Customs, Excise and Gold Tribunal - Delhi
R.K. Industries vs Collector Of Customs And C. Ex. on 26 October, 1988
Equivalent citations: 1989(24)ECR407(TRI.-DELHI), 1989(39)ELT316(TRI-DEL)
ORDER G.P. Agarwal, Member (J)
1. Being dissatisfied with the confiscation of the seized 8 Sewing Machines with an option to redeem the same on payment of a redemption fine of Rs. 1,76,000/-, the appellants have filed their present appeal.
2. Factual backdrop : As a result of search of the business premises of the appellant firm on 4-7-1985, 8 pieces of Industrial Sewing Machines of Japanese origin in original packing valued at Rs. 1,76,000/- were recovered. Since Shri Sri Newas Gupta, partner of the appellant firm could not produce any valid documents regarding their licit importation/acquisition/possession, the said machines were seized under Section 110 of the Customs Act, 1962 in the reasonable belief that the same were liable to confiscation. Some documents were also seized. Statements of S/Shri Hari Niwas Gupta, Sri Niwas Gupta and R.K. Gupta, partners of the appellant firm were recorded. In his statement dated 23-12-1985 Shri R.K. Gupta inter alia stated that they had imported 43 sets of stitch machines through M/s. International Clothing Industries (P) Ltd., against bill of entry No. 1060/82 dated 3-5-1985; cash No. 1946 dated the 7th June, 1985; that the L/C had been opened by M/s. International Clothing Industries (P) Ltd., that the machines were then imported by the export house and cleared against additional licence No. 2855239 dated 20- 9-1985; that they (export house) had taken advance money from them; that after clearance the export house despatched the goods to their office as per their requirements. He further stated that out of the said 43 machines, 35 machines were sold by them and the rest 8 machines were seized by the authorities concerned. As a sequel thereof Shri Akshay Kejriwal, Director of the export house namely International Clothing Industries (P) Ltd., Bombay was also examined under Section 108 of the Customs Act. In his statement Shri Akshay Kejriwal stated that they had imported 43 sewing machines during 1984-85; that they had imported these machines on the advice of their broker who said that the appellant firm were interested in those pieces; that the goods were sent to the appellant firm on 14-6-1985 for sale to actual industrial users as per the import policy; that the appellant firm was to inform them (M/s. International Clothing Industries (P) Ltd.) on actual sale so that the sales invoice could be raised in the name of actual users and that to the best of his knowledge the appellant firm had not sold any machines and that though they had sold the Industrial Sewing Machines to the appellant firm they had not raised any sales invoices in their name as goods imported against export house additional licence could only be sold to actual users. Ultimately show cause notices were issued to the appellant firm and their partners calling upon them to show cause as to why the seized goods be not confiscated under Section 111 (O) of the Customs Act, 1962 and penalty be not imposed upon them under Section 112 of the said Act. In reply the appellant firm as well as their partners had stated that the goods were not exempted from any prohibition in respect of their import and were cleared against a valid Import Licence, and therefore, the provisions of the Section 111 were not attracted. It was further added that the goods were imported under a proper B/E by M/s. International Clothing Industries (P) Ltd., Bombay who were actual users and since the importers were the actual users, they could utilize the seized machines for their own use. During the personal hearing it was also contended that Custom duty amounting to Rs. 64,608/- was paid on the goods and the provisions of Section 111 (O) of the Customs Act could not be applied. It was also contended that the assessment order was valid unless reviewed. However the Collector of Customs who adjudicated the case did not agree with the said contentions of the appellants and ordered for the confiscation of the seized goods with an option to redeem the same on payment of redemption fine of Rs. 1,76,000/- holding that the goods are liable to confiscation under Section 110 (O) of the Customs Act, 1962. Hence the present appeal.
3. We have heard Shri S.D. Nankani, learned counsel for the appellants duly assisted by Shri L.U. Balani, Advocate and Shri T.H.K. Ghauri, learned SDR for the respondent.
