ROCHE PRODUCTS LIMITEDversusCOLLECTOR OF CUSTOMS AND ANOTHER

                   ROCHE PRODUCTS LIMITED                                      A
                                     v.
          COLLECTOR OF CUSTOMS AND ANOTHER

                          OCTOBER 19, 1989

         [MURARI MOHON DUTT ANDS. RATNAVEL                                     B
                    PANDIAN, JJ.]

        Customs Act, 1962: Sections 122, 124, 128-Collector of
  Customs setting aside order of Customs Officer-Ordering confiscation
. and imposing penalty-Held appellant has right of appeal against such
  order.
                                                                               c
      Actual user m'ust not be debarred from utilising the imported
 material under its industriallicence.

       Administrative Law: Authority has power to do.a certain act-
 Does the act but refers to wrong provisions of :law--'such order mere         D
 irregularity and would not vitiate such act. .

       The appellant is engaged in the business of mannfacture of
 various pharmaceutical prodncts inclnding sulpbarnetboxazole which is
 also known as 'SMX'. One of the important ingredients or raw·
 materials for the manufacture of SMX is a chemical known as                   E
 'isOxamine'.

       On April 23, 1974 the Ministry of Industrial Development of the
 Government of India issued to the appellant an industrial iicence enabl·
 ing it to manufacture 18 tonnes of SMX-per year. Under one of ttie
 conditions of the industrial licence, the appellant was permitted to          F
 import the material, isoxamine, for a period of two years only from the
 date of licence, and thereafter the product SMX was to be manufac-
 tnred from indigenous materials. The appellant's request for permis-
 sion to import isoxamine till the middle of 1979 was not acceded to by
 the Government and the appellant was asked to manufacture SMX
 from indigenous materials. In tbe meantime, tbe appellant bad placed orders   G
 for the imprt of isoxarnine under an import licence issued on October
 13, 1976, and between March and June .1979 got the goods cleared after
 giving a declaration that the appellant was an Actual User, and that its
 registration bad not been cancelled or withdrawn or otherwise made
 inoperative.
                                                                               H

                                    495
    496         SUPREME COURT REPORTS                [1989] Supp. 1 S.C.R.

          The Collector of Customs, Bombay, issued show-cause notice on
A   the appellant for confiscation of goods and imposition of penalty, inter
    alia, on the ground that it had made a false statement that its registra-
    tion had not been cancelled, withdrawn or otherwise made inoperative
    for the manufacture of SMX by using imported material, that is,
    isoxamine, inasmuch as-the industrial licence bad ceased to be valid for
B   the manufacture of SMX with imported material after April 22, 1976.

          The Collector of Customs, after hearing the appellant, held that
    the appellant was not an Actual User (Industrial) in respect of the said
    imported raw material, isoxamine, after April 22, 1976, and that since
    the industrial licence was in~alid for manufacture of SMX with
    imported material the importation of the raw material, namely, isox-
c   amine, was impermissible. The Collector also held that the appellant
    had furnished a false declaration on the basis of which it got the goods
    cleared by the Custom Officer. The Collector, therefore, set aside the
    decision of the Custom Officer allowing clearance of the goods. The
    Collector of Customs further directed confiscation of the goods
D   imported by the appellant and also imposed a penalty. "I:he appellant's
    writ petition was dismissed_ by the learned Single Judge of the High
    Court, and appeal agianst his judgment was dismissed by the Division
    Bench.

           Before this Court it was contended on behalf of the appellant thai
E   the goods, namely, isoxamine, having been imported under a valid
    Open General Licence (OGL), the customs authorities bad no jurisdic-
    tion to confiscate the same; that the appellant having secured the OGL
    for the import of isoxamine for its own use and not for business or trade
    in it, the appellant should be held to be an Actual User; that the Col-
    lector of Customs could not, in exercise of his revisional jurisdiction
F   under section 130(2) of the Customs Act, 1962, as it stood then, for the
    first time confiscate the goods and impose penalty on the appellant; and
    that as the goods have been comiscated and the penalty bas been
    imposed by the Collector of Customs in exercise of bis revisional juris-
    diction, the appellant has been deprived of his right to prefer an appeal
    before the Central Board of Excise and Customs under Section 128(a) of
G   the Customs Act.

