PETITIONER:
ASSISTANT COLLECTOR OFCUSTOMS (PREVENTIVE) BOMBAY
Vs.
RESPONDENT:
BABU MIYA SHEIKH IMAM AND ORS. ETC.
DATE OF JUDGMENT28/07/1983
BENCH:
BHAGWATI, P.N.
BENCH:
BHAGWATI, P.N.
MISRA, R.B. (J)
CITATION:
1983 AIR 974 1983 SCR (3) 500
1983 SCC (3) 447 1983 SCALE (2)33
ACT:
Customs Act, 1962-Section 5(1) (a)(ii) -Scope of.
Section 135(1)(a)(ii) of the Customs Act, 1962 provides
that if any person "is in relation to any goods in any way
knowingly concerned in any fraudulent evasion or attempt at
evasion of any duty chargeable thereon or of any prohibition
for the time being imposed under any other law for the time
being in force with respect to such goods", he shall be
punishable.
HEADNOTE:
In the reasonable belief that the respondents were
smuggling silver out of the country, the Customs officials
apprehended the respondents at about midnight while they
were going in a fishing vessel off the coast of Bombay and
found 194 ingots of silver in the vessel. I hey were
prosecuted for offences under section 120-B Indian Penal
Code, section 135(1) (a) (ii) of the Customs Act, 1962,
section 5 of the Imports and Exports (Control) Act, 1947 and
section 23(1A) of the Foreign Exchange Regulations Act,
1973. While the Magistrate found them guilty of all the
offences the High Court on appeal set aside the conviction
under the Customs Act and Foreign Exchange Regulations Act.
The appellant accepted the acquittal Under section 23(1A) of
the Foreign Exchange Regulations Act but impugned the
judgment of the High Court in so far as it set aside the
conviction under section 135 (1) (a) (ii) of the Customs
Act.
It was contended on behalf of the prosecution that the
accused were knowingly concerned with fraudulent evasion or
attempt at evasion of the prohibition imposed under the
Export Trade Control order of 1968 on the export of silver
without licence and that therefore they were guilty of an
offence under the Customs Act.
The respondents, on the other hand, contended that the
words "with respect to such goods" occurring in the section,
refer to goods on which duty was chargeable as contemplated
in the first part of the section and since no duty was
chargeable on export of silver it did not fall within the
words "with respect to such goods" and therefore there was
no fraudulent evasion or attempt at evasion of the
prohibition on export of silver without a licence imposed
under the Export Trade Control order, 1968 issued under
section 3 of the Imports and Exports (Control) Act, 1947,
which was punishable under the Customs Act.
501
Allowing the appeal,
^
HELD: Where goods are chargeable with duty and any
person is knowingly concerned in any fraudulent evasion or
attempt at evasion of such duty, the case would fall within
the first part of the section, but where a prohibition is
imposed with respect to any goods under the Customs Act,
1962 or any other law for the time being in force, then,
irrespective of whether duty is chargeable on such goods or
not, any person who is knowingly concerned in any fraudulent
evasion or attempt at evasion of such prohibition, would be
covered by the second or third part as the case may be.
[506 E]
In the instant case the Export Trade Control order,
1968 issued under section 3 of the Imports and Exports
(Control) Act, 1947, prohibited the export of silver without
a licence. On the facts established by the prosecution the
accused were knowingly concerned in fraudulent evasion or
attempt at evasion of such prohibition on export of silver
and their case was therefore covered by the third part of
section 135(1)(a)(ii).