4. Before we proceed to consider the arguments advanced by the parties it would be useful to state a few admitted facts. There is no dispute that the contraband goods were imported and cleared against Additional Licence No. P/W/2855239/83 dated 20-9 1983. The said Licence allowed import of Capital Goods (i.e. Industrial Sewing Machines in question) listed in Appendix 2 to the I.T.C. Policy April 1983 - March 1984 as per its para 185(1) read with para 186(8). However, its sub-para (4) of para 185 puts a restriction upon such import and provides that such Capital Goods will be disposed of to eligible Actual Users (Industrial) only and information thereof shall be sent to the Licensing Authority and the sponsoring authority concerned, within 15 days from the date of sale or transfer of goods to the Actual User giving out the information mentioned therein. The terms "Actual User", "Actual User (Industrial)" and "Actual User (Non-Industrial)" had been defined in paragraph 5 of the same Policy. In the instant case we are concerned only with the case of "Actual User (Industrial)".
5. Sub-para (3) of Para 5 defines "Actual User (Industrial)" as follows -
"(3) 'Actual User (Industrial)' shall mean an industrial undertaking, he it in the large scale, small scale or cottage industries sector, engaged in the manufacture of any goods for which it holds a licence or Registration Certificate from the appropriate Government authority, wherever applicable."
In the instant case there is no dispute that the said "Actual User (Industrial)" condition was not complied with as laid down in sub-para (4) of Para 185 of the I.T.C. Policy April 1983 - March 1984 and therefore the Adjudicating Authority ordered for the confiscation of the contraband goods, namely Industrial Sewing Machines being violating the provisions of Clause (O) of Section 111 of the Customs Act, 1962.
6. Shri S.D. Nankani, learned counsel for the appellants on the aforesaid admitted/established facts raised the following legal contentions only -
(1) that the imported contraband goods, namely Industrial Sewing Machines were cleared after verification and check under Section 47 of the Customs Act, 1962 and therefore once the goods were so cleared there was no scope for issuing a show cause notice as such a step would amount to revision of the Order passed under Section 130 of the Customs Act. To buttress his arguments he cited the following case law -
(1) Jain Shudh Vanaspati Ltd. v. Union of India, 1982 ELT 43 (Delhi).
(2) Ajay Exports v. Collector of Customs, 1986 (9) ELT 873.
(3) Mangla Brothers v. Collector of Customs, AIR 1985 Cal. 122.
(4) Industrial Cables (India) Ltd. v. UOI, 1986(25) ELT 33 (5) Tashi Industries Corpn. v. Collector of Central Excise, 1979 Cen Cus. 133D (CBEC).
(6) Alcuin Tapes v. Collector of Customs, 1982 ECR 269D (CBEC).
(7) Order No. 153-55 dated 23-4-1982 passed by the CBEC in the case of Prem Chaudhary Ors.
(8) U.O.I. v. Popular Dychem, 1987 (28) ELT 63 (Bom.) (2) that the Imported goods were not exempted from any prohibition goods within the meaning of Section 111 (O) of the Customs Act and therefore the question of confiscation of the contraband goods under the said Section does not arise. To support his argument he cited Order No. 461 of 1969 dated 19-12- 1969 passed by a Single Member of the Central Board of Excise and Customs, New Delhi in the case of Commonwealth Industries, Bombay;
(3) that since the contraband goods were cleared under Section 47 of the Customs Act for home consumption the same ceased to be imported goods as defined under Section 2(25) of the Customs Act. Consequently the contraband goods could not be confiscated under Section 111 of the Customs Act; and (4) that for a breach of condition of Additional Licence against which the contraband goods in question were imported only the Licensing Authority could take the action under the Imports and Exports (Control) Act, 1947 and not the Customs Authorities under the Customs Act, 1962.
7. In reply Shri T.H.K. Ghauri, learned SDR while refuting the contentions raised by the learned counsel for the appellants supported the impugned Order and after drawing our attention to the various provisions of the Customs Act, 1962 cited the following case law -
(1) Lakshmlnarayan v. Collector of Customs, AIR 1961 Cal. 616.
(2) Sheikh Mohd. v. Asstt. Collector, Customs, AIR 1970 Cal. 134.
(3) Asstt. Collector, Customs v. U.I. Minerals Ltd., AIR 1976 Cal. 21.
(4) Collector of Customs & Central Excise v. Hindustan Motors, AIR 1975 Cal. 368.
(5) N. Devidas & Co. v. Collector of Customs, 1987 (29) ELT 247.
8. Point No. 1: We have considered the submissions made by the learned counsel for the appellants that once the goods have been cleared after verification and check under Section 47 of the Customs Act, there was no scope for issuing a show cause notice as such a step would amount to revision of an order passed under Section 47 which can only be done under Section 130 of the Customs Act, but feel unable to persuade ourselves to agree with him. Section 47 of the Customs Act reads thus -
"47. Clearance of goods for home consumption. - Where the proper officer is satisfied that any goods entered for home consumption are not prohibited goods and the importer has paid the import duty, if any, assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance of the goods for home consumption."