          While dismissing the appeal, this Court,

         HELD: (1) There can be po doubt that the definition of" Actual
    User (Industrial)", as contained in clause (3) of pargraph 5 of chapter 2
H   of Import Policy 1978-79 should be read with the definition of "Actual
             ROCHE PRODUCTS v. COLLECTOR OF CUSTOMS                      497

  User" in clause (1) of paragraph S. So read, it is clear that an "Actual      A
  User (Industrial)" means an industrial undertaking which is entitled to
  utilise the imported goods "in the manufacturing process or operations
· conducted within its authorised premises. In other words, the importer
  must not he debarred from utilising the imported goods under the terms
  of the industrial licence. [S04C-D I
                                                                                B
       (2) The declaration of the appellant that it is an Actual User, and
 that its registration has not been otherwise made inoperative is a false
 declaration, as rightly held by the Collector of Customs. Whent the
 industrial licence granted to the appellant does not permit the use of the
 imported goods for the manufacture of SMX, the importation of the
 goods under the OGL is illegal and could not be allowed to be cleared by       c
 the appellant. [SOSA-Bl

        (3) In view of the provisions .of section 122 read with section 124
 of the Customs Act, the Collector of Customs has the jurisdiction to
 confiscate goods or impose penalty after issuing show cause notice. He
                                                                                D
 has, therefore, both the original jurisdiction as also revisional jurisdic-
 tion. In exercise of his revisional jurisdiction under section 130(2) of the
 Act, he set aside the order of the Customs Officer allowing the goods to
 be cleared by the appellant and, thereafter, in exercise of his original
 jurisdiction under section 122 read with section 124 of the Act, he issued
 a show cause notice on the appellant and, after hearing the appellant,
 confiscated the goods and imposed penalty on the appellant. [S06E-F)           E

       (4) It appears, however, that the conf1Scation was made and the
 penalties imposed by the Collector of Customs in exercise of his revi-
 sional ·power under section 130(2) of the act. This is a mere irregularity
 not affecting the order. When an authority has the power to do a certain
 act and in exercise of such power he does the same, but refers to a F
 wrong provision of the law, that would be a mere irregularity and
 would not vitiate such act. [S06G-H; S07A)

      Addi. Commissioner of Income Tax v. J.K. D'Costa, [1982] 133
 ITR 7, distinguished.
                                                                                G
       (5) In the order of the Collector it has been specifically stated at
the very outset that an appeal against the order lies to the Central
 Board of Excise and Customs. It cannot, therfore, be said that the
-appellant was misled, as the order was purported to have been passed
 by the Collector of Customs in exercise of his revisioal jurisdiction.
                                                                                H
    498         SUPREME COURT REPORTS                 [1989] Supp. 1 S.C.R.

          CIVIL APPELLATE JURISDICTION: Civil Appeal No.
A   4407 (NM) of 1989.

        From the Judgment and Order dated 28. 7.1989 of the
    Maharashtra High Court in Appeal No. 360 of 1984.

B       Anil B. Divan, A.J. Rana, S. Ganesh, Ravinder Narain, P.K.
    Ram, Ms. Amrita Mittar, M.P. Bakshi and D.N. Mishra for the
    Appellant.

         V.C. Mahajan, Hemani Sharma and P. Parmeshwaran for the
    Respondents.
c         The Judgment of the Court was delivered by

          DUTT, J. This special leave petition has been heard at length
    and both parties have made elaborate submissions on the merits of
    their respective cases and, accordingly, we proceed to dispose of the
D   special leave petition after granting leave.

          The appellant, Roche Products Limited, a ~ublic limited com-
    pany bas, by this appeal, challenged the propriety of the decision ·()f the
    Division Bench of the Bombay High Court dismissing the appeal pre-
    ferred by the appellant against the judgment of a learned Single Judge
E   dismissing the writ petition of the appellant. In the writ petition, the
    appellant challenged the order of the Collector of Customs passed in
    exercise of his revisional_ jurisdiction under section 130(2) of the
    Customs Act, 1962, hereinafter refered to as 'the Act', directing con-
    fiscation of the goods imported by the appellant, but giving to the
    appellant an option to pay in lieu of such confis_cation, a fine of
F   Rs.19,00,000 and further imposing on the appellant a penalty of
    Rs.5,00,000.

