D.N.SINHA, J. -
(1.) THE short facts o this case are as follows; The petitioner carries on business under die firm name of Acchruram Sohanlal. He is an exporter of various forms of lac, particularly, rei'usa lac. As is well known, lac is a resinous substance secreted, by certain insects which live in certain specified types of trees. It is mainly exported outside India. Being of an animal -cum -agricultural origin, it is found that in spite of refining in the manufacturing process, lac is found to contain, various impurities. For example, there is moisture, vegetable resin etc. Some of these are soluble in cold alcohol and others are not. It appears that there are various kinds of lac, one of which is called 'Molumma' which is a kind of refuse lac in which the petitioner has much export trade. The lac content of this variety is between 40 p.c. and 80 p.c. The export of lac from India is now controlled, that is to say, it has to be effected under a licence.
(2.) IN February, 1960 the petitioner entered into a contract for the sale of 1800 bags of Molumnra refuse lac to West Germany. So far as tills application is concerned, it relates to two consignments viz., one of 100 bags and the other of 250 bags. For these two consignments, two licenses were obtained from the port Control authorities, and these were to be exported to West Germany per S.S. Braunfcls. These packages were sent to the Custom House, covered by two shipping bills. At this point of time, the goods were sampled and tested for determination of the lac content by Messrs. R. V. Briggs Co. Private Ltd., a well known and repute company of testers and valuers. This sample was taken in the presence of the parties and a Customs Officer. It was found, as is evident from the certificate issued by them, that the lac content was 78.69 per cent It appears that thereafter the Customs authorities caused a chemical examination of samples taken by them and according to them the lac content of the 100 bags was found to be 88.37 per cent, and that of the 250 bags was 81.64 per cent. Thereupon, two show cause notices Were issued upon the petitioner, copies whereof are annexed to the petition marked as Ex. D. In the show -cause notice, issued by the Assistant Collector of Customs, it was pointed out that upon the chemical test the percentage of lac was found to be 88.37 per cent, and 81.64 per cent, respectively. Refuse lac or Molumma lac, it was claimed, cannot have a percentage of lac of over 80 per cent. It was therefore charged that the lac that was being exported was not under a proper license and the value should be much more than was declared. It Was proposed therefore to impose a penalty Under Section 167(37) of the Sea Customs Act. Also, action was proposed under Section 167(8) of the Sea Customs Act.
Upon receiving this notice, the petitioner showed cause. Copies of the explanations are annexed to the petition and marked with the letter E. It was pointed out in the explanation that the test made by Messrs. R.V. Briggs Co. Private Ltd. was by the 'indirect method,' whereas the test that was made by the Customs authorities was by the 'direct method,' This difference in the two methods has been clearly explained. It is pointed out that in the direct method, by dissolving lac in cold alcohol, the lac is not isolated from all other impurities,' e.g., moisture etc. But in the indirect method, a determination is made of the contents of all matters other than lac, so that tile percentage of lac that is found is more correct than the other method, and should form the method of assessment of the lac content. It was stated in the explanation that this contention has now been accepted by the Government Chemist, and in the affidavits before me it has been stated and not specifically denied that it is the indirect method which is now being followed by the Customs authorities in making assessment of lac content.
(3.) THERE is one other fact that I should mention here, namely that after the first test had bean made. the Customs authorities them selves made a second test, whereby, in the case of the 100 bags, the percentage came down from 88.37 to 82.2, and in the case of the 250 bags it rose from 81.64 to 81.83. Upon these materials, the matter went for adjudication before the Assistant Collector of Customs, and he has passed an order in each case, being Ex. F to the petition. In the order Ex. F at p. 35 what is said is as follows: Mr. H.S. Geschke, the representative of the shippers appeared for a personal hearing. He raised a number of points but did not press the objections against the correctness of the test by the Custom House Laboratory.;