SHESHANK SEA FOODS PVT. LTD. KARNATAKA ETC. versus UNION OF INDIA AND ORS.

Citation: [1996] SUPP. 8 S.C.R. 802 · Decided: 19-11-1996 · Supreme Court of India · Bench: S.P. BHARUCHA · Disposal: Dismissed
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Judgment (excerpt)

A 
SHESHANK SEA FOODS PVT. LTD. KARNATAKA ETC. 
v. 
UNION OF INDIA AND ORS. 
NOVEMBER 19, 1996 
B 
[S.P. BHARUCHA AND K.S. PARIPOORNAN, JJ.] 
Customs Act, 1962 : 
S 111 (o)-Exemption Notification No. 116 dated 30.4. 1988-Breach 
of conditions-Power of customs authorities to investigate into-Sought to 
C be excluded on the ground that terms of Exemption Notification were made 
part of licence and, as such, the licensing authority alone had jurisdiction 
to investigate into the alleged breach-Held, merely because licensing 
authority is empol11eretl to investigate, Custon1s authorities are not precluded 
from doing so-The breach is not only of the terms of the licence, but is 
D also of the Exemption Notification and, therefore, provisions of s. 111 (o) 
enable the Customs authorities to investigate. 
The appellant was availing the benefit of Exemption Notification 
No: 116 datecl,30.4.1988 issued u/s 25(1) of the Customs Act, 1962. 
One of the conditions of the Notification was that the materials 
E imported thereunder would not "be sold, loaned, transferred or 
disposed of in any other manner". The Customs authorities, on coming 
to know of cases of violation of the terms of the Notification, started 
investigation u/s 11 l(o) of the Customs Act, 1962. 
Writ petitions were filed before the High Court seeking a writ 
F of prohibition restraining the Customs authorities from proceeding 
with search and seizure operations in the premises of the petitioners 
on the ground that raw materials had been imported under advance 
licence which incorporated the terms of the said Exemption 
Notification, and, therefore, only the licensing authority had the 
G jurisdiction to investigate the alleged violations. The High Court 
dismissed the writ petitions. Aggrieved, the appellant filed the present 
appeal before this Court. 
It was contended for the appellant that in view of paragraph 
231 of the Import and Export Policy, 1989-91 and Paragraph 374 of 
H the Hand Book of Procedure, April 1988-March 1991, issued by the 
802 
• 
SHESHANK SEA FOODS PVT. LTD. v. U.O.l. [BHARUCHA, J.] 803 
Ministry of Commerce, Government of India, it was only the licensing A 
authority which could investigate into alleged cases of domestic sale 
of exempt material and the jurisdiction of the Customs authorities to 
do so was ousted. Reliance was also placed on a communication dated 
.p.5.1969 issued by the Central Board of Excise and Customs in respect 
of which the Ministry of Law was stated to have advised that it would 
not be possible to take action u/s 11 l(o) of the Customs Act with B 
respect to conditions of the licence relating to use of goods after they 
were cleared from Customs charge. 
Dismissing the appeal, this Court 
HELD: I.I. There is nothing in the provisions of the Import C 
and Export Policy 1988-91 or the Hand Book of Procedures issued by 
the Ministry of Commerce, Government of India, that even remotely 
suggests that the power of Customs authorities under s.11 l(o) of/ 
Customs Act, 1962 had been taken away or abridged or that ail 
investigation into the alleged breach of the terms of the Exemption 
Notification, incorporated in the advance licence, could be conducted D 
only by the-Jicensing authority. That the licensing authority is 
~mpowered ft>_ conduct an investigation into cases of alleged domestic 
sale of exe~pt material does not by itself preclude the Customs 
authorities from doing so. (806 FG I 
1.2. It is true that communication dated 13.5.1969 issued by the 
Central Board of Excise and Customs refers to the breach of the 
condition of a licence, and that the terms of Exemption Notification 
No. 116 dated 30.4.1988 were made part of appellant's licence and, in 
that sense, a breach of the terms of the Exemption Notification is also 
E 
a breach of a condition of a licence, entitling the licensing authority F 
to investigate. But the breach is not only of the terms of the licence; it 
is also a breach of the condition in the Exemption Notification upon 
which the appellants obtained exemption from payment of Customs 
duty and, therefore, the provisions of s. l ll(o) enable the Customs 
authorities to investigate. (806 H, 807 A,B) 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1152 of 
1992 Etc. 
,From the Judgment and Order dated 21.6.91 of the Karnataka High 
G 
Court in W.A. No. 1312 of 1991. 
H 
804 
SUPREME COURT REPORTS [ 1996] SUPP. 8 S.C.R. 
A 
R. Thyagarajan, Joseph Vellapally, R. Mohan, V. Balachandran, R
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