          The appellant is engaged in the business of manufacture of
    various pharmaceutical products including sulphamethoxazole which
    is also known as 'SMX'. One of the important ingredients or raw-
G   materials for the manufacture of SMX is a chemical known as 'isox-
    amine', which is also known as '3-amino-5-mithyl-isoxazole'.

         On April 23, 1974, the Ministry oflndustrial Development of the
    Government of India issued to the appellant an industrial licence
    enabling it to manufacture 18 tonnes of SMX per year. Clause 4 of the
H   industrial -licnece enjoins that the manufacture of "new articles" shall
            ROCHE PRODUCTS v. COLLECTOR OF CUSTOMS [DUTT, J.]                 499

      be completed and commercial production established within a period             A
      of two years from the date of issue of the industrial licence. The indust-
      rial licence also contains some additional conditions of which the con-
      dition contained in clause 5(iv) is relevant for our purpose. Clause
      5(iv) provides as follows:
                                                                                     B
                  "5. The industrial licence will also be subject to the condi-
                  tions stipulated in Annexure I. It will be 'furthet subject to
                  the following additional conditions:

                        (i) ........................................... .

                        (ii)                                                         c
                        (iii)

';.
                         (iv) The undertaking should base the manufacture of
                  sluphamethaxazole on M.A.I. (5-methyl-3-Amino in sale).
                                                                                     D
                  From the third year onwards, the manufacture of drugs will
                  be ·based on T. Butyl alcohol hydroxylamine acid T. Butyl
                  alcohol hydrexylamine said sulphates .and methyl formu-
                  late. The manufacture of formulations should be .based on
                  their own production of sulphamethaxazole and import of
                  Tricathopria will be considered only for one year. There
                                                                                     E
                  after, it should be based on locally produced materials."

            Oause IO provides that the industrial licence will be valid only for a
      period of two years within which commercial production is to be
      established.
                                                                                     •
                                                                                     F
           It is apparent from the conditions .of the industrial licence that
      the appellant was permitted to import the material, isoxamine, for a
      period of two years only from the date of the licence, ihat is to say, up
      to April 23, 1976 and that, thereafter, the product SMX was to be
      manufactured from indigenous materials.
                                                                                     G
            On October 13, 1967, the Import Control Authority issued to the
      appellant an import licence for the import of various raw materials up
      to an aggregate value of Rs.53,31,000 including isoxamine. The licence
      was valid for a period of 24 months from the date of issue of the same.
      It, howevr, contained a condition that all the goods that would be
      imported under it should only be used in the factory of the appellant.
                                                                                     H
    500         SUPREME COURT REPORTS                [1989] Supp. 1 S.C.R.

          By its letter dated September 20, 1978, addressed to the Under
A
    Secretary, Government of India, Ministry of Petroleum, Chemi-
    cals and Fertilisers, the appellant stated their difficulties in manu-
    facturing SMX from indigenous materials and made a request that it
    might be allowed to import isoxamine until the middle of 1979. The
    appellant also wrote another letter dated September 29, 1978 to the
B   said Under Secretary, again pointing out to him, inter alia, ·the
    difficulties which the appellant had to face in developing the
    manufacture of isoxamine from locally produced materials, indigenous
    articles and ingredients and the delays which has occurred as a
    consequence.

          Although the appellant did not get any reply to its representation
c from the Government permittig it to import isoxamine until the middle
    of 1979, yet it placed an order on Hoffmann-La Roche Limited, Basie,
    Switzerland, for supply of isoxamine and opened an irrevocable letter
    of credit in favour of the said Hoffmann-La Roche Limited. Before the
    goods ordered by the appellant had reached India from Switzerland,
D   the Under Secretary to the Government of India, Ministry of
    Petroleum, Chemicals and Fertilisers, by his letter dated January 20,
    1979 informed the appellant that its request for permission to import
    isoxamine till the middle of 1979 could not be acceded to and the
    appellant was asked to manufacture SMX from indigenous materials.