9. From a perusal of the said Section 47, it would be clear that before making an order permitting clearance of the goods entered for home consumption the proper officer has to satisfy himself that-
(I) the import of the goods is not prohibited, and
(ii) the Importer has paid the import duty and any charges payable under the Act In this respect.
10. The term "prohibited goods" has been defined uder Section 2(33) of the Customs Act, 1962 which runs thus -
"(33) "prohibited goods" means any goods the Import or export of which subject to any prohibition under this Act or any other law for the time being in force but does not Include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with."
(emphasis supplied) Form a bare reading of the said definition it would be clear that -
(i) any goods the import of which is subject to any prohibition under the Customs Act or any other law for the time being in force are prohibited goods, and the only exception is that if the conditions subect to which the goods were permitted to be imported has been complied with then in that case such goods would not come within the mischief of the said definition.
11. The expression "any prohibition" occurring in the definition clause Section 2(33) and in Section 111 has not been defined in the Customs Act. However, the Apex Court had an occasion to deal with this aspect. In the case of Sheikh Mohd. Omer v. Collector of Customs, Calcutta, AIR 1971 SC 293 it was held that the expression "any prohibition" referred to in Section 111 of the Customs Act applies to every type of 'prohibition'. That prohibition may be complete or partial. Any restriction on import or export is to an extent a prohibition. In other words all types of prohibitions - Restriction is one type of prohibition.
12. In the instant case the contraband Industrial sewing machines were imported subject to the condition that the same will be disposed of in accordance with sub-para (4) of para 185 of Import and Export Policy April 1983 - March 1984 as extracted above, i.e. to say -
(i) the imported goods namely Industrial sewing machines will be disposed of to eligible Actual Users (Industrial) only; and
(ii) information thereof shall be sent to the licensing authority and the sponsoring authority concerned, within 15 days from the date of sale or transfer of goods to the Actual User giving out the required information such as name and full address of the Actual User (Industrial), address of the factory of the Actual User (Industrial); and the end-product manufactured by them, date of sale/transfer etc.
13. From the above it is clear that the Industrial sewing machines were permitted to be imported subject to the condition that on importation the imported goods will be disposed of to the eligible Actual Users (Industrial) only and the information thereof shall be sent to the licensing authority and the sponsoring authority concerned within 15 days from the date of such sale and transfer. Under Section 47 of the Customs Act, before making an order permitting clearance of the contraband imported Industrial sewing machines entered for home consumption by the proper officer what was required to be satisfied by him was that whether the imported goods were permitted to be imported in accordance with para 185(1) of the Import and Export Policy April 1983 - March 1984. At that stage he was not concerned with the compliance of the subsequent conditions laid down in sub-para (4) of para 185 i.e. to say (the goods so imported is to be disposed of to eligible Actual Users (Industrial) only and that the importer will sent the information) subject to which goods were exempted from the prohibition, consequently any order passed by the proper officer under Section 47 of the Customs Act cannot oust jurisdiction of the Customs Authorities to confiscate the goods under Section 111 (0) of the Customs Act if later on It is found that the conditions subject to which the goods were permitted to be imported were not complied with. For, the moment it is found that the conditions subject to which the goods were permitted to be imported were not complied with after importation the goods so imported partake the character of prohibited goods within the meaning of Section 2 (33) as discussed above. It is significant to observe that Clause (O) in Section 111 is a new provision and was introduced in the Customs Act, 1962 to check the violation of the conditions subject to which the goods were permitted to be imported. The Notes on Clauses for introducing the said provision runs thus -
"Item (O) Is a new provision under which any goods exempted from duty or from import prohibitions subject to certain conditions will become liable to confiscation if those conditions are not observed without the prior permission of the proper officer. This penal clause is being introduced to check misuse of exemptions granted in respect of baggage, postal goods, etc. These exemptions will henceforth be granted subject to appropriate conditions to the effect that the exempted goods may not be sold, etc. If these conditions are not fulfilled the goods shall be liable to confiscation."
