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TMI Blog2014 (5) TMI 240X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of export obligation is also supervised by Customs - Taking of permission required to be taken under the Customs Act and the procedure prescribed thereunder, will amount to imposition of a prohibition for the purpose of Sec. 2 (33) of the Customs Act 1962. Relying upon M/s Eurasian Equipments & Chemicals vs. Commissioner of Customs and Other [1979 (7) TMI 101 - HIGH COURT AT CALCUTTA (FULL BENCH)] - In that case the issue was whether or not goods exported in violation or prohibition/restriction imposed u/s 12 (1) of the Foreign Exchange Regulation Act 1947will be deemed to be violation leading to penalty, w.r.t. goods already exported, u/s 114 - In that case as it was argued by the appellants that penalties u/s 114 can only be imposed w.r.t. ‘export goods’ which are not yet exported - The above case law was not brought to the knowledge of the Chennai Bench while deciding the case of K Kamla Bai vs. Commissioner of Customs and Central Excise, Trichy [2004 (12) TMI 238 - CESTAT, CHENNAI] which is thus distinguishable - In view of the law laid down by Calcutta High Court, confiscation of goods under Sec 113 (d) is an independent act from the penalties imposable u/s 114 (i) - Pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sourcing. It was argued by the Learned Advocate that if the export of Castor Oil is not prohibited under Exim Policy, the same can not become prohibited because of mere failure on the part of an ex porter to abide the condition of Exim Policy making them liable to confiscate under Sec. 113 (d) of the Customs Act 1962. 4. Sh. K J Kinariwala (AR) appearing on behalf of the Revenue argued that as per para 25 of the Show Cause Notice dated 6.9.2006 appella nts were required to follow certain procedures and required to obtain certain permission from the Customs Officers as per CBEC issued Circular No. 26/2003 cus dated 1.4.2003. As the appellants have not followed the required procedure and also did not tak e the statutory permissions required, penalties have been correctly imposed. He relied upon the judgment of Kolkata High Court in the case of M/s Eureasian Equipments and Chemicals vs. CC and Others [1980 (i) ELT 38 (cal.)]. 5. Heard both sides and perused the case records. The issue required to be deliberated is whether penalties can be imposed upon the appellants under Sec. 113 (d) of the Customs Act 1962. Adjudicating Authority has imposed penalties upon all the appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Circular No. 26/2003. Cus dated 1.4.2003 was relied upon by the Revenue to argue that permission/approval of commissioner of Customs was required for outsourcing the requirement from the DTA units. Para 3 of this Circular is reproduced below: 3. It ma y be noted that before allowing such sub - contracting of production in DTA, the jurisdictional Assistant Commissioner/ Deputy Commissioner shall satisfy himself of the bonafide necessity of such sub- contracting of production in DTA. This facility may not be allowed in routine manner to the units. It is not the intention of the Government to allow the unit to parcel out the manufacturing into DTA or to other EOU/EHTP /STP /SEZ under normal circumstances, but to help the units to overcome genuine difficulties and to enable units to meet the sudden demand of goods for exports which is in excess of production capacity of the existing unit. Further, it may be ensured that while giving permission for subcontracting of production in DTA or to other EOU/STP/EHTP/SEZ units, the past antecedents of the units as well as job- working units should also be verified and in case of any misuse of serious nature noticed in the past or due t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alcutta High Court in the above case are relevant and are reproduced below: 26. It is quite clear that violation of any prohibition or restriction imposed under Section 12 of the Foreign Exchange Regulation Act 1947 will result in a violation, of the prohibition or restriction under Section 11 of the Customs Act 1962 by virtue of the deeming provisions co ntained in Section 23A of the Foreign Exchange Regulation Act; and necessarily, all the provisions of the Customs Act which may be attracted because of violation Section 11 of the Customs Act will have effect. The question is whether the violation of the prohibition or restriction imposed under Section 11 of the Customs Act will attract the provisions of Sections 113 and 114 of the Act in a case where goods had already been exported. The answer to this question will depend on proper construction of the relevant provisions of the Customs Act and of the provisions contained in Section 113 in particular. Section 113 lays down conditions when export goods become liable to confiscation. It makes provision as to under what circumstances 'export goods' incur the liability to confiscation. Section 113 does not deal with a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per construction of Sections 113 and 114 of the Customs Act with reference to the language used in the said sections this position, in our opinion, clearly emerges. We fail to appreciate how the accrued liability of the goods to confiscation with the attempt made for exporting the same contrary to prohibition is extinguished or wiped out with the said illegal attempt succeeding, resulting in the actual exportation of the goods. A plain reading of Section 113 of the Customs Act providing for liability to confiscation of export goods and of Section 2(19) of the Act defining'export goods' does not appear to indicate or suggest that the accrued liability to confiscation is so extinguished or wiped out. It may be noticed that this liability to confiscation attaches to the goods at the time the goods are sought to be exported contrary to prohibition and at that point of time the goods which are to be taken out of India to a place outside India have not been taken out of India to a place outside India. In other words at the point of time when the liability to confiscation accrues, the goods are 'export goods' well within the meaning of the definition of export goods in Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e attempt to export the goods necessarily precedes the actual export of the goods. Goods become liable to confiscation as soon as the attempt is made. There is no provision in the Act to suggest that this accrued liability is wiped out or extinguished with the exportation of the goods. It may be that after the goods had in fact been exported the liability of the goods to be confiscated may not be enforceable by actual confiscation n of the goods. Personal penalty of any person who, in relation to the goods, does or omits to do any act which act or omission renders the goods liable to confiscation under Section 113 or abets the doing or omission of such an act has been provided in Section 114. This provision is attracted as soon as the goods Incur the liability to confiscation under Section 113 and such liability, as we have earlier held, arises when the goods are attempted to be exported contrary to any prohibition. It is to be noted that at the time when the goods are sought to be exported they are undoubtedly 'export goods' within the meaning of Section 2(19) of the Customs Act. The liability of personal penalty provided in Section 114 of the Act, which arises with the ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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