E         Between March and June, 1979, consignments of isoxamine
    reached the Bombay Port pursuant to the order placed by the appel-
    lant to the said Hoffmann-La Roche Limited. The appellant also gave
    a declaration that it was an Actual User, and that its registration had
    not been cancelled or withdrawn or otherwise made inoperative, as
    required to be given under paragraph 6 of Appendix-10 of the Import
F   Policy, 1978-79 and got the goods cleared upon such declaration by the
    Customs Officers.

          On September 7, 1979, the appellant received from the Collector
    of Customs, Bombay, a notice issued under section 130(2) of the Act
    calling upon the appellant to show cause why the goods importd by the
G   appellant should not be confiscated under section 3 of thelmports and
    Exports (Control) Act, 1947 and why a penalty of Rs.7 ,00,000 should
    not be imposed on the appellant under section 112(1) of Act.
                                                         '
          In the said notice to show cause, it was stated inter alia that the
    industrial licence granted to the appellant stipulated that after a period
H   of two years the production of SMX should be based on indigenous
           ROCHE PRODUCTS v. COLLECTOR OF CUSTOMS [DUTT, J.]               501

    materials and, accordingly, the appellant was not allowed to use
                                                                                  A
    imported materials in the production of SMX after the expiry of two
    years, that is, after April 22, 1976. It was also stated that the appellant
    was not an Actuiil User of the imported material, that is, isoxamine,
    .after April 22, 1976 inasmuch as the industrial licence had ceased to be
    valid for the manufacture of SMX with imported materials. Further, it
    was stated that the declaration given by the appellant in terms of            B
    paragraph 6 of Appendix 10 of the Import Policy 1978-79, contained a
    false statement, namely' that the registration of the appellant had not
    been cancelled, withdrawn or otherwise made inoperative for the
'   manufacture of SMX and, accordingly, the goods, namely, isoxamine,
    had been imported by the appellant in contravention of the Import
    Trade Control Order issued under section 3 of the Imports and
    Exports (Control) Act. In the circumstances, the Collector of Customs         c
    proposed to review the said unauthorised clearance of the goods.

         The appellant submitted its reply to the show cause notice con-
    tending, inter alia, that the industrial licence dated April 23, 1974
    granted to it for the manufacture of SMX was still valid and operative.       D

           The Collector of Customs, after hearing the appellant and after
    considering the facts and circumstances of the case, by his order dated
    November 14, 1979, held that the appellant was not an Actual User
    (Industrial) in respect of the said imported raw material, isoxamine,
    after April 22, 1976, that is to say, after the expiry of two years from      E
    the date of issue of the industrial licence to the appellant, and that
    since the industrial licence was invalid for manufacture of SMX the
    importation of the raw material, namely, isoxamine, was impermissi-
    ble. It was also held by the Collector of Customs that the appellant had
    furnished a false declaration on the basis of which it got the goods
    cleared by the Customs Officers. Accordingly, the Collector of                F
    Customs ordered as follows:

               "In exercise of powers conferred upon me under Section
               130(1) of the Customs Act, 1962, I therefore, review the
               order of clearance allowing storage in. warehouse, the
               goods shall be cqnfiscated under Section 111(d) of the             G
               Customs Act, 1962 read with Section 3 of the Imports and
               Exports (Control) Act,1947. I, however, allow under Sec-
               tion 125 of the Customs Act, 1962, an option to pay in lieu
               of such confiscation a fine of Rs.19,00,000 (Rupees nine-
               teen lakhs only) and clear the goods into town. This option
               should be exercised within a month from the date of this           H
    502         SUPREME COURT REPORTS                [1989] Supp. 1 S.C.R.

                order or within such extended period as may be allowed on
A               good and sufficient cause being shown to the satisfaction of
                the Adjudication authority. I also imP.ose a penalty of
                Rs.5,00,000 (Rupee five lakhs only) on the importers
                under Section 112, of Customs Act, 1962 which is to be
                paid forthwith".
B
          Being aggrieved by the said order of the Collector of Customs,
    the appellant challenged the same by filing a writ petition before the
    Bombay High Court. A learned Sigle Judge of the High Court, who
    heard the writ petition, dismissed the same by his judgment dated
    April 11, 1984. The appellant preferred an appeal against the judg-
    ment of the learned Single Judge to a Division Bench of the High
c   Court which, as stated already, dismissed the same. Hence this appeal
    by special leave.

