TaxTMI 
TaxTMI 
2002 (5) TMI 67
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.... of the petitioner : 2.Mr. Mullick, learned Counsel for the petitioner, has challenged the action of the Customs Authorities on various grounds. According to him, the Customs Authority purported to act on the basis of suspicion as is reflected from the notices issued by the Appraiser, Special Investigation Branch, Dock Intelligence Unit (Appraising) contained in Annexure "P-5" series. Relying on those notices, he contends that the said notice was issued on the basis of suspected over-invoicing. Thus, the basis of off-loading the said goods and initiating the investigation purporting to 100% examination, was founded purely on suspicion. According to him, such investigation can be carried out under Section 110 of the Customs Act, 1962, if the proper officer has reason to believe that the goods are liable to confiscation. He points out that suspicion is not a reason to believe. He relied on the decision in State (Collector of Central Excise) v. Tapan Kumar Shome, 1986 (23) E.L.T. 42 (Orissa) (para-16); Smt. Pushpa Devi v. Union of India, 1984 (15) E.L.T. 72 (Raj.) (Head Note) and Income Tax Officer v. Lakhmani Mewal Das, 103 ITR 437 (S.C.) at page 448. Relying on these decisions, he ....
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....e material particulars with the entry made in the declaration. The question of drawback also does not come at this stage as contemplated in clause (ii). Clause (k) also cannot be applied since this covers cases where the goods after clearance are not loaded for exportation. Inasmuch as, in this case, after clearance, the goods have been loaded. Therefore, the goods cannot be confiscated. If the goods cannot be confiscated, it neither can be seized nor can be subjected to 100% examination. 2.3On similar ground Section 114, Customs Act, has also no manner of application in the present case. Section 114 applies in a case for attempt to export goods improperly. On the same analogy that the goods have since been exported, 114 is inapplicable. 2.4The other provision for confiscation emanates from Section 106, Customs Act, which provides the power to stop and search conveyance. In the present case, this provision is alleged to have been applied. This provision can be exercised only when there are reasons to believe. On the same ground that this case was initiated on the basis of suspicion, Mr. Mullick contends that the stoppage and search is wholly without jurisdiction. Then again this ....
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.... 2.10The Customs Act being a fiscal statute, it has to be interpreted strictly. Unless the law prescribes, the Customs Authority cannot be permitted to proceed with the proceedings. He relied on Commissioner of Sales Tax U. P. v. Modi Sugar Mills Limited, AIR 1961 SC 1047. He had also relied on Lucas TVS, Madras v. Assistant Collector Customs, Madras, 1987 (28) E.L.T. 266 (Mad.). On these grounds he prayed that the writ petition be allowed and the purported seizure, the purported investigation and the process for confiscation, if any, should be quashed and the goods should be exported again. Submission on behalf of the shipping agent : 3.The learned Counsel appearing on behalf of the shipping agent of the petitioner, S. K. Kanjilal, who is added as party, supported the contention of Mr. Mullick. He pointed out that once the goods are exported and leaves the port, the title to the goods passes on to the person to whom the goods are exported or in other words the importer of the exported goods. Therefore, the exporter cannot be held liable in respect of those goods. Submission on behalf of the Customs Authority : 4.Mr. Ghosh, learned Counsel for the Customs Authority, points out ....
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.... and was rightly seized. 4.4He relies on the decision in Assistant Collector of Customs, Special Section v. United India Minerals Limited, AIR 1976 Cal. 21, where a Division Bench of this Court had held that any act or omission before export, if becomes liable for any offence, then it does not cease to be an offence nor it is wiped out after the actual export. This decision is supported by a judgment of the Full Bench of this Court in Euresian Equipment And Chemicals Limited and Others v. Collector of Customs and Others, 1980 (6) E.L.T. 38 (FB) (Cal.). 4.5He contends that if a clearance order is obtained by fraudulent means, the show-cause notice for confiscation of the case cannot be debarred. In support he relies on the decision in Union of India v. Jain Shudh Vanaspati Limited, 1996 (86) E.L.T. 460 (S.C.). Relying on Union of India v. Tata Engineering & Locomotive Company Limited, 1997 (96) E.L.T. 209 (S.C.), he contends that once a proceeding for investigation is initiated, it should be allowed to be completed, it cannot be prevented at the threshold. On these grounds, he contends that the writ petition should be dismissed. Mr. Ghosh has also pointed out from the statement ma....
