Strict construction of Customs Act confiscation and penalty provisions: misdeclaration was not material, and no duty evasion was shown.

For confiscation under Section 113(i) of the Customs Act, 1962, goods must satisfy the statutory definition of "dutiable goods", meaning they are chargeable to duty and duty has not been paid; the Court refused to read the conjunctive wording as disjunctive and held the provision was not attracted on the facts. An alleged misdeclaration of F.O.B. value was not a "material particular" because materiality under the Act is confined to customs duty and control of prohibited goods, not matters relevant only to foreign exchange regulation. As no duty evasion was shown, Section 114(ii) could not be invoked, and the show cause notice was quashed.

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Issues: (i) Whether the goods in question were "dutiable goods" within the meaning of Section 2(14) of the Customs Act, 1962 so as to attract Section 113(i) of that Act; (ii) whether the alleged misdeclaration of F.O.B. value constituted a misstatement of a "material particular" for the purposes of Section 113(i) and could sustain penalty under Section 114(ii) of the Customs Act, 1962.

Issue (i): Whether the goods in question were "dutiable goods" within the meaning of Section 2(14) of the Customs Act, 1962 so as to attract Section 113(i) of that Act.

Analysis: The definition of "dutiable goods" requires that the goods be chargeable to duty and that duty has not been paid. The statutory language was treated as conjunctive, and the Court declined to rewrite it as "or" or "and/or". On the facts, the goods were not regarded as dutiable goods for the purpose of confiscation under Section 113(i).

Conclusion: Section 113(i) was not attracted on the ground that the goods were not dutiable goods.

Issue (ii): Whether the alleged misdeclaration of F.O.B. value constituted a misstatement of a "material particular" for the purposes of Section 113(i) and could sustain penalty under Section 114(ii) of the Customs Act, 1962.

Analysis: A material particular under Section 113(i) must be material to the purposes of the Customs Act, namely levy and collection of customs duty and control of prohibited goods. A declaration relevant only to foreign exchange regulation was held not to be material for the Customs Act. For penalty under Section 114(ii), the provision contemplates a duty sought to be evaded, and on the admitted facts no duty was being evaded.

Conclusion: The alleged misdeclaration did not satisfy the requirement of a material particular, and Section 114(ii) could not be invoked.

Final Conclusion: The impugned show cause notice was quashed and the respondents were restrained from proceeding on its basis, as the notice could not be sustained under the Customs Act on the grounds relied upon.

Ratio Decidendi: For confiscation under Section 113(i) and penalty under Section 114(ii) of the Customs Act, 1962, the statutory conditions must be strictly satisfied; a declaration is material only if it is material to the purposes of the Customs Act, and the definition of dutiable goods cannot be expanded by re-reading the conjunctive statutory language.

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