Civil Appeal No 897 of 1968
Appeal by Special Leave from the Judgment  order dated the 24th July 1967 of the Delhi High Court in LPA No 54 of 1967
G L Sanghi and Girish Chandra for the Appellants
section section Javali Amicas Cariae for the Respondent
The Judgment of the Court was delivered by KRISHNA IYER J
The respondent imported Auto Cycle Pedals under the guise of motor vehicle parts for which he had secured the relevant licence
These two articles are different from the point of view or the law controlling imports
As laid down in Ganga Setty s case1 by the Court it is primarily for the Import Control Authority to determine the head or entry under which any particular commodity falls
Or course if a construction adopted by the authority regarding the concerned entry were perverse or grossly irrational then the court could and would undoubtedly interfere
In the present case the High Court has held that the view of the Customs officials could not be considered perverse and has declined to set aside the impugned order on that score
Even at this stage it is appropriate to quote the order under challenge which runs Ms The Security and Finance Ltd Delhi imported from UK the above mentioned goods for which they did not possess a valid Import licence issued under Serial No 301Pt
IV of Import Trade Control Schedule
The importation was therefore considered as unauthorised
The importers were therefore in this Custom Memo No S24C 127655A dated 30 9 55 called upon to show cause why the goods should not be confiscated and penal action take under section 1678 Sea Customs Act read with Section 32 of the Import  Exports Control Act
In reply to the said show cause Memo the Clearing Agents of the importers produced a licence for Motor Vehicles parts and claimed release of the goods against the said licence
They further stated that similar consignment has been released in the past against similar licence
Furthermore no public Notice has been issued to the effect that Auto Cycle Pedals will not be allowed clearance against Motor Vehicle Parts licence
The arguments so advanced are not accept able
The importers did no avail of the personal hearing offered to them in the said show cause memo
ORDER The importation of the above goods without proper licence is prohibited under sections 32 and 4 of the Import  Export Control Act of 1947 and Notification issued thereunder
I accordingly confiscate the goods 1 AIR 1863 SC 1319 89 under section 1678 Sea Customs Act
In lieu of confiscation I gave an option under section 183 ibid to the importers to clear the goods on payment of a fine of Rs 22600 rupees twenty two thousand six hundred only
Customs duty and other charges as leviable on the goods will have to be paid in addition before these could be cleared out of customs control
Dated 14 11 55
Sd Dy
Collector of Customs Even so the Court quashed the latter limit of the order under challenge which had imposed penalty in lieu of confiscation and on top or it directed payment of the import duty ordinarily leviable for the auto cycle pedals imported
The only ground which led to this fatal consequence was that the authorities acting under s 183 of the Act VIII of 1878 for short the Act had no further power to direct the importer petitioner ie the respondent to pay excess duty which represents the difference between what is leviable for motor vehicles spares and auto cycle pedals Aggrieved by this view of the limitation on the powers of the Collector of Customs the appellant ie the Union of India has come up this Court after securing special leave to appeal
The respondent was not represented by counsel and since the point involved was one of law and the amount involved not inconsiderable we requested Shri Javali Advocate to serve as amicus curiae
He has argued the case with ability and we record our appreciation of his services to the Court
Indeed but for his close scrutiny of the order of the Deputy Collector of Customs we would not have perceived the mix up and other defects he highlighted in his submissions
We have already stated that a fine in lieu of confiscation had been imposed by the Collector of Customs
This he did under section 183 of the Act but not content with that imposition he also directed the payment of the full duty on the goods imported as condition precedent to the clearing of the goods out of the customs control 
Does the order under section 183 preclude him from levying duty under section 20 This is the short issue before us
A close study of the scheme of the relevant provisions powers and levies discloses a clear dichotomy which has escaped the attention of the High Court
Importexport duty is an obligation cast by section 20 of the Act
It is a tax not a penalty it is an innocent levy once the exigible event occurs
it is not a punitive impost for a contravention of the law
Confiscation
penalty and fine provided for under sections 167 item 8 and 183 are of the species of punishment for violation of the scheme of prohibition and control
Once this distinction and duality are remembered the interpretative process simplifies itself
Admittedly the respondent imported pedals uncovered by any licence
Two legal consequences followed
The importation attracted duty which any importer licit or illicit had to pay the moment 90 customs barrier was crossed