          It is not disputed that the industrial licence granted to the appel-
    lant clearly stipulated that after the expiry of two years the appellant
D   would not be entitled to manufacture SMX with the imported mate-
    rial, isoxamine. Such manufacture of SMX could be made by the
    appellant from indigenous materials. It has been strenuously urged by
    Mr. Anil Divan, learned Counsel appearing on behalf of the appellant,
    that the goods, namely, isoxamine, having been imported under a
    valid Open General Licence (OGL), the customs authorities have· no
E   jurisdiction to confiscate the same. It is submitted that the only thing
    that can be looked into by the customs authorities is whether the
    particular goods have been imported under a valid licence or not. As
    soon it is found that it has been so imported under a valid licence, the
    customs authorities will have no other alternative than to clear the
    goods.
F
          We are unable to accept this contention of the appellant. It Is
    true that the goods have been imported under OGL. If that had been
    the only condition for clearance of the goods then, of course, the
    customs authorities could not confiscate the goods. But, that was not
    th.e only condition to be fulfilled by the appellant. Another conditions
G
    that has to be fulfilled by the appellant is that contained in paragraph
    (6) of Appendix lOof the linport Policy 1978-79which is as follows:

                "(6). All Actual Users, at the time of clearance of goods
                shall furnish to the customs authorities a declaration giving
                particulars of their registration as an Actual User with the
                concerned authorities and affirming that such registration
      ROCHE PRODUCTS v. COLLECTOR OF CUSTOMS [DUTT, J.]             503

           has not been cancelled or withdrawn or otherwise made
                                                                           A
           inoperative. In case, where separate registration number is
           not allotted by the sponsoring authority concerned, the
           importers shall produce other evidence to the satisfaction
           of the customs authorities that they are registered as
           industrial units. Actual Users (non-Industrial) shall, at the
           time of clearance of the goods furnish to the customs           B
           authorities the original or a photostate copy of the (cur-
           rently valid) Registration Certificate held by them under
           the Shops and Establishments Act, Cinematographic
           Act,or concerned local statute."
                                                       '
      Thus, under paragraph (6), the Actual User has to furnish a
declaration affirming that the registration as an Actual User has not C
been cancelled or withdrawn or otherwise made inoperative. If there
be no separate registration number, as in the case of the appellant,
importers shall produce evidence to the satisfaction of the customs
authorities that they are registered as industrial units. The appellant
has, admittedly, been registered as an industrial unit which is D
evidenced by the grant of the industrial licence. As stated already, the
appellant furnished a declaration that its registration had not been
cancelled or withdrawn or otherwise made inoperative. The appellant
also claimed that it was an Actual User. It is urged on behalf of the
appellant that as soon as it is proved that it is an Actual User, and that
its registration has not been cancelled, the declaration that has been E
furnished by the appellant must be held to be a correct one and the
customs authorities had rightly allowed the appellant to clear the
goods.

      Clauses (1) and (3) of Paragraph 5 of Chapter 2 of Import Policy
1978-79 define "Actual User" and "Actual User (Industrial)" respec- F
lively, as follows:

           "(1) "Actual User" means a person who applies for/
           secures a licence for the import of any item or an allotment
           of a canalised item required for his own use, and not for
           business or trade in it. Thus, in the case of an industrial G
           undertaking, the item concerned shall be utilised for the
           manufacturing processes or operations conducted within its
           authorised premises (or made available to jobbing units
           outside only as part of such production effort). In the non-
           industrial category, such as hospitals, research and
           development or any other institutions, commercial estab- H
    504         SUPREME COURT REPORTS                [1989] Supp. 1 S.C.R.

               lishments and individuals, the concerned item shall be
A              utilised for its/his own use 1.e. for the purpose for which the
               item was sought for import.

               (3) "Actual User (Industrial)" shall mean an industrial
               undertaking, be it in the large scale, small scale or cottage
B              industries sector, engaged in the manufacture of any goods
               for which it holds a licence or Registration Certificate from
               the appropriate Government authority, wherever appli-
               cable."