14. To this it may be added that admittedly in the instant case the goods were permitted to be imported with the condition that the same will be disposed of to the Actual User (Industrial) only and the information thereof would be given within 15 days to the licensing authority and the sponsoring authority concerned, but the said conditions were not complied with at all. Consequently, under these circumstances it is beyond our comprehension to understand as to how the accrued liability of the imported goods to confiscation which has resulted due to the-non-compliance of the conditions subject to which the goods were permitted to be imported is extinguished or wiped out with the order passed by the proper officer under Section 47 of the Customs Act. In the case of Euresian Equipments & Chemicals v. Collector of Customs, 1980 AIR 1980 Cal. 188 a full Bench of the Calcutta High Court while over-ruling its earlier decisions rendered in the case of Jute Investigation Company Ltd. v. S.K. Srivastava, (1973) 77 Cal. WN 501 and Thomas Duff and Company (India) Pvt. Ltd. v. Collector of Customs, 1976 Tax LR 1567 held in para 29 that the goods can be confiscated even though they had been exported beyond India and an order by the proper officer permitting clearance and loading of the goods under Section 51 of the Customs Act would not affect the position. However, this controversy should not detain us further. In the case of "7. Confiscation is an act of appropriation of private property for State or Sovereign use and usually been the result of the doing by the owner of some prohibited act. The seizure and appropriation of property as a punishment for breach of the law whether municipal or international was held to be confiscation in (1947) ch. 629 (Frankfurther v. W.L. Exner). A proceeding for confiscation is one in rem rather than one in personam-like e.g. penalty under Section 112 of the Act one in relation to the goods rather than in relation to the person in any way concerned (AIR 1974 S.C. 859 - Collector of Customs v. Boormull), Once their value had been misdeclared, they are impressed with the character of misdeclared goods and, consequently, offending goods, which could, even after clearance, be confiscated. Liability to confiscation, declared in Section 11 of the Act, regardless of clearance. Hence the power to search premises (Section 105) or conveyances (Section 106) or inspect places of storage of notified goods (Section 106-A) and the power of seizure (Section 110). If the goods cease to be liable for confiscation after clearance, these powers would be rendered nugatory"
(Emphasis supplied)
15. The case law cited by the learned counsel for the appellants is not apt to the instant case. For, in those cases the importation of the goods was not subject to any condition to be complied with after clearance.
16. It may also be stated that during the course of arguments at one stage the learned counsel for the appellants also tried to rely upon the stray sentence appearing in the statement of Shri Akshay Kejriwal, Director of International Clothing Industries (P) Ltd., Bombay to the effect that they are recognised Export House and were manufacturers/exporters of garments and had imported Sewing Machines during 1984-85 for their own use. From this stray sentence Shri Nankani tried to built up his argument that if the Director Shri Akshay Kejriwal of International Clothing Industries (P) Ltd., Bombay had imported the Industrial Sewing Machines for their own use the question of violation of post importation condition regarding their disposal to eligible Actual Users (Industrial) as laid down in sub-para (4) of Para 185 of Import and Export Policy April 1983 - March 1984 does not arise. After due consideration, we find no substance in this plea. It is settled rule of appreciation of evidence that the statement of a person should be read as a whole. So read nothing turns out on the said stray sentence. The said statement of Shri Akshay Kejriwal as reproduced in the Adjudication Order reads as follows -
"9. Shri Aksnay Kejriwal, Director; International Clothing Industries (P) Ltd. Bombay, In his statement under Section 108 of the Customs Act, 1962, interalia, stated that he was one of the Directors of M/s. International Clothing Industries (P) Ltd., which was recognised export house and were manufacturers/exporters of garments; that they had imported sewing machines during 1984-85 for their own use; that they had imported 43 sets of machines model DN-2W on advice of their broker O.P. Kanodia who said that M/s. R.K. Industries were interested in those pieces; that M/s. M.D. Sedroni and Co. were instructed to clear the consignment and collect the duty and other charges from M/s. R.K. Industries; that the goods were sent to M/s. R.K. Industries on 14-6-1985 after receipt of payment for sale to actual industrial users as per the import policy that M/s. R.K. Industries were to inform M/s. International Clothing Industries (P) Ltd. on actual sale so that the sales invoice could be raised in the name of actual user; that they were to receive Rs. 27,500/- from M/s. R.K. Industries as profit and his (Akshay Kejriwal) loss or profit in the sales were to be borne by the latter; that to the best of his knowledge M/s. R.K. Industries had not sold any machine by the date; that they had sold the Industrial Sewing Machines to M/s. R.K. Industries but had not raised sales invoices in their name as goods Imported against export house additional licence could only be sold to xtual users."