Secondly the commission of the offence of importing pedals without a licence caught the offender in the coils of section 167 entry 8 inviting the jurisdiction of the authority prescribed under section 182 to confiscate the goods or alternatively to impose a fine in lieu of confiscation under section 183 of course if confiscation is resorted to the title vests in the State as provided in section 184
Import duty has to be paid inevitably in these cases by the importer
Confiscation or fine in lieu thereof is an infliction on the offender or circle of offenders falling within section 167 Entry 8
Some times the burden in both the cases falls on the same person
At other times they may fall on different persons
In some cases the importer as well as the confiscate may be identified and so the duty and the penalty may be imposed validly
In other cases it may be difficult to get at the actual person who imported or was concerned in the offence of importation contrary to the prohibition or restriction clamped down by the law
In that event only confiscation and alternatively fine may be imposed
Viewed in this perspective the answer to the question that arises for decision is simple
In the present case as held by the High Court the respondent did import auto cycle pedals outside the permit or licence
He is therefore liable to pay import duty normally leviable from pedal importers
He his admittedly transgressed the provisions of Entry 8 of section 167 by importing goods not covered by the licence and therefore comes within the penal complex set out in sections 182 183  and 184
In the present case the Deputy Collector the competent authority has chosen to give the owner of the goods the respondent option to pay in lieu of confiscation a fine
He has not confiscated the goods and therefore section 184 is not operational in this context
In short the obligation under section 20 is independent of the liability under section 183
The order dual in character although clubbed together in a single document is therefore valid in entirety
Even so the confusion has been caused by the Deputy Collector failing to keep distinct the two powers and the two liabilities and thereby leading to avoidable jumbling
Shri Javali rightly exposed the order impugned to the actinic light of criticism by pointing out that this rolled up order suffers from several infirmities apart from its unspeaking brevity
The Deputy Collector does not state that he is levying duty on the importer qua importer under section 20
He does grievously err in the first breath confiscating the goods in which case the title vests in Government under section 184 and in the very next directing payment of fine in lieu of confiscation
Both cannot co exist
Moreover he forgets that section 167 entry 8 empowers apart from confiscation of the offending goods a penalty also which is independent of the fine in section 183 in lieu of confiscation
This confused and laconic order only highlights the need for some orientation course in law for officers who are called upon to exercise judicial powers and write reasoned orders
91 However we are prepared to gather from the order under attack two levies imposed in exercise of two distinct powers as earlier explained
The import duty has been made a condition for the clearance of the goods
This is right and it is impossible to say that the said payment is not justified by section 20
Likewise the authority when it imposed a fine was exercising its power under section 183
We can readily see that he did not mean to confiscate the goods
He only proposed to confiscate and proceeded to fix a fine in lieu thereof
Non felicitous and inept expressions used in the order are perhaps apt lo mislead but the intendment is clear that what was done was not confiscation but giving an option to pay a quantified fine in place of confiscation
The order was a composite one when read in the sense we have explained and is quite legal
Therefore we reach the conclusion that the appellant is entitled to win and the High Court was in error
The line of reasoning which has appealed to us is echoed in a decision of the Madras High Court reported as Collector of Customs vs section Mehra1
Ramachandra Iyer CJ speaking for the Bench has explained the legal position clearly and we agree with it
Two decisions of this Court were referred to before the High Court and indeed the decision of the High Court proceeded on the footing that those two decisions concluded the matter
The Madras decision distinguishes and for right reasons if we may say so with respect those two rulings of this Court
They do not apply to the facts of the situation before us
On the other hand both those cases deal with quantities of gold seized from persons as smuggled goods
How they were imported who were involved in the import and who could therefore be made liable for import duty were left blank in those two cases
Therefore the conditions imposed by the customs authorities for payment of import duty could not be supported
We will go into a little more detail to explain those two decisions and their non applicability to the point we are discussing
We may state that neither of them decides that once a find in lieu of confiscation is imposed the power to levy duty under section 20 is deprived if
It is not as if the authorities could not exercise boththe powers where the facts attracted both section 20 and sections 182 to 184
In Shewpujanrai Indrasanrai Ltd vs The Collector of Customs2 this Court had to consider an order passed by the Collector under the in respect of smuggled gold
An option to pay a fine of Rs 1000000 was ordered but the Collector tied it up with  two conditions for the release of the confiscated gold 