          There can be no doubt and it is also conceded to on behalf of the
    appellant that the definition of "Actual User (Industrial)", as con-
c   tained in clause (3) of paragraph 5 should be read with the definition of
    "Actual User" in clause (1) of paragraph 5. So read, it is clear that an
    "Actual User (Industrial)" means an industrial undertaking which is
    entitled to utilise the imported goods "in the manufacturing process or
    operations conducted within its authorised premises". Much emphasis
D   has been laid by the learned Counsel for the appellant on the first
    sentence of clause (1) of paragraph 5-"Actual User" means a person
    who applies for/secures a licence for the import of any item or an
    allotment of a canalised item required for his own use, and not for
    business or trade in it. It is submitted on behalf of the appellant that
    the appellant having secured the OGL for the import of isoxamine for
E   its own use and not for business or trade in it, the appellant should be
    held to be an Actual User. We do not find any substance in the conten-
    tion made on behalf of the appellant. The appellant is not entitled
    under the industrial licence to utilise the imported goods for its own
    use for the manufacture of SMX. Even otherwise, the latter part of
    clause (1) makes it very clear that the imported goods have to be
F   utilised for the manufacturng process or operations conducted within
    the authorised premises of the industrial undertaking which the appel-
    lant is debarred from doing under the terms of the industrial licene<:
    after the expiry of the period of two years on April 22, 1976. The
    appellant, therefore, does not satisfy the first condition of paragraph
    (6) of Appendix 10 of the Import Policy 1978-79, namely, the importer
G   has to be an Actual User. In other words, the importer must not be
    debarred from utilising, but must be entitled to utilise the imported
    goods under the terms of the industrial licence.

         · The appellant also does not fulfil the other condition under
    paragraph (6) that the registration has not been made otherwise
H   invalid. It may be that the industrial licence is operative for the
       ROCHE PRODUCTS v. COLLECTOR OF CUSTOMS [DUTT, J.]               505

 manufacture of SMX with indigenous materials but, surely, it is              A
  inoperative for the manufacture of the said product with imported
  materials after the expiry of two years from the date of the issuance of
  the licence. The declaration of the appellant that it is an Actual User,
  and that its registration has not been otherwise made inoperative is a
  false declaration, as rightly held by the Collector of Customs in the
                                                                              B
  impngned order. When the industrial licence granted to the appellant
  does not permit the user of the imported goods for the manufacture of
  SMX, the importation of the goods under the OGL is illegal and could
  not be allowed to be cleared by the appellant. There is, therefore, no
  substance in the contention made on behalf of the appellant that on a
  demurer at the highest, the appellant can only be said to have
  infringed a condition of its industrial licence and such infringement       c
 does not constitute a prohibition on import which is imposed by any
 law. This submission completely overlooks the provision of paragraph
  ( 6) of Appendix 10 of the Import Policy 1978-79. After the expiry of
  two years from the date of issuance of the industrial licence, the appel-
  lant had no right to import isoxamine under the OGL. Accordingly,
  the importation of isoxamine after the expiry of two years from the         D
· date of the issuance of the industrial licence was illegal.

      It is next contended on behalf of the appellant that even if the
appellant's declaration is considered to be wrong, it would not render
the importation invalid, but the only consequence would be that the
clearance of the goods would not be permitted and that in such situa-         E
tion, the respondents would only take recourse to clause 10-C(l) of the
Imports (Control) Order. Clause 10-C(l) provides that where, on the
importation of any goods or at any time thereafter, the Chief Control-
ler of Imports and Exports is satisfied, after giving a reasonable
opportunity to the licensee of being heard in the matter, that such
goods cannot be utilised for the purpose for which they were imported         F
he may, by order, direct the licensee or any other person having pos-
session or control of such goods to sell such goods to such persons,
within such time, at such price and in such manner as may be specified
in the direction. The appellant cannot, in our opinion, take resort to
the provision of clause 10-C(l). That provision is not meant for grant-
ing relief to an importer who on the basis of a false declaration gets his    G
goods cleared, nor does it apply to any import which is in violation of
the conditions of an industrial licence. Clause 10-C(l) will apply to a
case where the goods have been validly imported, but cannot be
utilised for some reason or the other. The contention of the appellant            '
is unsound and is rejected.
                                                                              H
    506          SUPREME COURT REPORTS                [19891 Supp. 1 S.C.R.

