TaxTMI 
TaxTMI 
2015 (10) TMI 1286
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....y exported'?" 2. After hearing the arguments of both sides, on the previous occasion, we thought it fit to re-frame the questions of law. Accordingly, the questions of law admitted by this Court are reframed as follows: "1. Whether the Tribunal was correct in holding that Section 113 of the Customs Act cannot be invoked for confiscation of goods already exported? 2. Whether the Tribunal was justified in setting aside the order of penalty on the exporter under Section 114 of the Customs Act?" 3. We have heard both sides at length on the re-framed questions of law. 4. The brief facts leading to the present case are as follows: Based on the intelligence gathered, the Officers of the DRI visited the premises of M/s.K.Kamala Bai, a proprietory concern run by Shri.C.Kantilal, in the name of his wife Smt.Kamala Bai, who had imported several tonnes of Cassia duty free under DEEC Scheme against advance licence issued in their favour. In the course of investigation, it was found by the authorities that instead of exporting the cassia oil, to fulfill the export obligation, the importers exported castor oil mixed with certain additives with the he....
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.... No.P/K 3528067 dated 17.3.92 were not used in the process of extracting Cassia Oil for export. Instead 735 Kgs of cheap castor oil mixed with synthetic oil under the guise of cassia oil had committed. This appears to operate as a prohibition under section 113(d) of Customs Act, 1962 read with section 3(3) of Foreign Trade (Development and Regulation) Act, 1992 and the rules made there under by virtue of powers conferred on Central Government under Section 19 of Foreign Trade (Development & Regulation) Act, 1992; d. that the exporters M/s.K.Kamala Bai, Madras, its proprietrix Mr.K.Kamala Bai, a. there is a clear misdeclaration of the description of the goods entered for exportation in the shipping bill No.1755 dated 9.1.94 and exported as such and the goods appeared to have been rendered liable for confiscation under section 113(i) of Customs Act, 1962 read with section 50(2) ibid; b. that as per section 18(1) (a) of Foreign Exchange Regulations Act, 1973, there is a prohibition on export of goods unless the exporter concerned furnished correct material particulars in the prescribed form. In the present case, the details of description ....
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....are liable for penal action under section 114(i) of Customs Act, 1962 also read with Section 147 of the Customs Act, 1962 wherein there is an inherent liability on the agent on behalf of the exports. 8. Now therefore, M/s. K. Kamala Bai, Madras, the proprietrix Mrs. K. Kamala Bai, Shri. C. Kantilal, M/s. Sha Devi India, Madurai, Shri. K.R. Ramesh Babu K.R. Ravi Shankar Babu, M/s.Deluxe Road lines, Madras Lalith D.Shah and M/s. S. Ukkirapandian Pillai & Sons, Tuticorin are hereby required to Show Cause to the Commissioner of Customs, No.4A, Dindigul Road, Trichy within 30 (thirty) days of receipt of this notice as to why; i) the goods covered by the shipping Bill No:1758 dated 19.1.94 valued at Rs. 42,51,030 should not be held liable for confiscation under Section 113(i) read with section 50(2) of Customs Act, 1962 and further under Section 113(d) read with Section 3(3) of Foreign Trade (Development and Regulation) Act, 1992 and Section 18 and 67 of Foreign Exchange Regulations Act, 1973; and ii) penalty should not be imposed on them under Section 114 of the Customs Act, 1962." 7. Thereafter, the Adjudicating Authority, after due process of law, ....
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.... Exchange Regulation Act, 1973 read with Section 3(3) of the Foreign Trade (Development and Regulation) Act, 1992 in as much as these goods are not available for confiscation, there is no point in ordering confiscation of the same. However the liability for penal action on the exporter is warranted for this misdeclaration." 8. Aggrieved by the order of the Adjudicating Authority, the appellant as well as the first respondent herein preferred appeal before the Tribunal. 9. The Tribunal, after considering the submissions made on both sides held that once the goods were exported, confiscation under Section 113 of the Customs Act would not arise and as as result, the penalty also would be set at naught. For better clarity, we extract below the relevant portion of the order of the Tribunal: "4. After giving our careful thought to the submissions, we find that the impugned order was passed in adjudication of a show-cause notice pertaining to goods already exported. The assessee has argued, through counsel, that goods already exported were not liable to be confiscated under Section 113 and no penalty relatable to such confiscation was liable to be imposed on th....
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....ns Act, 1973. He further submitted that there is a clear misdeclaration of the description of the goods entered for exportation in the Shipping Bill, the goods are liable for confiscation under Section 113 of the Customs Act. 12. Learned counsel appearing for the respondent/assessee submitted that the goods already exported were not liable for confiscation under Section 113 of the Customs Act. Consequently, the exporter could not be penalised under Section 114 of the Customs Act. 13. Heard learned Standing Counsel appearing for the Revenue and the learned counsel appearing for the assessee and perused the materials placed before this Court. 14. It is seen from the facts narrated that in this case, the exporter had furnished false material particulars in the prescribed form for the export of Cassia Oil. In fact, the investigation clearly proved that what was exported was Castor Oil mixed with certain chemicals. This fact is not in dispute. The question is whether the interpretation of Section 113(d) of the Customs Act, as has been propounded by the Tribunal, can be accepted. The Tribunal came to hold that Section 113 could not be invoked for confiscation ....