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....ity of the goods actually contained as compared to the declared quantity. After 100% examination, it was found that there were shortages of quantity and that in some cases, the packages consisted of old and used/soiled unserviceable garments of no commercial value and not corresponding to the declared description of the goods said to be contained in the container. It was further found that those goods were over-invoiced for availing undue export incentives. It is also pointed out that the said Sri Rajan Ghoshal could not be found at the address declared in the shipping bills and on the IEC Certificate. M/s. Shyam Sundar Enterprises does not exist at the address declared on the shipping bill and the IEC Certificate. The address appears to be in occupation of a third party. Improper attempt to export : 7.In Chapter VII, clearance of imported goods and exported goods are dealt with. It spares only two sections namely 50 and 51, Customs Act, for clearance of exported goods, while Section 44 to 49 dealt with imported goods. Section 50 provides that the exporter of any goods shall make entry of such goods by presenting to the Proper Officer, if the goods are to be exported in a vessel ....
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....can be resorted to. Can investigation be stopped at the threshold ? 8.The investigation, if initiated, cannot be nipped in the bud and be prevented simply on the basis of certain technicalities. If the Court is satisfied that there is certain material on the basis whereof, a prima facie case could be made out, the investigation cannot be forestalled. This scope of forestalling investigation is very limited. It can be done so, only when it appears that it is without jurisdiction or that it is mala fide or that no ingredient is made out to establish a prima facie case. 8.1The investigation should not be thwarted by the Court, if some ingredients of an offence are available on the records before the Court, as was held in P.N. Mishra v. State of U.P. (Criminal Misc. App, No. 6486 of 1997) disposed of by me on 24th of May, 2000. 8.2The same principle with regard to the quashing of F.I.R. can be attracted and applied in respect of initiation of an investigation by the Customs Authority in a case where there are reasons to believe that there are some violations of the Customs Act. The extent of interference in such a case was crystallized in State of West Bengal v. Swapan Kumar Guha A....
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....s a futile attempt to close the chapter before it was unfolded itself. It will be for the Trial Court to examine the matter on the materials produced on behalf of the prosecution. The exercise cannot be performed either by the High Court or by the Apex Court." Whether the investigation should proceed ? 10.We will discuss the extent of reason to believe having regard to the facts of this case, at appropriate stage. But, now we may refer to the materials placed before this Court, in order to examine as to whether the investigation should be allowed to proceed or not. Admittedly, in the present case, some plastic dot pens have been exported. The value of such dot pen was alleged to be at the extreme higher side. Specimen of such dot pens was produced before this Court. But this Court is not an expert. It did not undertake to assess the value thereof. The investigating authority may value it. If it is alleged that it cannot be valued at such higher rate, this Court cannot throw away the said contention, simply because the petitioner is asserting that it was rightly valued. It is a matter of investigation. Therefore, the investigation should be allowed to ascertain the same. This valu....
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....r Officer and on the basis of such materials received on investigation on developed information may be factors or ingredients for forming a belief, which can very well be said to be reasonable. It cannot be thrown out on technical grounds. That apart, on examination when materials are available to support such reason to believe and that the belief appears to have some support from the materials disclosed, then the Court cannot stop investigation on the ground that it was incompetent, since there was no reason to believe in existence, at the time when the investigation was undertaken. If on investigation, it appears that there are some materials, which support the reason to believe, then the Court cannot interfere, even though these materials might not have been there with the authority to support the reason to believe. The information that was developed through enquiry can also construe reason to believe which has to discover facts on information. Therefore, I do not think it a fit case, where the investigation can be thwarted. 11.1In State (Collector of Central Excise) v. Tapan Kumar Shome, 1984 (23) E.L.T. 42 (Orissa); Smt. Pushpa Devi v. Union of India, 1984 (15) E.L.T. 72 (Raj....