17. From a close reading of the entire statement it is clear that Shri Akshay Kejriwal immediately after stating that they had imported Sewing Machines for their own uso stated that they have imported the said machines on the advice of their broker who said that the present appellants were interested in those pieces and that the goods were sent to the appellants on the clear instructions to sale the Sewing Machines to Actual I industrial Users which they failed to do so.
18. Thus we hold that the confiscation proceedings started by issuing a show cause notice under Section 124 of the Customs Act was not without jurisdiction.
19. Point No .2: The other contention of the learned counsel for the appellants that the imported goods were not 'prohibited goods' and therefore were not exempted from any prohibition within the meaning of Section 111 (O) of the Customs Act cannot also be accepted. It is not in dispute that the import of Capital Goods listed in Appendix 2 of the Import and Export Policy, April 1983-March 1984 was not permitted under the Additional licences except as provided in sub-para (8) of Para 186 of the said Policy. The said para runs thus -
"(8) The Additional Licences will also be valid for import of Capital Goods listed in Appendix 2 and raw materials, components, consumables and spares (excluding items covered by Appendix 5) which have been placed on Open General Licence for Actual Users (Industrial). This facyity will be subject to the same conditions as laid down in para 185 above, except that the endorsement referred to in sub-para 185(3) will not be required in the case of Additional licences which are already non-transferable."
Thus from the above it is clear that the importation of the Industrial Sewing Machines against the Additional licences was exempted from prohibition subject to the conditions laid down In Para 185 of the said Policy. While dealing with Point No. 1 above we have stated that the Industrial Sewing Machines in the instant case were permitted to be imported subject to the condition that the same would be sold or transferred to Actual Users (Industrial) only and information thereof shall be sent to the Licensing Authority and the sponsoring authority concerned, within 15 days from the date of sale or transfer of goods to the Actual User as stipulated in sub-para (4) of Para 185 of the Import and Export Policy for the relevant period. This condition was admittedly not complied with and it was not the case of the appellants that the non-observance of the said condition was sanctioned by the proper officer. Hence in the light of the definition of 'prohibited goods' contained in Section 2 (33) of the Customs Act and the meaning given to the expression "any prohibition" by the Hon'ble Supreme Court in the case of Sk. Mohd. Omer v. Collector of Customs, supra and the object of Section 111 (0) of the Customs Act, as discussed by us while deciding Point No. 1 above, we hold that the imported goods were prohibited goods and were exempted from such prohibition subject to the conditions laid down in Para 185(4) read with Para 186(8) of the Policy and on failure to comply with the said condition (subject to which the importation of the Industrial Sewing Machines was made permissible) became liable to confiscation. The Order passed by the CBEC in the case of Commonwealth Industries cited by the learned counsel for the appellants is of no help.The said Order is a laconic one. It does not spell out the facts of the case and the controversy involved therein. It is not a well reasoned order. The observations made in that Order that one of the conditions precedent to the application of Section 111 (O) of the Customs Act is that the goods should have been exempted from any prohibition or duty subject to any condition. 'The goods in question did not enjoy any such exemption as an import licence cannot be said to exempt the goodsjrom import prohibition. It is only an authority to import and clear the goods and the conditions on that licence were the conditions for the clearance of the goods and were not conditions subject to which any exemption from prohibition was given" does not appeal to us. Moreover, it appears from the said Order of the CBEC that that was a case of a breach of the condition of a licence. The instant case is a case where the department has confiscated the contraband goods for violation of the conditions laid down in para 186 (8) read with Para 185 of the Imports and Exports Policy, April 1983-March 1984 subject to which importation of the goods in question was permitted against Additional Licences. Thus the said case of Commonwealth Industries, Bombay is also distinguishable on the facts of the case. Besides the said Order passed by the CBEC is not binding upon us.