One was the production of a permit from the Reserve Bank of India in respect of the gold and the other was the payment of proper customs duties in respect of the gold
Both the conditions were held to be illegal by this Court
It was conceded in that case by the learned Solicitor General that there was no provision in the Foreign Exchange Regulation Act or the under which the Reserve Bank could give permission in respect of smuggled gold with retrospective effect
What 1 AIR 1964 Mad 504
2  92 is more if it could there would be no offence under section 167 entry 8 and the order of confiscation itself would be bad
As to the second condition of payment of customs duty there was no finding by what
means the gold was smuggled by sea or by land and therefore ii was difficult to see how section 88 which was sought to be pressed into service could be of any help
Indeed the decision of the Bombay High Court in Hormasji Elavia vs The Union of India1 had been brought to the notice of the learned Judges where customs duty was held payable under section 88 of the  but it was distinguished on the score that in that case the goods had been tracked down as smuggled through the port of Kantiajal without payment of any duty and in those circumstances it was held that section 88 applied
the manner of import once identified the power to levy duty could be exercised under the appropriate Act
Therefore Shewpujanrai supra is no authority for the proposition that import duty cannot be levied once fine in lieu of confiscation is imposed
The later decision in Amba Lal vs Union of India1 also is of No assistance
That also related to smuggled gold
The Collector of Customs imposed conditions for the release in that case of the confiscated gold
Though the order was struck down on a concession by the learned Additional Solicitor General on the facts as disclosed in that case the contraband goods
were recovered by search from the appellant s house but the authorities could not establish by any evidence that the seized articles were imported into India after the customs barrier was put up for the first time between India and Pakistan
It is obvious therefore that import duty could not be levied from tale person from whom the seizure was effected
The case before us stands clearly on a different footing and the order imposing fine in lieu of confiscation and also levying import duly is good
We allow the appeal but
in the circumstances of the case
there will be no order as to costs SR Appeal allowed
1 Cr
1296 of 1953 decided on 18 8 1953


Summary:
The respondent company imported auto cycle parts under the guise of motor vehicle parts for which only he had a valid license under the Import laws
In respect of certain consignments of imports from UK the customs authorities by a single order dt
14 11 1955 passed the following i acting under section 1678 of the Customs Act it gave an option to the respondent to pay fine in lieu of confiscation of the goods under section 182 and ii acting under sections 183 and 20 of the Customs Act to pay the differential duty between auto parts and the motor parts
The respondent challenged this order before the High Court on the ground that once the power under section 183 has been exercised the authorities had no further power to levy the differential duty
The High Court while quashing the order imposing penalty in lieu of confiscation directed payment of the import duty ordinarily livable for the auto cycle pedals imported
Against this view of the limitation on the powers of the Collector the Union came by way of special leave while allowing the appeal the Court  HELD 1 It is primarily for the Import Control Authority to determine the head or entry under which any particular commodity falls
Of course if a construction adopted by the authority regarding the concerned entry were per verse or grossly irrational then the Court could or would undoubtedly interfere
88 D Ganga Setty s case  followed
ii The scheme of the Sea Customs Act reveals that Importexport duty is an obligationcast by section 20 of the Act
It is a tax not a penalty it is an innocent levy once the eligible event occurs it is not a punitive import for a contravention of the law
Confiscation penalty and fine provided for under sections 167 Item 8 and 183 are of the species of punishment for violation of the scheme of prohibition and control 89 G
iii Two legal consequences followed the importation of pedals uncovered by any license viz 1 the importation attracted duty which any importer licit or illicit had to pay the moment customs barrier was crossed and ii the commission of the offence of importing pedals without a licence trapping the respondent in the coils of section 167 entry 8 inviting the jurisdiction of the authorities to exercise their powers under sections 182 or 183
89 H 90 A
iv The order dual in character although clubbed together in a single document is valid and it does not preclude the authorities levying duty under section 20 since obligation under section 20 is independent of the liability us 183
Non felicitous and inept expressions used in the order are perhaps apt to mislaid but the intendment is clear that what was done was not confiscation but giving an option to pay a quantified fine in a places of confiscation The order was a composite one and is quite legal
90 D 91 B D
7 L 1276SCI75 88 Collector of customs vs H section Mehra AIR 1964 Mad 504 Shewpujanrai Indrasanrai Ltd vs The Collector of Customs  referred to