2002 (5) TMI 67 - HC - Customs

Summary

Issues Involved:
1. Jurisdiction and authority of Customs Authorities to initiate investigation and seize goods.
2. Validity of the actions taken under Sections 106, 110, 113, and 108 of the Customs Act, 1962.
3. Interpretation of "attempt to export" and its implications.
4. Applicability and compliance with Section 124 of the Customs Act.
5. Relevance of the Duty Drawback Scheme in the context of the case.
6. The legitimacy of the summons issued under Section 108 of the Customs Act.

Issue-wise Detailed Analysis:

1. Jurisdiction and Authority of Customs Authorities to Initiate Investigation and Seize Goods:
The petitioner challenged the Customs Authorities' actions, arguing that they were based on mere suspicion rather than "reason to believe," as required under Section 110 of the Customs Act. The petitioner contended that once goods are cleared and exported, the Customs Authority loses jurisdiction to seize or confiscate them. However, the court held that the Customs Authorities have the right to seize goods if there are reasons to believe they are liable to confiscation. The court found sufficient material to justify the initiation of the investigation and the subsequent actions.

2. Validity of Actions Taken Under Sections 106, 110, 113, and 108 of the Customs Act:
The petitioner argued that the actions under Sections 106, 110, and 113 were without jurisdiction, as they were based on suspicion rather than concrete evidence. The court, however, concluded that the Customs Authorities had sufficient grounds to believe that the goods were liable to confiscation due to discrepancies in the declared and actual contents, over-invoicing, and the use of fictitious addresses. The court validated the 100% examination of goods under Section 106, stating that it was necessary to establish discrepancies.

3. Interpretation of "Attempt to Export" and Its Implications:
The court addressed whether the term "attempt to export" includes actions taken after goods have left the port but are still within Indian waters. It concluded that improper exportation does not become proper due to clearance and actual exportation if the initial attempt was improper. The court held that the liability for improper exportation accrues at the stage of exportation and continues even after the goods have left the port.

4. Applicability and Compliance with Section 124 of the Customs Act:
The petitioner argued that no notice under Section 124, which requires giving reasons and grounds for confiscation, was issued. The court found this argument premature, as the matter was still at the investigation stage under Sections 106 and 110. Therefore, the requirement of Section 124 was not yet applicable.

5. Relevance of the Duty Drawback Scheme in the Context of the Case:
The petitioner contended that the Customs Authorities had no jurisdiction to confiscate goods under the Duty Drawback Scheme. The court disagreed, stating that the liability for improper exportation under Sections 113(i) and (ii) is not dependent on the claim for duty drawback. The court emphasized that the scheme's misuse through over-invoicing and under-packaging justified the investigation and potential confiscation.

6. Legitimacy of the Summons Issued Under Section 108 of the Customs Act:
The petitioner challenged the summons issued under Section 108, arguing they were based on suspicion. The court held that Section 108 summons are for gathering evidence and do not require "reason to believe." The court found that the materials disclosed justified the summons and allowed the investigation to proceed.

Conclusion:
The court dismissed the writ petition, validating the Customs Authorities' actions and jurisdiction to investigate and seize the goods. It concluded that the investigation should continue, and the Customs Authorities should complete it within three months, taking appropriate steps as advised by law. The court emphasized the importance of strict interpretation of fiscal statutes and the necessity of preventing misuse of export incentives.