           Next contention of the appellant is that the Collector of Customs
A
    cannot, in exercise of his revisional jurisdiction under section 130(2) of
    the Act, as it stood then, for the first time confiscate the goods and
    impose penalty on the appellant. It is submitted that a revisional
    l\Uthority, as the Collector of Customs is under section 130(2) of the
    Act, can set aside the decision or order of an officer of customs subor-
B   dinate to him, but cannot either confiscate the goods or impose pen-
    alty. It is contended that in the instant case, the Collector of Customs
    could set aside the decsion of the Customs Officer allowing clearance
    of the goods and direct issuance of a show cause notice under section
    124 of the Act for the confiscation of the goods. The grievance of the
    appellant is that if such a show cause notice was issued and there was
    an adjudication of confiscation and penalty under section 122 of the
c   Act, in that case, the appellant could challenge the same by way of an
    appeal as provided in section 128 of the Act. The Collector of
    Customs, it is urged, having himself confiscated the goods and
    imposed a penalty, has deprived the appellant of its right of appeal
    under section 128 and, accordingly, the imugned order of the Collector
D   of Customs confiscating the goods and imposing the penalty on the
    appellant should be quashed.

          We may first consider whether the Collector of Customs had
    exceeded his jurisdiction in confiscating the goods and imposing
    penalty for the first time in exercise of his revisional jurisdiction under
E   section 130(2) of the Act. In view of the _provisions of section 122 read
    with section 124 of the Act, the Collector of Customs has the jurisdic-
    tion to confiscate goods or impose penalty after issuing show cause
    notice on the person concerned. He has, therefore, both the original
    jurisdiction as also revisional jurisdiction. In exercise of his revisional
    jurisdiction under section 130(2) of the Act, he set aside the order of
F   the Customs Officer allowing the goods to be cleared by the appellant
    and, thereafter, in exercise of his original jurisdiction under section
    122 read with section 124 of the Act, he issued a show cause notice on
    the appellant and, after hearing the appellant, confiscated the goods
    and imposed penalty on the appellant. It, however, appears from the
    impugned order dated November 14, 1979 that the co11fiscation was
G   made and the penalties imposed by the Collector of Customs in exer-
    cise of his revisional power under section 130(2) of the Act. This, in
    our opinion, is a mere irregularity not affecting the order. Admittedly,
    the Collector of Customs had the power to confiscate the goods and
    impose penalty under section 122 read with section 124 of the Act.
    When an authority has the power to do a certain act and in exercise of
H   such power he does the same, but refers to a wrong provision of the
      ROCHE PRODUCTS v. COLLECTOR OF CUSTOMS [DUTI, J.)             507

law, that would be a mere irregularity and would not vitiate such act.
                                                                            A
In the instant case also, the Collector of Customs had admittedly the
power to confiscate goods and impose penalty and even though in the
impugned order it is stated that the confiscation of the goods was made
and the penalty was imposed in the exercise of his power under section
130(2) of the Act, that would not be fatal and vitiate the order.
                                                                            B
      The decision of the Delhi High Court in Addi. Commissioner of
Income Tax v. J.K. D'Costa, [1982] 133 ITR 7, strongly relied upon by
the appellant, does not apply to the facts and circumstances of the
instant case. In that case, the Addi. Commissioner of Income Tax
came to the conclusion, inter alia, that the failure of the Income Tax
Officer to initiate penalty proceedings for both the assessment years,
namely, 1964-65 and 1965-1966 under section 271(1)(a) and for the           c
assessment year 1965:66 under section 273(b) of the Income Tax Act,
1961, was erroneous and prejudicial to the interest of the revenue. In
that view of the matter, he passed orders setting aside the assessment
orders and directed the Income Tax Officer to make fresh assessments
in accordance with law. It has been observed by the Delhi High Court        D
that there is no identity between the assessment proceedings and the
penalty proceedings; the latter are separate proceedings, that may, in
some cases, follow as a consequence of the assessment proceedings.
Further, it has been observed that the penalty proceedings do not form
part of the assessment proceedings and that the failure of the Income
Tax Officer to record in the assessment order, his satisfaction or the      E
lack of it in regard to the leviability of penalty cannot be said to be a
factor vitiatig the assessment order in any respect. In that case, as the
Income Tax Officer did not impose a penalty, the Addi. Commissioner
set aside the assessment order. The omission to initiate penalty pro-
ceedings-by the Income Tax Officer will not vitiate an assessment order
which is otherwise valid and it has been rightly observed by the Delhi      F
High Court that the Addi. Commissioner was not justified in setting
aside the assessment order onthat ground.

