1971 (2) TMI 128 - HC - Customs

Summary

Issues Involved:
1. Whether the goods in question were dutiable goods.
2. Whether the alleged misdeclaration of value in the shipping bills was material under Section 113(i) of the Customs Act, 1962.
3. Whether there was an obligation on the petitioner to declare the value based on the price paid by the ultimate foreign buyer.
4. Whether Section 114(ii) of the Customs Act, 1962 could be applied for imposing penalties in this case.

Detailed Analysis:

1. Whether the goods in question were dutiable goods:

The primary issue was whether the goods in question were "dutiable goods" under the Customs Act, 1962. The court referred to Section 2(14) of the Act, which defines "dutiable goods" as any goods chargeable to duty and on which duty has not been paid. The court noted that the goods must fulfill two conditions: they should be chargeable to duty and the duty should not have been paid. The court held that since the duty had been paid and refunded, the goods were not dutiable at the time of export. The court rejected the respondent's argument that the expression "and" in the definition should be read as "or" to align with the legislative intent, stating that such an interpretation would render the first part of the definition redundant and lead to absurdity. Therefore, the court concluded that the goods were not dutiable, and Section 113(i) of the Customs Act, 1962, would not be attracted.

2. Whether the alleged misdeclaration of value in the shipping bills was material under Section 113(i) of the Customs Act, 1962:

The court examined whether the alleged misdeclaration of value was a "material particular" under Section 113(i) of the Customs Act, 1962. The court held that "material" must refer to particulars relevant to the Customs Act, which primarily concerns levying and realizing duty and preventing the exportation or importation of prohibited goods. Since the alleged misdeclaration did not affect duty payment or involve prohibited goods, it was not material for the purposes of the Customs Act. The court rejected the respondent's argument that any violation of the Foreign Exchange Regulation Act would also involve a violation of Section 50(2) of the Customs Act, 1962. Therefore, the court concluded that the alleged misdeclaration did not attract the provisions of Section 113(i), and the notice was liable to be quashed on this ground.

3. Whether there was an obligation on the petitioner to declare the value based on the price paid by the ultimate foreign buyer:

The petitioner argued that there was no obligation to declare the value based on the price paid by the ultimate foreign buyer. The court referred to Section 14(a) of the Customs Act and the definition of "value" but did not find it necessary to decide this issue. The court noted that the declaration of value for foreign exchange purposes was not material for the Customs Act, 1962.

4. Whether Section 114(ii) of the Customs Act, 1962 could be applied for imposing penalties in this case:

The court examined whether Section 114(ii) of the Customs Act, 1962, could be applied to impose penalties. The section provides for a penalty not exceeding five times the duty sought to be evaded or Rs. 1,000, whichever is greater. Since no duty was being evaded in this case, the court held that the section could not be applied as a comparative assessment was not possible. Therefore, the notice was liable to be quashed on this ground as well.

Conclusion:

The court concluded that the show cause notice dated 10th July 1970 was liable to be quashed on the grounds that the goods were not dutiable and the alleged misdeclaration was not material under the Customs Act, 1962. The court issued appropriate writs in the nature of certiorari and mandamus, restraining the respondents from proceeding with the said notice. The rule was made absolute to the extent indicated, and there was no order as to costs. The operation of the order was stayed for five weeks.