1963 (5) TMI 66 - HC - Indian Laws

Summary

Issues Involved:

1. Importing a class of goods different in quality and shape from that permitted.
2. Mis-declaration of the value of goods.
3. Under-valuation resulting in loss of duty to the Government.
4. Whether duty is payable on goods confiscated and released on payment of a fine.

Issue-wise Detailed Analysis:

1. Importing a Class of Goods Different in Quality and Shape from That Permitted:

The respondent obtained a licence under the Import and Export Control Act, 1947, for importing cotton velvets. However, the Customs Authorities found that the goods imported were artificial silk velvet, which was different from the permitted cotton velvet. Additionally, the goods were not cut to shape as required by the licence. The Collector of Customs took a lenient view on this breach due to previous similar imports and the condition that the respondent had to re-export the goods.

2. Mis-declaration of the Value of Goods:

The respondent declared the value of the imported goods as Rs. 28,501/-, but the actual value was found to be Rs. 43,697.37 np. This mis-declaration led to the imposition of a fine by the Customs Authorities. The Collector of Customs ordered the confiscation of the goods valued at Rs. 15,232.58 (the value and quantity not covered by the licence) under Section 167(8) of the Sea Customs Act, read with Section 3(2) of the Imports and Exports (Control) Act, 1947. Additionally, a fine of Rs. 16,800/- was imposed in lieu of confiscation under Section 167(8), and a fine of Rs. 7,600/- was imposed in lieu of confiscation under Section 167(37) for mis-declaration.

3. Under-valuation Resulting in Loss of Duty to the Government:

The under-valuation of the goods resulted in a loss of duty amounting to Rs. 15,232.58 np. The Customs Authorities declined to release the goods unless the duty payable on the goods was also paid. The respondent filed applications under Article 226 of the Constitution for quashing the order of confiscation and for directing the Collector of Customs to release the goods on payment of the fine but without payment of duty. The learned Judge rejected the application to quash the order of confiscation but held that there could be no imposition of duty on goods confiscated and released on payment of a fine in lieu of confiscation.

4. Whether Duty is Payable on Goods Confiscated and Released on Payment of a Fine:

The central issue in the appeal was whether duty could be imposed on goods confiscated and released under Section 183 of the Sea Customs Act. The Customs Act, 1962, which came into force on 2-2-1963, provides under Section 125(2) that any fine imposed in lieu of confiscation will be in addition to duty. However, the import in this case occurred before the new enactment.

Under Section 20 of the Sea Customs Act, 1878, customs duties are levied on goods imported by sea. The liability to duty attaches the moment the goods cross the customs frontier. The ad judgment of confiscation can occur only after the goods are imported. If confiscation is avoided by payment of a fine under Section 183, the liability to duty remains, as the goods continue to belong to the importer. The learned Judge's view that goods released on payment of a fine in lieu of confiscation cannot be subjected to import duty was not accepted. It was held that the imposition of a fine in lieu of confiscation results in the release of the property, and the goods remain liable to duty as they continue to belong to the importer.

The argument that the penalty imposed should include the duty was rejected. The authority to levy import duty may not be the same as the one adjudging confiscation. The Customs Authorities were justified in declining to deliver the goods unless the duty was paid.

Conclusion:

The appeal was allowed, and it was held that the goods were liable to customs duty despite the imposition of a fine in lieu of confiscation. The respondent was ordered to pay the costs of the appellant.