Goods Cleared for Re-export: No Confiscation or Penalty Due to Lack of Misdeclaration and Trade Violation Evidence.

The HC dismissed the Revenue's appeals, affirming the CESTAT's decision. It held that the goods were not liable for confiscation under Section 111(d) or 111(m) of the Customs Act, 1962, as no violation of Section 11 of the Foreign Trade Act was established, nor was there evidence of misdeclaration. The respondent was permitted to re-export the goods, and no penal action under Section 112 was warranted.

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Issues Involved:
1. Whether the goods are liable for confiscation under Section 111(d) of the Customs Act, 1962, read with Section 11 of the Foreign Trade (Development & Regulation) Act, 1992.
2. Whether the goods are liable for confiscation under Section 111(m) of the Customs Act, 1962 for misdeclaration.

Issue-wise Detailed Analysis:

Issue 1: Confiscation under Section 111(d) of the Customs Act, 1962

Section 111(d) of the Customs Act, 1962 deals with the confiscation of goods imported contrary to any prohibition imposed by or under the Act or any other law for the time being in force. The Revenue contended that the goods were imported in violation of Section 11 of the Foreign Trade (Development and Regulation) Act, 1992, which mandates that no import shall be made except in accordance with the provisions of the Act, rules, and the export and import policy in force.

The High Court observed that the Commissioner of Customs and Central Excise did not mention any violation of Section 11 in the show cause notice. The learned CESTAT also noted that no notice of confiscation was issued under Section 111(d). Both authorities concluded that there were no restrictions on the import of the goods, and they were freely importable. The High Court held that the Revenue could not raise a new point in the second appeal, as it did not have a foundation in the pleadings and did not emerge from the findings of fact reached by the lower authorities. Therefore, the High Court concluded that the goods were not liable for confiscation under Section 111(d).

Issue 2: Confiscation under Section 111(m) of the Customs Act, 1962 for Misdeclaration

Section 111(m) of the Customs Act, 1962 pertains to the confiscation of goods that do not correspond in respect of value or any other particular with the entry made under the Act. The Revenue argued that the respondent was part of a conspiracy to misdeclare the goods to evade customs duty. However, the High Court noted that no show cause notice was issued to the respondent alleging conspiracy or fraud. The CESTAT found that the respondent's actions, such as changing the description of the goods at the request of a broker, were insufficient to invoke Section 111(m), as the word "Entry" in the section is restricted to a bill of entry, which was not filed in this case.

The High Court referred to the Supreme Court's decision in Union of India v. Sampat Raj Dugar, which held that an exporter retains ownership of goods if the importer abandons them. The CESTAT concluded that the respondent, as the supplier, could not be assumed to be part of a conspiracy to import the goods fraudulently. The High Court agreed with the CESTAT's reliance on the case of Pacific International Traders, where re-export of goods was permitted in similar circumstances. The High Court upheld the CESTAT's decision that confiscation under Section 111(m) was not warranted, and consequently, no penal action under Section 112 of the Customs Act, 1962 could be taken.

Conclusion:

The High Court found no merit in the Revenue's appeals and dismissed them, affirming the CESTAT's decision to set aside the order of confiscation and permit the respondent to re-export the goods.

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