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....d the reach of law and no punishment is intended to be inflicted on the dead person or his heirs and legal representatives by imposing any fine or penalty, as they may in no way be liable or responsible for the said act. As we have earlier observed the liability of the goods to confiscation arises under Section 113 (d), as soon as the goods are attempted to be exported and the attempt to export the goods necessarily precedes the actual export of the goods. Goods become liable to confiscation as soon as the attempt is made. There is no provision in the Act to suggest that this accrued liability is wiped out or extinguished with the exportation of the goods. It may be that after the goods had in fact been exported the liability of the goods to be confiscated may not be enforceable by actual confiscation of the goods. Personal penalty of any person who, in relation to the goods, does or omits to do any act which act or omission renders the goods liable to confiscation under Section 113 or abets the doing or omission of such an act has been provided in Section 114. This provision is attracted as soon as the goods incur the liability to confiscation under Section 113 and such liability,....
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....pments and Chemicals Ltd., Calcutta, S/Sri Laxmi Prasad Jajodia, Manick Chand Jajodia and Jugal Kishore Jajodia were the persons concerned for the mis-declaration of the goods and values of the goods exported and hence liable for penal action u/s 114(1) of the Customs Act, 1962, 110. M/s. Euresian Equipments and Chemicals Ltd., Calcutta and its directors S/Sri Laxmi Prasad Jajodia, Manick Chand Jajodia and Jugal Kishore Jajodia were called upon to explain the matter in writing and to show cause to the Collector of Customs, Calcutta, why penal action under Section 114 of the Customs Act, 1962 should not be taken against them. 16. The validity of the above-said show cause notice was challenged by the exporter in a Writ Petition. Learned single Judge dismissed the Writ Petition holding that if the export is made on the basis of incorrect declaration under Section 12(1) of the Foreign Exchange Regulation Act, this will amount to contravention of the Customs Act. On appeal, the matter was referred to the Full Bench and the following questions of law were raised before the Full Bench: "(1) Whether, by virtue of Section 23A of the Foreign Exchange Regulation Act, 1947, the pro....
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....sing any fine or penalty, as they may in no way be liable or responsible for the said act. As we have earlier observed the liability of the goods to confiscation arises under Section 113 (d), as soon as the goods are attempted to be exported and the attempt to export the goods necessarily precedes the actual export of the goods. Goods become liable to confiscation as soon as the attempt is made.There is no provision in the Act to suggest that this accrued liability is wiped out or extinguished with the exportation of the goods. It may be that after the goods had in fact been exported the liability of the goods to be confiscated may not be enforceable by actual confiscation of the goods. Personal penalty of any person who, in relation to the goods, does or omits to do any act which act or omission renders the goods liable to confiscation under Section 113 or abets the doing or omission of such an act has been provided in Section 114.This provision is attracted as soon as the goods incur the liability to confiscation under Section 113 and such liability, as we have earlier held, arises when the goods are attempted to be exported contrary to any prohibition. It is to be noted that at ....
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....cur the liability to confiscation under Section 113 of the said Act. We accordingly answer the second question which came up for consideration before the Division Bench and which has been referred to the Full Bench in the manner indicated above." (Emphasis Supplied) 18. The Full Bench has clearly held that even in respect of goods already been exported, the provisions of Section 113(d) of the Customs Act would stand attracted and Penalty under Section 114 is justified. 19. Section 113(d) provides that any goods attempted to be exported or brought within the limits of any customs area for the purpose of being exported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force shall be liable to be confiscated. 20. The reasoning of the Full Bench of the Calcutta High Court is that the goods are liable for confiscation as soon as an attempt is made. We are in agreement with the said reasoning. 21. For better clarity, Sections 113 and 114 of the Customs Act read as follows: "Section 113. Confiscation of goods attempted to be improperly exported, etc. The following export goods sha....
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.... (l) any specified goods in relation to which any provisions of Chapter IV-B or of any rule made under this Act for carrying out the purposes of that Chapter have been contravened." "114. Penalty for attempt to export goods improperly, etc. Any person, who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under Section 113 or abets the doing or omission of such an act shall be liable,- (i) in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty not exceeding five times the value of the goods or one thousand rupees, whichever is the greater; (ii) in the case of dutiable goods, other than prohibited goods, to a penalty not exceeding five times, the duty sought to be evaded on such goods or one thousand rupees, whichever is the greater; (iii) in the case of goods under claim for drawback, to a penalty not exceeding five times the amount of drawback, claimed or one thousand rupees, whichever is the greater." 22. In the instant case, the goods have already been exported. Hence, ....