2004 (4) TMI 79 - SC - Customs

Whether property in the goods brought into the country had passed on to the importer or not? Held that - Section 142(1)(b) of the Act would come into operation provided that goods in question belong to M/s. Rahul Associates. Dependent upon the question of title is also the relief which the respondent would be entitled to namely, re-export. The issue of title was an issue of fact which the High Court should have left to the Department to consider. As we have noted, the High Court did not consider this vital aspect of the matter at all. Despite the submissions made by the parties, we do not propose to assess the evidence ourselves. We accordingly, set aside the decision of the High Court and remand the matter back to the appropriate authorities in the Customs Department for the purpose of determining the issue whether the title to the goods in question had passed from the respondent to M/s. Rahul Associates. In the event it is found that the title had not passed, the respondent will be entitled to re-export the same subject to payment of such charges etc. which are rightfully leviable in respect of the goods. If the goods are found to belong to M/s. Rahul Associates, the respondent s claim for re-export must be rejected and it will be open to the Department to take appropriate action in respect thereof under the Act as they may be entitled to under the Act.

Summary

Issues:
Challenge to High Court order permitting re-export of electronic goods, determination of property title in goods, legality of re-export based on title ownership.

Analysis:
The Supreme Court heard an appeal challenging a High Court order allowing the re-export of certain electronic goods. The goods arrived at the Bombay Port in 2000, but the importer, M/s. Rahul Associates, did not clear them. The respondent expressed willingness to pay charges for re-export. The Port Authorities issued a notice for sale of the goods to recover dues. The respondent filed a writ petition seeking to re-export the goods, citing a previous court decision where re-export was allowed when property in goods had not passed to the importer. The appellants argued that property title had passed to M/s. Rahul Associates, alleging a conspiracy to evade duty on an earlier consignment. The Customs Act was invoked to recover unpaid duty from M/s. Rahul Associates through sale of the second consignment.

The crucial issue revolved around determining the title to the goods in question. The High Court, in allowing re-export, overlooked the ownership aspect raised by the appellants. The Supreme Court emphasized that if the title had passed to M/s. Rahul Associates, re-export at the foreign exporter's instance was not permissible. The Court highlighted the need for the Customs Department to ascertain the title ownership before allowing re-export. The matter was remanded to the Customs Department for a factual determination on title ownership. If the goods belonged to M/s. Rahul Associates, the respondent's re-export claim would be rejected, and appropriate action under the Customs Act could be taken.

In conclusion, the Supreme Court set aside the High Court decision and remanded the matter for the Customs Department to determine the title ownership of the goods. The judgment clarified that re-export could only be allowed if the title had not passed to the importer. The case highlighted the importance of establishing ownership rights before permitting re-export of goods, ensuring compliance with legal provisions under the Customs Act. The appeal was disposed of without costs, emphasizing the need for a thorough examination of ownership issues in such cases.