Wilful misstatement in duty-free aircraft clearance can be inferred from conduct and documents, sustaining confiscation and penalty.

A declaration to Customs that an aircraft was not intended for registration in India was found inconsistent with the surrounding correspondence, purchase agreement, applications to aviation and import authorities, and the bond and bank guarantee, all of which showed an intention to retain and operate the aircraft in India. The misstatement was treated as deliberate in substance because intention may be inferred from the whole course of conduct and contemporaneous documents, and later payment of duty did not erase the earlier false declaration. Rule 58(6)(b) of the Indian Aircraft Rules, 1920 did not protect a case where the aircraft was meant to be registered in India from the outset; confiscation and penalty were upheld, with the penalty reduced.

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Issues: Whether the appellants had the intention to get the aircraft registered in India and made a wilful misstatement to obtain duty-free clearance, thereby attracting confiscation and penalty under the Customs Act.

Analysis: The aircraft was cleared without duty on the basis of a declaration that it was not intended to be registered in India and would be removed within six months. The surrounding correspondence, the purchase agreement, the applications to aviation and import authorities, the permission to operate only for a limited period, and the contents of the bond and bank guarantee showed that the appellants had all along pursued registration and operation of the aircraft in India. The stated declaration to Customs was therefore found to be incorrect. The intention of a party was held to be ascertainable from its acts and the entire transaction, and the later payment of duty did not nullify the earlier misstatement. The existence of Rule 58(6)(b) of the Indian Aircraft Rules, 1920 did not protect a case where the aircraft was intended to be retained and registered in India from the outset.

Conclusion: The misstatement was held to be deliberate in substance, confiscation and penalty were upheld, and the penalty was reduced from Rs. 10 lakhs to Rs. 2 lakhs.

Ratio Decidendi: Intention for customs purposes must be inferred from the whole course of conduct and contemporaneous documents, and a declaration for duty-free clearance that is inconsistent with the actual intended use of the goods amounts to wilful misstatement attracting confiscation and penalty.

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