2010 (2) TMI 357 - HC - Customs

Classification- The goods were examined on the request made by the Deputy Commissioner of Customs (Docks) on 22-8-2003 by the officers of Customs, in the presence of the officers of DRI and two independent witnesses under the Panchanama. On opening and examination of the container No. TRLU-4961908, it was found that some double sized corrugated cartons were stacked/lying in the bottom of the container and were concealed/surrounded with cartons described as Viscose Rayon Filament Yarn. On opening each of the said cartons, it was found that all of them contained raw silk and the cloth bag contained one paper leaflet inscribed with words Blossoms (R)- white steam filature-China National Silk Import & Export Corp.-Made in China. The total quantity of the aforesaid raw silk, concealed in 50 cartons, on weighing, found to be 2910 kilograms whereas the total quantity of viscose rayon filament yarn was found to be 16881.40 kilograms packed in 551 cartons as against the declared 553 cartons having total weight 16942.60 kilograms. On opening and examination of the other container bearing No. CRXU-2683537, it was found to contain 209 cartons of viscose rayon filament yarn having total weight 6289.80 kilograms as against declared 207 cartons. Tribunal partly allowed the appeal. Held that- the Appellate Tribunal was not right in finding fault with the Adjudicating Authority for not granting discretionary relief to the Respondent No. 1, who had not established their ownership to the smuggled goods and who had also shared common intention to smuggle goods in India by deceitful means. The Adjudicating Authority, having found parties guilty of smuggling the goods by deceitful means, rightly imposed various fines.

Summary

Issues Involved:
1. Legality of re-exporting confiscated goods.
2. Ownership and title of the confiscated goods.
3. Justification for the absolute confiscation of goods.
4. Compliance with customs declaration requirements.

Analysis:

1. Legality of Re-exporting Confiscated Goods:
The primary issue was whether the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) was justified in allowing the re-export of Mulberry Raw Silk that was concealed and liable for confiscation. The High Court found that the Tribunal's decision to allow re-export was incorrect. The court emphasized that the adjudicating authority had rightly confiscated the goods under Sections 111(f), (i), (j), and (l) of the Customs Act, 1962, as the goods were intentionally smuggled into India by concealing them among declared goods. The court concluded that the Tribunal erred in permitting re-export without valid reasons and without establishing the ownership of the goods.

2. Ownership and Title of the Confiscated Goods:
The court scrutinized the claim of ownership over the 50 cartons of Raw Mulberry Silk. The Respondent No. 1 argued that the goods were erroneously shipped to India and were meant for a buyer in the UK. However, the court noted that once the goods were exported and the documents of title were transferred to Respondent No. 2, the ownership also transferred. Respondent No. 1 could not claim ownership after the goods were delivered to Respondent No. 2, who had paid customs duty and other charges. Therefore, Respondent No. 1 had no right to claim re-export of the goods.

3. Justification for the Absolute Confiscation of Goods:
The adjudicating authority had ordered the absolute confiscation of the concealed Mulberry Raw Silk and imposed fines and penalties on the importers and associated individuals. The Tribunal had criticized the adjudicating authority for not providing reasons for absolute confiscation. However, the High Court upheld the adjudicating authority's decision, stating that the smuggling attempt was intentional and deceitful. The court found that the adjudicating authority had sufficient grounds to confiscate the goods absolutely and impose penalties.

4. Compliance with Customs Declaration Requirements:
The court highlighted the importance of accurate customs declarations under Section 17(4) and the proviso to Section 46(4) of the Customs Act, 1962. The importers had declared only Viscose Rayon Filament Yarn in their bills of entry, omitting the Mulberry Raw Silk. The court underscored that the importer is responsible for making a true declaration and must seek examination of goods if unable to provide full particulars. The mis-declaration and concealment of goods were clear violations of the customs declaration requirements, justifying the confiscation and penalties imposed by the adjudicating authority.

Conclusion:
The High Court answered the substantial question of law in favor of the Revenue and against the Respondents-Assessee. The appeal was allowed, the judgment and order of the Tribunal were set aside, and the order-in-original passed by the adjudicating authority was restored. The court affirmed the confiscation of goods and penalties imposed, emphasizing the intentional smuggling and mis-declaration by the importers.