In the case of Commissioner of Customs v Kamalabhai, Hon’ble Madras High Court held that the exported goods u/s 113 can’t be confiscated but the penalties in section 114 related to “Attempt to make exports” will be applied as “Attempt” is a step to “actual export”. Therefore, the argument that section 114 could only be applied when there is an “attempt to export” could not go into the favour of Assessee.
Facts of the Case
In this case there was an import of several tonnes of Cassia duty free under DEEC Scheme against advance licence. In the course of investigation, it was found by the authorities that instead of exporting the cassia oil, to fulfill the export obligation, there was export of castor oil mixed with certain additives with the help of supporting manufacturer and transporter and clandestinely disposed the cassia so imported in the local market.
In the show cause notice it was alleged that there is a clear misdeclaration of the description of the goods entered for exportation and exported as such and the goods appeared to have been rendered liable for confiscation under Section 113(1) of the Customs Act, 1962 read with Section 50(2). Also, the Custom House Agent attempted to export the goods improperly and hence they are liable for penal action under section 114(i) of Customs Act, 1962 also read with Section 147 of the Customs Act, 1962 wherein there is an inherent liability on the agent on behalf of the exports.
Order of the Adjudicating Authority
The Adjudicating Authority observed that as the exporter had exported the goods by misdeclaration, which were already exported were liable for confiscation under Section 113(i) of the Customs Act, 1962 read with Section 50(2) of the Customs Act, 1962 and also under Section 113(d) of the Customs Act, 1962 read with Section 18(1)(a) and Section 67 of the Foreign Exchange Regulations Act read with Section 3(3) of Foreign Trade (Development & Regulation) Act, 1992. Also, the person having Power of Attorney for Respondents conspired and managed to export Castor Oil mixed Cinnanic Aldehyde in the guise of Cassia Oil and hence the respondents were held liable for penal action under Section 114 of the Customs Act, 1962.
Though the Castor Oil has been exported under the Shipping Bill in the guise of Cassia Oil, inspite of the fact liability for confiscation exists, the confiscation can’t be done as these goods were not available for confiscation. Therefore, there was no point in ordering confiscation of the same. However the liability for penal action on the exporter was upheld.
Held by Hon’ble Tribunal
The Hon’ble Tribunal observed after reading section 113 that the legislative intent behind is “attempt to export” as the section mentions about “confiscation of goods attempted to be improperly exported”. When the above provision was enacted, Parliament was conscious of the fact that goods already exported out of Indian territory was incapable of being confiscated. For this reason the Hon’ble Tribunal held that the provisions of Section 113 cannot be invoked for confiscation of goods already exported. Section 113 can be pressed into service only to confiscate goods which were “attempted to be exported” in violation of any of the prohibitions mentioned in the various clauses thereof. The confiscation order in respect of the subject goods is, therefore, bad in law. Consequently, the order of penalty on the exporter under Section 114 was not sustainable.
Held by the Hon’ble High Court
The Hon’ble High court relied Full Bench of the Calcutta High Court in the case of Euresian Equipment and Chemicals Ltd. and others V. Collector of Customs and others, where it was held that even in respect of goods already been exported, the provisions of Section 113(d) of the Customs Act would stand attracted and Penalty under Section 114 is justified.
Section 113(d) provides that any goods attempted to be exported or brought within the limits of any customs area for the purpose of being exported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force shall be liable to be confiscated.
The reasoning of the Full Bench of the Calcutta High Court is that the goods are liable for confiscation as soon as an attempt is made. If the goods have already been exported, the question of confiscation will not arise and that has been rightly observed by the Adjudicating Commissioner. Hence, the Adjudicating Commissioner had rightly held that since the goods are not available for confiscation, there is no point in ordering confiscation. Therefore, imposing penalty in terms of Section 114 of the Customs Act, is in accordance with the provisions of the Customs Act.
The intention of the Statute is to proceed against the offender to export goods contrary to the provisions of the Act. In this case, the finding of the Commissioner is that the goods have been exported contrary to the prohibition imposed by law. Hence, an attempt has been made contrary to the prohibition, which is already culminated in export and consequently penalty was rightly imposed by the Adjudicating Authority.
Therefore, the Hon’ble High Court held that the Tribunal was in error in coming to the conclusion that since the goods have already been exported and not available for confiscation, there could not be an order of confiscation under Section 113 of the Customs Act and hence, Section 114 of the Customs Act will not be sustainable.
Accordingly, the Appeals of the Revenue were allowed.