The provision enacted in section 135(1)(a)(ii) is
divisible into three parts: the first part postulates that
goods in respect of which the offence is committed must be
goods chargeable with duty; the second and third parts are
not concerned with the question whether any duty is
chargeable on the goods or not. They speak only of
fraudulent evasion or attempt at evasion of any prohibition
for the time being imposed under the Customs Act or any
other law in force in respect of any goods. What they
contemplate is that in respect of goods in question there
must be a prohibition imposed under the Customs Act or any
other law for the time being in force irrespective of
whether duty E is chargeable on such goods or not and the
accused must be concerned in any fraudulent evasion or
attempt at evasion of such prohibition. The prohibition
fraudulently evaded or sought to be evaded might be with
respect to "any goods": it is not necessary that it should
be with respect to goods on which duty is chargeable. The
expression "with respect to such goods": had to be used at
the end of the section because the second and third parts
start with the words "if any person is in relation to any
goods knowingly concerned in any fraudulent evasion or
attempt at evasion". The words "such goods" have clearly
reference to "any goods" at the commencement of the section.
These words are not descriptive of the kind of goods to
which the first part of the section is applicable. It is
totally impermissible on a plain, natural construction of
the language used in the section to read these words as
importing the requirement that the goods must be chargeable
with duty in order to fall within the second or third part
of the section. [505 E, 506 A-D]
JUDGMENT:
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal Nos.
416-18 of 1974.
Appeals by Special leave from the Judgment and order
dated the 23rd/24th August, 1973 of the Bombay High Court in
Crl. Appeal Nos. 68,298 & 510 of 1972.
502
N.C. Talukdar, C. V. Subba Rao and R.N. Poddar for the
Appellant.
O.P. Rana and M.N. Shroff for the State of Maharashtra.
S.R. Srivastava for Respondent No. 1 in Crl. A. 416.
The Judgment of the Court was delivered by
BHAGWATI, J. These appeals by special leave are
directed against a common judgment dated 27th August 1973
passed by a single e Judge of the High Court of Bombay in so
far as it acquitted the first respondent in Criminal Appeal
No. 146 of 1978 respondent No. 1 and 2 in Criminal Appeal
No. 147 of 1974 and the first respondent in Criminal Appeal
No. 418 of 1974 (hereinafter referred to as the accused) of
the offence under Section 135 (1)(a)(ii) of the Customs Act,
1965. The entire controversy between the parties in these
appeals turns on the true interpretations of section 135 (1)
(a) (ii) and it is therefore not necessary to set out the
facts in detail, but in order to appreciate how the question
arises for consideration we may briefly reproduce a few
relevant facts.
On 9th June 1968 at about 2 p.m. Shri Mugve, the
Assistant Collector of Customs, who was then Principal
Appraisar in the Directorate of Revenue Intelligence,
Bombay, received information that a fishing vessel was going
to load silver at Ghas Bunder after 9 p.m. On that day and
it was going to take the silver to a spot near Khanderi
island in order to put it on an Arab Dhow for despatching it
to Dubai. On receipt of this information, Shri Mugve kept a
watch in a privately owned motor launch in the stream near
Ballard Pier about four miles away from the shore. At about
11 p.m. Shri Mugve and the other customs officers
accompanying him noted that a heavily loaded fishing vessel
was proceeding towards the Khanderi island without
navigational lights. They immediately chased the fishing
vessel and asked the crew to stop it but instead of stopping
the crew increased the speed and tried to run away. The
fishing vessel was chased and eventually it was intercepted
by Shri Mugve and the other customs officers. On being
questioned the Tindel of the fishing vessel made a statement
that 194 ingots of silver of the value of Rs. 92 lakhs were
being taken towards Khanderi island for being loaded on an
Arab Dhow which was going to Dubai. The fishing vessel was
thereupon towed to Ballard Pier and 194 ingots of silver
found in it were seized under a Panchnama in the reasonable
belief
503
that they were being smuggled out of India. The accused who
were in the fishing vessel were also prosecuted in the Court
of Additional Chief Presidency Magistrate 5th Court Dadar
for offences under Section 120 of the Indian Penal Code,
Section 135 (1) (a) (ii) of the Customs Act 1962, Section 5
of the Imports and Exports (Control) Act 1947 and Section 23
(1 A) of the Foreign Exchange Regulation Act 1973. The
Additional Chief Presidency Magistrate found the accused
guilty of all the offences charged against them and
sentenced them to various terms of imprisonment including
fine. The accused there upon preferred three appeals in the
High Court of Bombay against the order of conviction and
sentence passed against them by the Additional Chief
Presidency Magistrate. These appeals were heard by a single
Judge of the High Court and by a common Judgment dated 27th
August 1973 the learned single Judge confirmed the
conviction of the accused under Section 120 of the Indian
Penal Code and Section 5 of the Imports and Exports
(Control) Act 1947 but set aside the conviction under
Section 135 (1) (a) (ii) of the Customs Act 1962 and Section
23 (1 A) of the Foreign Exchange Regulation Act 1973. The
Assistant Collector of Customs accepted the judgment of the
learned single Judge in so far as it acquitted the accused
of the offence under Section 23 (1 A) of the Foreign
Exchange Regulation Act 1973 but he was aggrieved by that
part of the judgment which set aside the conviction under
Section 135 (1) (a) (ii) of the Customs Act 1962 and he
accordingly preferred the present three appeals with special
leave obtained from this Court.