20. In the light of the above we reject the said contention of the learned counsel for the appellants.
21. Point No. 3 : The other contention of the learned counsel for the appellants that since the contraband goods were cleared under Section 47 of the Customs Act for home consumption the same ceased to be imported goods as defined under Section 2(25) of the Customs Act and therefore could not be confiscated under Section 111 of the Customs Act is also without any substance. Section 111 (O) speaks of "any goods" and not of the "imported goods". The term "goods" has been defined in Sub-section (22) of Section 2 of the Customs Act as follows -
"(22) "goods" includes -
(a) vessels, aircrafts and vehicles;
(b) stores;
(c) baggage;
(d) currency and negotiable instruments; and
(e) any other kind of movable property;"
The expression imported goods is defined in Sub-section (25) of Section 2 as follows -
"(25) "imported goods" means any goods brought into India from a place outside India but does not include goods which have been cleared for home consumption;"
22. The contraband imported Industrial sewing machines are "goods" as defined in Section 2(22), ibid is not in dispute. When this is the position the question of applying the meaning of expression "imported goods" given in Section 2(25), ibid does not arise. However, this question is no longer res integra. In the case of Sheikh Mohd. v. Assistant Collector, Customs, AIR 1970 Cal. 134 the same contention was raised before the Hon'We Calcutta High Court. While repelling the said contention His Lordships observed that the definition of "imported goods" in Section 2(25) has to be read alongwith Section 111 of the Customs Act, which deals with goods brought from a place outside India and ultimately held as follows -
"...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 under Section 130(1) of the Act therefore fails and is rejected."
23. The same question was also agitated before this Tribunal earlier In the case of N. Devidas & Co. v. Collector of Customs, Bombay decided on 25-2-1987 [since reported in 1987 (29) ELT 247] and it was repelled in the following terms -
"4. That Section 111 of the Act itself had made no use of the expression "Imported goods", is conveniently ignored. It speaks, on the contrary, of "goods brought from a place outside India". It may be that the word "import" had been defined to mean the act of bringing goods into India from a place outside India [Section 2(23) of the Act]. But that is not the only criterion laid down in the definition of the expression "imported goods". The definition goes further than mere "import". It does not include those cleared for home consumption. Once Section 111 did not use the expression "imported goods", there is no warrant to read that expression into it merely because the words "brought from a place outside India merely descriptive of the word "goods" - tally with the definition of "Import" in Section 2(23) of the Act. Nor does it mean and imply that we should read for "goods brought from a place outside India" the word "import". A definition is meant to be the key for understanding the words used in a statute not for replacing the words actually used in a statute with the words defined, just because of the identity of the words sought to be replaced with the meaning given in the definitions.
5. If, therefore, the words "brought from a place outside India" are merely descriptive of the words "goods" they do not signify the act of bringing them in. They do not exclude even by implication goods cleared for home consumption. When once the words "imported goods" do not find a place in Section 111, It Is unnecessary to specify therein further that the goods liable to confiscation include those that have been cleared for home consumption. In other words, if It were the legislative intent to exclude goods cleared for home consumption from any liability to confiscation, all that was necessary was to substitute the words "goods brought from a place outside India" with the words "imported goods". Nothing would have been easier."
24. Thus we reject the aforesaid contention.
25. Point No. 4: The contention of the learned counsel for the appellants that for a breach of condition of Additional Licence against which the contraband goods In question were Imported only the Licensing Authority could take the action under the Imports and Exports (Control) Act, 1947 and not the Customs Authorities under the Customs Act, 1962 appears attractive on the face of It but a little probe in the matter would expose Its fallacy. The instant case is not a case of violation of any condition of the licence but is a case of violation of restriction placed upon import of the capital goods namely industrial sewing machines. It is an admitted fact that imported goods were claimed to be cleared against Additional Licences in terms of Para 186(8) read with Para 185 under Chapter 18 of the Import & Export Policy April 1983-March 1984. Para 174 which appears under Chapter 18 provides for granting of special facilities to "Export Houses" to enable them to strengthen their negotiating capacity in foreign trade and to build up a more enduring relationship between them and their supporting manufacturers. Para 185(1) provides that the Export Houses will be allowed to import OGL items against REP licences issued in their own name or transferred to them by others and this facility will be available to them for the import of Capital Goods (listed in Appendix 2) etc. subject to the condition that the capital goods so imported by Export Houses under this facility will be disposed of to eligible Actual Users (Industrial) only as detailed out in sub-para 4 of the same para. Thus on the face of para 185 Export Houses were not allowed to import capital goods (listed in Appendix 2) against Additional Licences but para 186(8) of the same Policy made a provision that Additional Licences will also be valid for import of capital goods listed in Appendix 2, which have been placed on Open General Licence for Actual Users (Industrial) subject to the same conditions as laid down in para 185 above. The said sub-para (8) runs thus-
"(8) The Additional Licences will also be valid for import of Capital Goods listed in Appendix 2 and raw materials, components,.consumables and spares (excluding items covered by Appendix 5) which have been placed on Open General Licence for Actual Users (Industrial). This facility will be subject to the same conditions as laid down in para 185 above, except that the endorsement referred to in sub-para 185(3) will not be required in the case of Additional Licences which are already non-transferable."
