- (1.) The Petitioner-Appellant, Shree Bhawani Cotton Mills Ltd., was granted a licence by the Joint Chief Controller of Imports and Exports dated March 3, 1960, authorising it to import certain goods, the material particulars of which are given below: 1. Country from which consigned :-- U.S.A.
(2.) Quantity and description of goods : 3-120 less one Saw Gin Plant, four Cotton Seed Delinting Machines with accessories. * * *
(3.) Approximate value c.i.f. Rupees Six lakhs only, Rs. 6,00,000. * * * 6. Limiting factor for purpose of clearance through Customs: Value. Briefly speaking, it was authorised to import from the United States of America four Cotton Seed Declining Machines with accessories of the approximate value c. i. f. Rs. 6,00,000 only. The goods were to be imported inter alia, from Messrs. Carver Cotton Gin Company, East Bridge Water, Massachusets U.S.A. On the strength of this licence, the Appellant placed an order with the said Messrs. Carver Cotton Gin Company through' their agents Messrs. Patel Brothers, Bombay. On May 31, 19(50 the Appellant wrote a letter to the American suppliers, a copy of which is annexure 'B' to the petition and appears at. pp. 14 to )7 of the paper book. The relevant part of that order is set out below: Re. Our Order for Delinting plant, placed with Messrs. Patel Brothers, Delhi, lated 30.5.60. With reference to the above as, desired by your representative Messrs. Patel Brothers, Delhi, we give below the full particulars of the equipments that you would ship against our order and request you to confirm the same. JUDGEMENT_15_LAWS(CAL)7_1965_1.html 2. It is necessary to observe item 6. Not only does it speak, of "spare parts" but spar parts sufficient to make two full and-complete machines without condensers. On June 10, 1960, Messrs. Carver Cotton Gin Company accepted the order and the goods were imported. The goods were covered by two invoices, copies whereof are contained m annexure 'C' to the petition, at pp.20, 21, 22 and 23 of the paper book. They show that four machines were being imported with spare parts for the same. On September 13, 1960 the Appellant presented the Bill of Entry through Messrs. Ghatterjee and Company, Clearing Agents and in the Bill of Entry the imported goods were described as "4 Cotton Delinting Machines with accessories and spares". The goods were assessed on the basis of the declaration and were allowed Customs clearance on October 3, 1960. The Customs authorities were, however, not satisfied and certain actions were taken, namely, that on August 19, 1961, the offices of the Appellant in Calcutta were searched by officers of the Calcutta Customs and on August 18, 1961, the offices of Messrs. Patel Brothers of Bombay were searched by officers of the Bombay Customs and certain documents were seized and statements taken. On January 31, 1962, notice to show cause was issued by the Assistant Collector of Customs and Superintendent of Preventive Service, Calcutta and served on the Appellant. A copy of the show-cause notice is annexure 'D' to the petition and set out at pp. 24 to 26 of the paper book. The charge was that the Appellant had a licence for the input of four delinting machines and they had declared before the Customs authorities that they were importing four such machines, but what they did, in fact, was to import two further machines in excess of the licence, together with their accessories and this was in contravention of Sections 19 and 167(8) of the Sea Customs Act, read with Section 3(1) of the Imports and Exports (Control) Act. The Appellants were asked to show cause why penal action should not be taken against themas "persons concerned" under Section 167(8) of the Sea Customs Act. Together with the show cause notice, about 13 sheets of relevant documents were enclosed. It will be necessary to refer to a letter written by Messrs. Patel Brothers to Messrs. Carver Cotton Gin Company dated June 13, 1960, a letter written by the Appellant to Messrs. Patel Brothers dated February 13, 1961 and a statement made by Sri A.V. Patankar dated September 11, 1961. The first mentioned letter was written by Patel Brothers to their American principals and the relevant part thereof is set out below: Dear Sirs, Re. Shri Bhawani Cotton Mills Ltd., Calcutta. In continuation of our letter of even number dated 7th June, 1960 we are pleased to inform you that the above party have been persuaded by our representative to purchase some more equipment from you and hence they have now decided to increase the letter of Credit in your favour by a sum of $ 2,000/- , thus making a total of $ 34,300/- for the revised order; that increase could be possible as some money has been left over on their import licence. They will now be purchasing two more 176-Saw Carver Dual Motor Linters and some other equipments; details of the revised order will be intimated to you very' shortly. As you know they have already placed an order for quantity of four 176-Saw Dual-motor Linters. The additional two machines which they want without condensers should be shipped in completely knocked down condition as spare parts: We are writing this to ascertain from you whether it would be possible for you to send the two Delinters in pieces as requested. We are confident that you will do the needful in this matter; however, we would like to have your confirmation before the final list is sent to you. In view of the urgency of this case, kindly send your reply by cable and oblige. Sri Patankar is the Sales Engineer in the firm of Messrs. Patel Brothers, Bombay and he was in service at the relevant time. He was deputed by his employers to give an explanation to the Customs authorities and he, inter alia, said as follows: In connection with the supply of machinery of M/s. Shri Bhawani Cotton Mills Ltd., Calcutta, it will be seen from the letters which are in possession of Customs at present that the sales representative of M/s. Patel Bros., Delhi, Shri J. S. Dass had been to Calcutta to canvas the order of Shri Bhawani Cotton Mills and therefore was in constant touch with Shri Mohta, a Director of the said Mills. Our firm got a letter from Shri S.K. Das dated 9.6.1960 from Calcutta wherein he has stated that the firm M/s. Shri Bhawani Cotton Mills require two additional delinter machines as spare parts and therefore we should request the suppliers M/s. Carver Cotton Gin Company, U.S.A. to comply with their request. The party therefore placed an order as per their letter of 31.5.1960 to M/s. Carver Cotton Gin Company, U.S.A. copy to our office vide item 6 of the order which is very clear, value U.S.A. 17592.85 and we wrote to M/s. Carver Cotton Gin Company, U.S.A. enclosing of a copy of the orders requesting them to send the Proforma Invoices and show therein as 'Spare Parts' and not as shown by the party in their order to avoid any complications. This was done on the basis of the letter Shri S.K. Das dated 11.6.1960 from Calcutta wherein he was clearly stated that what we wrote to M/s. Carver. In fact we have acted just as A.P. directed by the man in touch with the Importers. A letter was written by the Appellants to Messrs. Patel Brothers dated February 13, 1961 which is included in annexure 'D' to the petition at p. 34 of the paper book and which is as follows: M/s. Patel Bros. 8, Bagh Dewar, Delhi-6. Dear Sirs, We are pleased to inform you that two Saw Gin Machines and Baling Press have been erected. Six Delinters have also been erected. The Cyclone Machine is under erection. Although all the machines have been erected, yet we require your Engineer's help in running these machines particularly the Baling Press which is or a new model and without a pressure Gauge. So, your Engineer's, presence and guidance for the working of the Press is essential. We shall therefore be very much thankful to you, if you please send your Engineer at-the earliest. Thanking you, Yours faithfully, for Shri Bhawani Cotton Mills Ltd., Sd. Illegible. 3. On March 5, 1962, the Appellants showed cause. A copy of the same is annexure '13' to the petition. It was admitted that the "spare parts" imported were assembled after arrival in India, into two machines.;