in value could be made the basis of penalty
On behalf of the respondents it was contended that although the term value  was not in section 1 l lm before the 1973 amendment but that will make no difference as even without the term value  a mis description could be interpreted to be a mis description on the basis of value stated and ultimately the goods found to be of a higher value
By the amendment the Legislature had only tried to explain or clarify the position
698 Allowing the Appeals the Court  HELD 1
The impugned orders are set aside and the penalty imposed on the appellants under section Illm read with section 111d of the is quashed
704A B 2
Before the amendment in 1973 section 111m did not contemplate any difference in material particulars in respect of value but it referred matters other than the value
703B C 3
Unamended section 111m indicated that wherever goods actually imported are different in material particulars than the goods which were shown in the bill of entry or a declaration as contemplated in section 46 then it will be a breach of section 11 lm
The difference in particulars could be in respect of anything but value as this sub clause clearly shows that the difference in value could not be made the basis of breach of this sub clause before the amendment of 1973 when the term value  has been introduced into this sub clause
70 1 B C  4
In order to interpret a particular provision and to infer the intention of the Legislature the objects and Reasons stated in the Bill when it is presented to the Legislature could be used
703B  5
The amendment inserting the term value  in section 111m cannot be said to be explanatory
703Fl Union of India  ors
vs Ms Rai Bahadur Shree Ram Durga Prasad P Ltd  ors
   relied upon