(Emphasis supplied)
26. Thus from a conjoint reading of para 185 and para 186(8) it is clear that restriction was put on import of capital goods which have been against the Additional Licences to the effect that on importation such goods will be disposed of to the eligible Actual Users (Industrial) only and information thereof will be sent to the Licencing Authority and the sponsoring authority concerned within the given time as prescribed under sub-para (4) of para 185, ibid. Thus when in the instant case it was found that the condition by way of restriction was put on importation of the Industrial sewing machines i.e. the same on importation will be disposed of to Actual Users (Industrial) no exception can be taken for drawing the proceedings for confiscation under the Customs Act by the Customs Authorities if it is established that the said condition was not complied with. To be terse, when the contraband Industrial sewing machines were allowed to be imported against the Additional Licences in the instant case with the condition that the goods so imported would be disposed of to the Actual Users (Industrial) only and information thereof shall be sent to the Licencing Authority and the sponsoring authority within 15 days from the date of sale or transfer of the goods to Actual User, the goods so cleared against the Additional Licences became prohibited on the non-observance of the said condition attracting the liability to confiscation under Section 111 (o) and the Customs Authorities were well within their right to confiscate the contraband goods. It may be stated that the instant case is not a case of breach of a condition of the-licence but is a case of breach of the conditions laid down in Para 186(8) read with Para 185 of the Import & Export Policy 83-84 subject to which the goods in question were permitted to be imported against the Additional Licence. At this stage we are aware of the decision rendered by the Hon'Ue Supreme Court in the case of East India Commercial Company v. Collector of Customs, 1983 AIR 1962 SC1893 wherein while interpreting Section 3(2) of the Imports and Exports (Control) Act, 1947 and Sections 19 and 167(8) of the Sea Customs Act, 1878 their Lordships held that the infringement of a condition in the licence not to sell goods imported to third party is not an infringement of the Order issued under the Imports and Exports (Control) Act, 1947 and therefore, the Customs Authorities had no jurisdiction to confiscate the goods so imported. The said case of East India Commercial Company was distinguished by the Hon'ble Supreme Court in the case of Abdul Aziz v. State of Maharashtra, AIR 1963 SC 1470 observing that the case of East India Commercial Company, supra was decided on the basis of Notification No. 23-ITC/43 dated July 1,1943 and Notification No. 2-ITC/48 dated March 6,1948 issued under Rule 84 of the Defence of India Rules which by virtue of Section 4 of the Imports and Exports (Control) Act, 1947 were deemed to have been issued under that Act and subsequent to that there is a change in law. The relevant observations made therein runs thus -
"(14) The cases reported as C.T.A Plllal v. H.P. Lohia, AIR 1957 Cal. 83 and AIR 1962 SC1893 holding that the infringement of a condition in the licence not to sell goods imported to third parties is not an infringement of the Order, are not of help as they deal with the contravention of the conditions of the licence granted under orders dated July 1,1943 and March 6,1948 which did not contain a provision comparable which the provisions of Sub-clause (4) of Clause 5 of the Order of 1955."
27. It may also be added that the case of East India Commercial Company, supra was decided on the basis of the provisions of the Sea Customs Act, 1878. The said Act now stands repealed by the Customs Act, 1962. in the Sea Customs Act the expression "prohibited goods" was not defined. Section 2(33) of the Customs Act, 1962 now defines the expression "prohibited goods". Likewise Section 111 (o) in the Customs Act, 1962 is a new provision. Hence, the case of the appellants has to be decided in the light of the provisions available in the Customs Act, 1962 and the case of East India Commercial Company, supra is not applicable to the instant case. Even otherwise the liability for breach of a condition of the licence granted under the provisions of the Imports and Exports Control Act, 1947 and the liability of the goods to be confiscated for violation of the provisions of Section 111 of the Customs Act are independent and distinct in their nature and both the authorities under the Customs Act and the Imports & Exports (Control) Act, 1947 are free to take action under their respective Acts according to law. Thus we reject the contention of the learned counsel for the appellants and hold that the Customs Authorities were competent to confiscate the goods in question under Section 111 (o) of the Customs Act.
28. In the result we find no substance in the appeal and reject the same.