2025 (8) TMI 1410 - AT - Customs

Seized shark fins not confiscable for attempted export absent evidence; value re-determination rejected; penalty under Section 114(i) set aside

Global Impex Trading Versus The Additional Director General, (Adjudication) Mumbai

Global Impex Trading Versus The Additional Director General, (Adjudication) Mumbai - TMI ISSUES PRESENTED AND CONSIDERED 1. Whether the impugned order correctly held the seized shark fins to be absolutely confiscable under Section 113(d) of the Customs Act, 1962 by treating the storage as an 'attempt to export'. 2. Whether the original authority properly re-determined the value of the seized shark fins (at USD 1,000-1,500/kg) consistent with the Customs Valuation (Determination of Value of Export Goods) Rules, 2007 and Section 14 of the Customs Act, 1962. 3. Whether imposition of penalty under Section 114(i) of the Customs Act, 1962 on the proprietor is sustainable where confiscation under Section 113 was ordered. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Confiscation under Section 113(d): Whether storage amounted to 'attempt to export' Legal framework: Section 113(d) provides for confiscation of goods 'attempted to be exported ... contrary to any prohibition' under the Act; the concept of 'attempt' requires intention plus an actus reus proximate to commission (intention, preparation and a preliminary act beyond mere preparation). Precedent treatment: The Tribunal reviewed authoritative exposition of 'attempt' from the Supreme Court (Malkiat Singh) and Tribunal jurisprudence (V. Thiruvalagan), stressing the distinction between mere preparation and acts constituting an attempt. Interpretation and reasoning: The Tribunal examined facts: goods stored at appellant's premises (Mumbai and Veraval), absence of documentary evidence (shipping bills, proforma invoices, communications), lack of connection to a customs area or port, and no evidence of steps constituting a proximate act toward export. Reliance placed in the impugned order on cases where seizure had factual nexus to movement toward a port or customs border - facts not present here. Applying the test from Malkiat Singh and the four-part formulation of attempt, the Tribunal found that mere storage and past exports do not demonstrate an overt act dangerously proximate to export; evidence fell into the category of preparation rather than attempt. Ratio vs. Obiter: Ratio - An act of storing goods at non-customs premises without documentary or overt acts linking them to the customs area does not, per se, constitute an 'attempt to export' for purposes of Section 113(d). Obiter - Observations distinguishing factual matrices of cited cases. Conclusion: Confiscation under Section 113(d) could not be sustained because the Revenue failed to prove acts beyond mere preparation or sufficient proximate acts evidencing intention to export. Issue 2 - Redetermination of value: Whether reliance on a retracted statement and absence of corroboration warranted valuation at USD 1,000-1,500 per kg Legal framework: Valuation of export goods must follow the Customs Valuation (Determination of Value of Export Goods) Rules, 2007 read with Section 14, requiring proper evidentiary basis and adherence to statutory valuation principles. Precedent treatment: Tribunal and Supreme Court authority summarized in submissions emphasise that valuation cannot rest solely on uncorroborated or retracted statements and that proper documentary proof and follow-up are needed to establish transaction value. Interpretation and reasoning: The adjudicating authority re-determined value based on a statement attributing high Hong Kong prices, but that statement was retracted by the declarant alleging coercion. The Tribunal noted absence of details in the statement (period, quantity, quality), absence of follow-up enquiries, absence of corroborative statements from co-noticees, and no documentary evidence (shipping bills or declared export values). Given these gaps and the retraction, reliance on that statement contravened the statutory valuation regime. Ratio vs. Obiter: Ratio - Valuation cannot be redetermined at a substantially higher rate based solely on a retracted, uncorroborated statement; statutory valuation principles require corroborative evidence and proper inquiry. Obiter - Remarks on the need for follow-up questioning and specific transactional details when using declarant's price statements. Conclusion: The re-determination of value at the higher USD rates was unsustainable; the impugned valuation is contrary to the valuation rules and Section 14. Issue 3 - Imposition of penalty under Section 114(i) where confiscation was ordered Legal framework: Section 114(i) penalty provisions operate in the context of goods liable to confiscation under Section 113; imposition of penalty is contingent upon goods being liable for confiscation. Precedent treatment: The Tribunal applied statutory linkage between confiscation and penalty and earlier authorities addressing that penalty cannot be sustained where foundational confiscation is unsupported. Interpretation and reasoning: Having held that confiscation under Section 113(d) was not made out, the Tribunal reasoned that the predicate for invoking Section 114(i) did not exist; hence the penalty imposed on the proprietor could not stand. Ratio vs. Obiter: Ratio - Penalty under Section 114(i) cannot be sustained where the statutory basis for confiscation under Section 113 is absent. Obiter - None material beyond application of statutory nexus. Conclusion: The penalty imposed under Section 114(i) on the proprietor is unsustainable and must be set aside as it depends on a valid confiscation order which was not established. Cross-references and Overall Conclusion Cross-reference: Issues 1 and 2 are interrelated - deficient proof of attempt to export (Issue 1) undermines both confiscation and the evidentiary basis for valuation (Issue 2); Issue 3 (penalty) is dependent on the outcome of Issue 1. Overall conclusion: The Tribunal set aside the impugned order insofar as it ordered confiscation, re-determined value at the higher rate, and imposed penalty on the proprietor; the appeal was allowed in favour of the appellant on these points. The Tribunal's determinations are based on statutory construction of 'attempt', applicable valuation rules, and the dependency of penalty on valid confiscation.