Before we set out the rival arguments addressed before
us, it would be convenient to reproduce Section 135 (1) (a)
(ii) of the Customs Act 1962. That section reads as follows:
135. Evasion of duty or prohibitions-(1)
Without prejudice to any action that may be taken
under this Act, if any person-
(a) is in relation to any goods in any way
knowingly concerned in any fraudulent evasion or
attempt at evasion of any duty chargeable thereon
or of any prohibition for the time being imposed
under this Act or any other law for the time being
in force with respect to such goods, he shall be
punishable-
504
(ii) in any other case, with imprisonment for
a term which may extend to (three years) or with
fine, or with both.
The argument of the prosecution was that on the facts proved
in the case the accused were knowingly concerned in
fraudulent evasion or attempt at evasion of the prohibition
on the export of silver without a licence imposed under the
Export Trade Control order 1968 issued by the Central
Government under section 3 of the Imports and Exports
(Control) Act 1947 and they were therefore guilty of the
offence falling under section 135 (1) (a) (ii) which makes
it penal if any person “is in relation to any goods in any
way knowingly concerned in any fraudulent evasion or attempt
at evasion of any prohibition for the time being imposed
under any other law for the time being in force with respect
to such goods.” This argument was sought to be met on behalf
of the accused by contending that the words “with respect to
such goods” occurring at the end of Section 135 (1) (a) (ii)
referred to goods on which duty was chargeable as
contemplated in the first part of that section and since no
duty was chargeable on export of silver, it did not fall
within the words “with respect to such goods” and hence
fraudulent evasion or attempt at evasion of the prohibition
on export of silver without a licence imposed under the
Export Trade Control order 1968 issued under section 3 of
the Imports and Exports (Control) Act 1947 was not
punishable under section 135 (1) (a) (ii). It was this
contention urged on behalf of the accused which appealed to
the learned single judge of the High Court of Bombay and
resulted in the acquittal of the accused. The sole question
which therefore arises for consideration on these rival
arguments is as to what is the true meaning of the
expression “with respect to such goods’. Is it limited only
to goods falling within the first part of section 135 (1)
(a) (ii), that is goods on which duty is chargeable or does
it refer to any goods in respect of which prohibition is
imposed under the Customs Act 1962 or any other law for the
time being in force. The answer to this question does not in
our opinion admit of any doubt, because the language of
section 135 (1) (a) (ii) is clear and explicit and one has
merely to read the words of the section according to their
plain grammatical construction to come to the conclusion
that the view taken by the M learned single Judge of the
High Court is plainly erroneous. We proceed to give our
reasons for saying so, but we may point out straightway that
this view taken by the learned single judge of
505
the High Court has been subsequently overruled by a Division
Bench of the same High Court in the State of Maharashtra v.
Kassam(1).
If we analyse and break up the provision enacted in
section 135(1) (a) (ii), it will be clear that structurally
it is divisible into three parts, namely:
1. If any person is in relation to any goods in
any way knowingly concerned in any fraudulent
evasion or attempt at evasion of any duty
chargeable thereon, he shall be punishable
with imprisonment for a term which may extend
to three years or with fine or both.
