Case Note & Summary
The Collector of Customs, Madras, appealed by special leave against a judgment of the Madras High Court which had quashed the confiscation of a large quantity of sewing machine needles imported by the respondent. The respondent had imported the needles under a licence which, according to the Customs Department, did not cover the goods because the needles fell under the description 'Needles for domestic sewing machines' specified in Schedule I Item 288 of the Import Control Order, 1955. A learned Single Judge of the High Court had set aside a penalty of Rs. 5,000 imposed on the respondent on the ground that the imported needles were not proved to belong to the prohibited class, but had inconsistently maintained the confiscation order. On appeal, the Division Bench of the High Court held that there was no prohibition at all as contemplated by Section 3 of the Imports and Exports (Control) Act, 1947, read with the Import Control Order, 1955, and therefore quashed the confiscation order without deciding the other questions. The Supreme Court examined Section 3 of the Act and Clause 3 of the Import Control Order, 1955, which states that no person shall import goods of the description specified in Schedule I except under and in accordance with a licence or customs clearance permit. The Court held that this language clearly imposes a prohibition on import of scheduled goods unless covered by a valid licence. The Division Bench had erred by relying on the entry 'nil' in the Red Book (Import Trade Control Policy) as not constituting prohibition; however, in the present case, the prohibition was directly contained in the Control Order itself, which was duly published in the Official Gazette. The Supreme Court distinguished the earlier decision in Joint Chief Controller of Imports & Exports, Madras v. M/s. Amichand Mutha etc., where no order under Section 3 had been produced. The Court held that the prohibition is conditional and lifted only by a licence which covers the specific goods imported. The Division Bench had not considered whether the respondent's licence actually covered the imported needles or whether rules of natural justice were violated in the inquiry. The Supreme Court, therefore, allowed the appeal, set aside the Division Bench judgment, and remitted the case to the High Court for decision on these remaining questions of law.
Headnote
A) Customs - Import Prohibition - Conditional Prohibition by Control Order - Imports and Exports (Control) Act, 1947, Section 3; Import Control Order, 1955, Clause 3 and Schedule I Item 288 - The Division Bench held that there was no prohibition because the word 'nil' in the Red Book did not amount to prohibition under Section 3; Supreme Court held that Clause 3 of the Import Control Order expressly prohibits import of scheduled goods except under licence, and Item 288 covers needles for domestic sewing machines; the prohibition is conditional and lifted only by a valid licence covering the specific goods; reference to the Red Book was misplaced because the prohibition was in the Control Order itself; Held there was required prohibition against import without licence of needles specified. B) Customs - Judicial Review and Remand - Undecided Questions of Licence Coverage and Natural Justice - Imports and Exports (Control) Act, 1947, Section 3; Import Control Order, 1955, Clause 3 - The Division Bench did not decide whether the respondent's licence covered the imported needles or whether rules of natural justice were violated; Supreme Court held that if customs authorities erred in law, High Court could correct; if natural justice violated, case could be remitted for fresh decision; Held case remitted to High Court for decision on those questions.
Issue of Consideration
Whether the import of domestic sewing machine needles was prohibited under Section 3 of the Imports and Exports (Control) Act, 1947 read with Clause 3 and Schedule I Item 288 of the Import Control Order, 1955, and whether the Division Bench of the High Court erred in holding there was no prohibition.
Final Decision
Appeal allowed; judgment of Division Bench set aside; case remitted to High Court for decision on remaining questions of law, including whether the licence covered the imported goods and whether natural justice was violated.
Law Points
- Section 3 of Imports and Exports (Control) Act
- 1947 empowers Central Government to prohibit or restrict imports
- Clause 3 of Import Control Order
- 1955 imposes conditional prohibition on import of scheduled goods unless covered by licence
- 'Nil' in Red Book does not amount to prohibition without an order under Section 3
- Prohibition under Control Order requires goods to conform to licence description
- Natural justice violations may be corrected by High Court and matter remitted for fresh decision.
