Holding

Section 135(1)(a)(ii) applies to any goods subject to a prohibition under the Customs Act or any other law, irrespective of whether duty is chargeable, so the accused were guilty under its third part.

Summary

The Assistant Collector of Customs intercepted a fishing vessel carrying 194 ingots of silver, suspecting smuggling. The accused were convicted under several statutes, including section 135(1)(a)(ii) of the Customs Act, 1962. The Bombay High Court set aside the conviction under the Customs Act, holding that the phrase "with respect to such goods" required the goods to be duty‑chargeable. On appeal, the Supreme Court examined the language of section 135(1)(a)(ii) and held that the provision is divisible into three parts; the second and third parts do not depend on duty liability but on any prohibition imposed by law. Since the Export Trade Control Order, 1968 prohibited export of silver without a licence, the accused were knowingly involved in fraudulent evasion of that prohibition, falling within the third part of the section. Consequently, the Supreme Court allowed the appeal, set aside the High Court’s acquittal, and restored the conviction under the Customs Act.

Issues considered

Whether the expression "with respect to such goods" in section 135(1)(a)(ii) of the Customs Act, 1962, limits the offence to goods on which duty is chargeable.
Whether a prohibition under the Export Trade Control Order, 1968 (issued under the Imports and Exports (Control) Act, 1947) falls within the scope of section 135(1)(a)(ii).

Legislation cited

Customs Act, 1962s. 135(1)(a)(ii)
Export Trade Control Order, 1968
Foreign Exchange Regulation Act, 1973s. 23(1A)
Imports and Exports (Control) Act, 1947s. 5
Indian Penal Code, 1860s. 120B

Subjects

Customs lawSmugglingDuty evasionProhibitionStatutory interpretationExport Trade Control OrderSection 135Fraudulent evasion

Judgment

500

ASSISTANT COLLECTOR OF
A CUSTOMS (PREVENTIVE) BOMBAY

v.

BABU MJY A SHEIKH IMAM AND ORS. ETC.
) \.
.

B July 28, 1983

[P. N. BHAGWATI AND R. B. MISRA, JJ.J

Customs Act, 1962-Section 135(/) (a) (ii,-Scope of.
c 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
an.v p:olzibition for the titnc being imposed under. any other law for the time
~ei~g in force with respect to such, goods'', he shall be punishable.

D In the reasonable belief that the respondents were smuggJing silver out
of the country, the Custon1s officials apprehended the· resporldents at · about
111idnight while they were going in a fishing vessel off the coast of Bombay and
found 194 ingots of silver in the vessel. They were prosecuted for offences
under section !'20-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
E 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
as.ide 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.
F
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
e:1tport of silver without licence and that therefore they were guilty of an off~nce
under the Cu.$ toms Act.
G
The respondt:lnts, ~n 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 secti.on 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
H attempt at evasion of tI{e prohibition on export of silver without a licence
iniposed under the Export Trade Control Order, 1968 issued under section 3
of the Imports and Exports (Control) Act; 1947, which was punishable under
~h~ Cust9m~ AC?t.
ASSTT. COLLECTOR v. BABU MIYA SOI
Allowing the appeal,
A
HELD : Where goods are chargeable with duty and any person is·
knowjngly concerned in any fraudulent evasion or atten1pt at evasi?n of such
duty, the-case wOuld.fall within the first.part of the section, but where a pro-
hibition is imposed with respect to any goods under the Customs Act, 1962 or
any other law for the time being in force, then, irrcspeCtive- of whether duty is
chafgeable on such goods or not, any person who is knowingly concerned in ·B
any fraudulent evasion or attempt at evasion of such )'fOhibition, would be
covered by the second or third part as the case may be .. [ 506 BJ

In the instant c~se the EXport Trade Control Order, 1968 issued ~nder
section 3 of the Imports and Exports. (Control) Aci, 1947,. prohibited the
export of silver without a licence. On the facts established by the prosecu. C
tion 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
D
not concerned with the question whether any duty is chargeable on the goods
or nQt. They speak only of frauduient evasion or attempt at evasion of any
prohibition for the time being imposed under the Custom~ Act or any other
law in forc.c 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
fr"audulently evaded or sought to be evaded might be with respect to "any
goods" : it is llot 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 fraud- F
ulent evasion or attempt at evasion''. The words "such goods" have clearly
reference to "anY goods" at the commenceinent of the section. These words
are not descriptive of the kind of goods to which the first part of the section
is applicable. It i$ totally impermissible on a plain, naturai construction o'r
the language used in the section to read these words as importing the require-
ment 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-DJ

CRIMINAL APPELLATE JURISDICTION Criminal Appeal Nos.
416-18 of 1974.

Appeals by Speciafleave from the~Judgment and Order dated
H
the 23rd/24th August, 1973 of the Bombay High Court in Cr].
Appeal Nos. 68,298 & 510 of 1972.
502 SUPREME COURT REPORTS i1983J 3 s.c.R.