2. If any person is in relation to any goods in
any way knowingly concerned in any fraudulent
evasion or attempt at evasion of any
prohibition for the time being imposed under
the Customs Act 1962 with respect to such
goods, he shall be punishable with
imprisonment for a term which may extend to
three years or with fine or both.
3. If any person is in relation to any goods in
any way knowingly concerned in any fraudulent
evasion or attempt at evasion of any
prohibition for the time being imposed under
any other law for the time being in force
with respect to such goods, he shall be
punishable with imprisonment for a term which
may extend to three years or with fine or
both.
The ingredients of the offence under section 135(1) (a) (ii)
would clearly be satisfied if the case falls within any one
of these three parts. Each of these three parts is distinct
and independent of the other two and whether a case falls
within any one part or not has to be judged by reference to
the ingredients of that part and not of any other part. The
ingredients of one part cannot be projected in the other two
parts. The first part deals with a case where in relation to
any goods a person is knowingly concerned in any fraudulent
evasion or attempt at evasion of any duty chargeable on such
goods. Obviously, therefore, the first part. postulates that
the
506
goods in respect of which the offence is committed must be
goods chargeable with duty. But the second and third parts
are not concerned with the question whether any duty is
chargeable on the goods or not. These two parts speak only
of fraudulent evasion or attempt at evasion of any
prohibition for the time being imposed under the Customs Act
1962 or any other law for the time being in force in respect
of any goods. What these two parts contemplate is that in
respect of the goods in question there must be a prohibition
imposed under the Customs Act 1962 or any other law for the
time being in force it being totally irrelevant whether duty
is chargeable on such goods or not, and the accused must be
knowingly concerned in any fraudulent evasion or attempt at
evasion of such prohibition. The prohibition fraudulently
evaded or sought to be evaded may be with respect to “any
goods” and it is not necessary that it should be with
respect to goods on which duty is chargeable. The expression
“with respect to such goods” had obviously to be used at the
end of the section because the second and third parts of the
section start with the words “if any person is in relation
to any goods …. knowingly concerned in any fraudulent
evasion or attempt at evasion”. The words “such goods” have
clearly reference to “any goods” at the commencement of the
section. These words are not descriptive of the kind of
goods to which the first part of the section is applicable.
It is totally impermissible, on a plain natural construction
of the language used in section, to read these words as
importing the requirement that the goods must be chargeable
with duty in order to fall within the second or third part
of the section.
We are therefore of the view that where goods are
chargeable to duty and any person is knowingly concerned in
any fraudulent evasion or attempt at evasion of such duty,
the case would fall within the first part of the section,
but where there is a prohibition imposed with respect to any
goods under the Customs Act 1962 or any other law for the
time being in force, then, irrespective of whether duty is
chargeable on such goods or not, any person knowingly
concerned in any fraudulent evasion or attempt at evasion of
such prohibition, would clearly be covered by the second or
third part as the case may be. Here there was clearly a
prohibition on export of silver without a licence, imposed
by the Export Trade Control order 1968 issued under section
3 of the Imports and Exports (Control) Act 1947 and on the
facts established by the prosecution-facts which could not
be and were not disputed-the accused were knowingly
concerned in fraudulent evasion or attempt
507
at evasion of such prohibition on export of silver and their
case was therefore plainly and indubitably covered by the
third part of section A 135(1) (a) (ii). The learned single
Judge of the High Court was consequently in error in taking
the view that the accused were not guilty of the offence
charged under 135(1) (a) (ii).
We accordingly allow these appeals preferred by the
Assistant Collector of Customs, set aside the order of
acquittal passed by the learned single Judge of the High
Court and restore the order passed by the Additional Chief
Presidency Magistrate convicting the accused under section
135(1) (a) (ii) of the Customs Act 1962 and sentencing them
to various terms of imprisonment and fine.
P.B.R. Appeals allowed.
508