Attempted export in breach of deemed prohibition can still trigger confiscation and penalty despite later actual export.
Contravention of the foreign exchange restriction was treated as attracting Customs Act liability because Section 23A deems the restriction under Section 12(1) of the Foreign Exchange Regulation Act, 1947 to be a restriction under Section 11 of the Customs Act, 1962. Liability to confiscation under Sections 113 and 114 arises at the stage of an attempted export made contrary to the prohibition, and the subsequent actual export of the goods does not extinguish that accrued liability. Goods already exported may still be regarded as export goods for the purpose of confiscation and penalty where the prohibited attempt had already occurred.
Issues: (i) Whether a contravention of Section 12(1) of the Foreign Exchange Regulation Act, 1947 attracts Sections 113 and 114 of the Customs Act, 1962 by virtue of Section 23A, even where the goods had already been exported. (ii) Whether goods which have actually been exported can still be treated as export goods liable to confiscation and as the basis for penalty under the Customs Act, 1962.
Issue (i): Whether a contravention of Section 12(1) of the Foreign Exchange Regulation Act, 1947 attracts Sections 113 and 114 of the Customs Act, 1962 by virtue of Section 23A, even where the goods had already been exported.
Analysis: Section 23A deems the restriction under Section 12(1) of the Foreign Exchange Regulation Act, 1947 to be a restriction imposed under Section 11 of the Customs Act, 1962, and therefore the Customs Act provisions operate accordingly. On a proper construction of Sections 113 and 114, liability to confiscation arises when export goods are attempted to be exported contrary to a prohibition, and personal penalty follows when a person's act or omission renders the goods liable to confiscation. That liability is not extinguished merely because the attempted export subsequently succeeds and the goods leave India.
Conclusion: Yes. Sections 113 and 114 of the Customs Act, 1962 are attracted by virtue of Section 23A where there is a contravention of Section 12(1) of the Foreign Exchange Regulation Act, 1947, even if the goods have already been exported.
Issue (ii): Whether goods which have actually been exported can still be treated as export goods liable to confiscation and as the basis for penalty under the Customs Act, 1962.
Analysis: Export goods under Section 2(19) are goods which are to be taken out of India, and goods remain export goods at the stage when they are attempted to be exported contrary to prohibition. Section 113 deals with the incurring of liability to confiscation, not the physical act of confiscation itself. Actual export after the prohibited attempt does not wipe out the accrued liability, and the notice under Section 114 is therefore not without jurisdiction.
Conclusion: Yes. Goods already exported can still be treated as export goods for the purpose of liability to confiscation and penalty under Sections 113 and 114 of the Customs Act, 1962.
Final Conclusion: The challenge to the customs show cause notice failed, the notice was held maintainable, and the appeal was dismissed.
Ratio Decidendi: Where export is attempted in contravention of a prohibition deemed under Section 23A of the Foreign Exchange Regulation Act, 1947 to be imposed under Section 11 of the Customs Act, 1962, liability under Sections 113 and 114 accrues at the stage of the attempt itself and is not erased by the subsequent actual export of the goods.