      In the instant case, the facts are completely different. The Col-
lector of Customs set aside the order of the Customs Officer allowing
the appellant to clear the goods on a false declaration and also con-       G
fiscated the goods and imposed penalty. The Collector of Customs
had, as noticed above, the power to confiscate the goods and impose
penalty and he did the same after issuing a show cause notice and
hearing the appellant. In D'Costa's case (supra) the Addi. Commis-
sioner of Income Tax had no power to initiate penalty proceedings
under section 271(1)(a) or section 273(b) of the Income Tax Act,            H
     508         SUPREME COURT REPORTS               [1989] Supp. 1 S.C.R.

A   1961. Be that as it may, that decision has no manner of application to
    the facts and circumstances of the instant case.

          The appellant has complained that as the goods have been con-
    fiscated and the penalty has been imposed by the Collector of Customs
    in exercise of his revisional jurisdiction, the appellant has been
B · deprived of his right to prefer an appeal before the Central Board of
    Excise and Customs under section 128(a) ef the Act. When the Col-
    lector of Customs could confiscate the goods and impose penalties
    only in exercise of his original jurisdiction under section 122 read with
    section 124 of the Act, surely, the appellant had a right of appeal
    agaisnt such con.fiscation and imposition of penalty. At this stage, we
    may notice a very significant fact that in the impugned order of the
c Collector dated November 14, 1979, it has been specifically stated at
    the very outset that an appeal against the order lies to the Central
    Board of Excise and Customs, New Delhi, within three months from
    the date of its despatch. It cannot, therefore, be said tht the appellant
    was misled, as the order was purported to have been passed by the
o Collector of Customs in exercise of his revisional jurisdiction. The
    appellant, however, did not avail itself of its right of appeal under
   section 128(a) of the Act and, accordingly, its complaint in that regard
   is not justified.

          Before we part with this appeal, we may dispose ·of two other
E   minor contentions of the appellant. Counsel for the appellant submits
    that as the' appellant has been found not entitled to use the imported
    material in the production of SMX, it is curious that by the impugned
    order the appellant has been given an option to pay in lieu of the
    confiscation of the imported materials a fine of Rs.19,00,000 and clear
    the goods into the town. Counsel submits that this shows that the
F   appellant is entitled to use the imported material for the production of
    SMX. This contention is devoid of merit and is fit to be rejected on the
    face of it. The appellant may have been allowed to clear the goods on
    payment of a fine in lieu of confiscation, but that does not mean that
    the appellant would be entitled to use the goods for the manufacture of
    SMX in violation of the industrial licence. The appellant may sell the
G   goods to some other person but, surely, it cannot use it in its factory
    for the manufacture of SMX.

        The other contention of the appellant is that as the capacity of
  'the appellant to manufacture SMX has been raised from 18 tonnes to
   45 tonnes per annum, there is no sense in confiscating the imported
H goods. This contention is equally devoid of merit. It may be that the
      ROCHE PRODUCTS v. COLLECTOR OF CUSTOMS [DUTT, J.]           509

manufacturing capacity of the appellant has been increased, but there    A
is nothing to show that the Central Government has permitted the
appellant to manufacture SMX with imported isoxamine. The appel-
lant may go on manufacturi.Ilg SMX from indigenous materials and the
manufacturing capacity of the appellant may have been increased from
18 tonnes to 45 tonnes for the manufacture of SMX from indigenous
                                                                         B
materials, but these facts are quite irrelevant and have no bearing on
the question with which we are concerned. The contention is rejected.
No other points have been urged on.behalf of the appellant.

    For the reasons aforesaid, the appeal.is dismissed. There will,
however, be no order as to costs in this appeal.             ·
                                                                         c
R.S.S.                                              Appeal dismissed.