N.C. Ta/ukdar, C.V. Subba Rao and R.N. Poddar for the
A Appellant.

O.P. Rana and M.N. Shroff for tb,e State of Maharashtra.

S.R. Srivastava for Respondent No. 1 in Cr!. A. 416.
B
The Jndgment of the Court was delivered by

BHAGWATI, J. These appeals by special leave are directed agliinst
a common judgment dated 27th August 1973 passed by a single
c 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. 418of1974 (hereinafter referred to as the
accused) of the offence under Section 135 (I) (a) (ii) of the Customs
Act, 1965. The entire controversy between the parties- in these
D appeals turns on the true interpretations of section 135 (1) (a) (ii) and
itis 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
E 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
F 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
G fishing vessel and asked the crew to stop it but instead of stopping
the crew increased the speed and tried to run away. The fishin&
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 sliver of the value
H 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
foundtin~it were sei~ec;l um)er \I Pa11c~nama itt the re?so11able beljef
ASSTT•. COLLECTOR v. BABU MIYA (Bhagwati, J,) 503

that they were being smuggled out of India. The accused who were
in the fishing vesscl were also prosecuted in the Court of Additional A
Chief Presidency Magistrate 5th Court Dadar for offences under
Section 120 B of the Indian Penal Code, Section 135 (I) (al (ii) of
the Customs Act 1962, Section 5 of the Imports and Exports
(Control) Act 1947 and Section 23 (I A) of the Foreign· Exchange
Regulation Act 1973. The Additional ·chief Presidency Magistrate B
found the accused guilty of all the offences charged against them and
sentenced them to various terms of imprisonment including fine.
The accused thereupon 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 c
Judgment dated 27th August 1973 the learned single Judge confirmed
the conviction of the accused under Section 120 B of· the Indian
Penal Code and Section 5 of the Imports and Exports (Control) Act
1947 but set aside the conviction under Section 135 (I) (a) (ii) of the
Customs Act 1962 and Section 23 ·(t A) of the Foreign Exchange D
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 (I A) of the Foreign
Exchange Regulation Act 1973 but he was aggriev~d 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 E
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 re.ads as follows : F

'
135. Evasion of duty or prohibitions-(!) Without
· prejudice to any action that may be taken under this Act,
G
..... 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 B
any other law for the time being in force with respect,l[to
such goods, he shall be punishable-
504 SUPREME COURT REPORTS (1983] 3 s.c.R.

(ii) in any other case, with imprisonment for a term
A ~hich 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
B 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 ofl'enee falling under section 135 (I) (a) (ii) which makes
c 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 argu-
ment was sought to be met on behalf of the accused by contending
that the words "with respect to such goods" occurring at the end
D of Section 135 (l) (a) (ii) referred to goods on which duty was
chargeable as contemplated in the first part of that section and since
no sJuty 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
E
under.section 3 of the Imports and Exports (Control! Act 1947 was
not punishable under section 135 (I) (a) (ii). It was this con\cntion
urged on ·behalf of the accused which appealed t,o the learned single
judge "of ihe High Court of Bombay and resulted in the acquittal of
the accused. The sole question which therefore arises for considera-
tion 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 (I) (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 (I) (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
learned single Judge of the High .Court is ._plainly· erroneous. We
proceed to give our reasons for saying so, but we may point
QUt st~ai~htway that this view tak;en by the learned single judge of
.Assrr. COLLECTOR v. BABU MIYA (Bkagwati, i.) sos
the High Court has been subsequently overruled by a Division llench
of the same High Court in the State of Maharashtra v. Ka.ssam( 1). A
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 :

I. If any person is in relation to any goods in any way
n
knowingly concerned \n 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 . c
2. If any person 1s m 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 D
with imprisonment for a term which may extend to
three years or with fine or both •
• goods in any way
--· 3. If any person is _in relation to any
knowingly concerned in any fraudulent evasion or E
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.
F
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 G
.., . 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 H

(I) J.L.R. [1977] Bombay 2547.
.506 SUPREME COURT REPORTS [t983j 3 s.c:R..
goods in respect of which the offence is committed must be
goo~s 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 Jaw for the time being in
force in respect of any goods. What these two parts contemplate is
8 . that in respect of the goods in question there must be a prohibition
imposed under tbe Customs Act 1962 cir any other Ia.w 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
c 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 b~cause the second and third parts of the section start
with the words "if any person is in relation to any goods ... ·.
D 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 cons-
truction of the language used in section, to read these words as
E 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
F 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 oiher law for the time being in force, then, irrespective of
·whether duty is chargeable on sucli goods or not, any person know·
iogly concerned in any fraudulent evasion or attempt at evasion of
G 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
H prosecution-facts which could not be and were not disputed-the
accused were knowingly concerned in fraudulent evasion or attempt
Afisrr. COLLECTOR v. BABU MIYA (Bhagwati, l.) 5M
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 C~urt 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 B
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.
c
P.B.R .. Appeals allowed.

!

.l