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....hich escaped assessment, then the Income Tax Officer has jurisdiction to re-open the same. It is not necessary that such reason should be fool proof, but it must be such that on the basis of which a reasonable man can conclude about the existence of some ingredients with regard to the infraction. The belief is that of an officer. Sufficiency of the reasons for forming belief is not for the Court to judge. However, the assessee could establish that there, in fact, existed no belief or that the belief was not bona fide or was based on vague, irrelevant and non-specific information. The Court in such event can examine whether there was any material available on record from which requisite belief could be formed. It had also pointed out that subsequent information can also be relied upon. As discussed above, in the present case, it appears that the Customs Authority had its Special Intelligence Branch and Revenue Intelligence Department, which had gathered materials through enquiry and investigation and had developed the same. Upon such information, which the authority may consider reliable and relevant, one can form an opinion one way or the other. The Authority having formed an opini....
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....lied on Lucas TVS, Madras v. Assistant Collector of Customs, Madras And Others, 1987 (28) E.L.T. 266 (Mad.) to contend that once the goods are loaded in the vessel after they were duly cleared under Section 51, Customs Act, the goods must be deemed to be goods exported for the purpose of Section 75 of the Customs Act. It would be enough for the exporter to show that the goods were out of his control and were on their way to the country of destination. But, this interpretation was given in relation to the effect of Section 75, but not in relation to an investigation contemplated under Section 106, 110 or 113. Thus, the said decision does not help us in the facts and circumstances of the present case. Application of Sections 106, 110 and 113 : 13.Thus, as soon the said goods become subject to confiscation under Section 113, Customs Act, Section 106 can very well be attracted. As soon the goods appear to be liable to confiscation, it comes within the definition of smuggling defined in Section 2(39). Section 2(39) includes any act or omission that render the goods liable to confiscation under Section 113, as smuggling. Since these goods are liable to be confiscated under Section 113 ....
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....ave ascribed to attempt to export improperly in Section 113, Customs Act, does not seem to travel beyond the strict interpretation of the fiscal statute. We may remember that attempts are being made to obtain undue advantage of a scheme by over-invoicing and under-packaging. This is not only jeopardizing the export prospect for which the incentives are allowed, but also costing the state exchequer. Unscrupulous exporters are draining out the state exchequer by unscrupulously realising duty drawback facilities. Over-invoicing, under packaging or exporting of goods of no value, are counter productive to export promotion. The duty drawback policy is conceived only to promote export and earn foreign exchange. The over-invoicing or shortage of packages or exportation of goods without any commercial value, would not enable earning of foreign exchange and as such the incentive is being misused. This is putting the state to double jeopardy, by draining out the state exchequer and, at the same time, non-earning of foreign exchange and even jeopardizing the whole export prospect. 15.1In Assistant Collector of Customs, Special Section v. United India Minerals Limited, AIR 1976 Cal. 21, the v....
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....s held that the authority has every right to make appropriate enquiries. High Court is not expected to control the mode and manner in which the enquiry is to be completed. Such a remedy is available by way of an appeal or revision, if there be any. High Court should not tinker with it. Passing of property not a bar : 16.In the present case, one ground was taken that the goods after it was exported, the property has since passed to the importer. Under the Bill of Lading Act, unless the master's receipt is issued, the title cannot be said to have passed. Nothing has been shown by production of any document, which results in passing of the title to the goods. Therefore, the exporter cannot avoid its liability. That apart, it appears that the exporter has made himself scarce. Even when Mr. Mullick was asked to produce his client, Mr. Mullick did not agree to do so on the ground that if he is produced, he will be immediately arrested by the Custom Authorities. At the same time, the addresses were alleged to be fictitious. That apart, it is alleged that the petitioner has described himself with the name in different spellings. However, we need not go into those questions. These are sub....