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TMI Blog2023 (2) TMI 1037X X X X Extracts X X X X X X X X Extracts X X X X ..... es of section 113, he does not find the offence serious enough to warrant the punishment of confiscation, he does not have to confiscate them. Considering the nature of the contraventions and the aggravating and extenuating factors, the adjudicating authority can decide to confiscate or not confiscate the goods. The Madras High Court examined the scope of the expression liable to confiscation which was used in the predecessor law, Sea Customs Act, 1878 in SHA RIKABDOSS BHAVARLAL VERSUS COLLECTOR OF CUSTOMS, MYSORE [ 1961 (5) TMI 2 - MADRAS HIGH COURT ] and held that the expression does not mean that the goods should be confiscated. Thus, the settled legal position is that liable to confiscation does not mean shall be confiscated and the adjudicating authority or the assessing officer has to exercise his/her discretion and decide (a) if the goods fall under section 113 (or section 112 in case of imported goods); and (b) if they fall under section 113 (or 112, as the case may be), decide whether or not to confiscate them. It is NOT NECESSARY for the adjudicating authority to confiscate all the export goods which fall under section 113 or all imported goods which fall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipping bills dated 23.03.2019 and 28.03.2019 using the dummy IEC code. The respondent, based in USA, owns the two helicopters which it leased to a company in India which operated them. The respondent then wanted to take them back to USA but it was not a regular exporter or importer and hence had no Importer-exporter code (IEC) from DGFT. It sought permission from the Deputy Commissioner to export them using dummy IEC. It did not receive any letter permitting it to export the helicopters using dummy IEC. 2. The respondent filed the two shipping bills with dummy IEC as it had no IEC in its name. It waived the requirement of show cause notice and the Commissioner issued the impugned Spot Assessment Order. He found that the attempted export was in contravention of para 2.05 of Section (II) of Foreign Trade Policy and Section 7 of the Foreign Trade (Development and Regulation) Act, 1992 as the helicopters could not have been exported without obtaining IEC from the DGFT. Consequently, he found that the helicopters were liable to confiscation under Section 113(d) of the Customs Act,1962 which reads as follows:- SECTION 113. Confiscation of goods attempted to be improperly exported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o its interpretation DGFT and Ministry of Commerce are the final Authority. There is no allegation of violation of any other law. Learned Counsel for the respondent placed on record the clarification by way of office memorandum dated 15.10.2019 issued by the DGFT, which states as follows:- The undersigned is directed to refer to OM No. 7.12.2019-IPP dated 05.08.2019 on the subject cited above. 2. In this regard, it is stated that the matter has been examined and it is decided that IDERA holders re-exporting the aircraft under Rule 32A of Aircraft Rules, 1937 may be exempted from having IEC as the aircrafts are not actually exported from India. 7. It is his submission that there was no violation of law at all in view of the clarification by the DGFT. Learned amicus curiae assisting the court in this matter has also submitted that after the clarification has been issued by the DGFT, nothing survives in this case as the alleged violation is no longer so. The submissions by the learned counsel and learned amicus curiae deserve to be accepted. In view of the clarification issued by the DGFT, we find that there was no violation of the Foreign Trade Policy at all. 8. Learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... probable. 10. From the above, it is evident that the word liable has two meanings. The first is that one responsible by law or legally answerable, i.e., it denotes the legal duty of someone liable which is not relevant to Section 113. The second meaning is that someone or something is liable to, i.e., likely to or be exposed to. It suggests a likelihood of something happening. Section 113 states the following goods attempted to be exported are liable to confiscation and lists various types of goods under different clauses. This only means that such goods which fall under one of the clauses under this section are likely to be confiscated and can be confiscated. The section cannot be read to mean that such goods shall be confiscated. 11. The reason for this is simple. On confiscation, the property of the goods will vest in the Central Government and the individual or entity is deprived of its property which is a very serious punishment. The Adjudicating Authority has to, in the first place, decide if the goods attempted to be exported fell under one of the clauses of section 113. If they do not, this section does not apply at all. If the goods fall under one of the clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot applicable, in case of liability to confiscation. Secondly, whether the goods should be confiscated or not is a matter of discretion of the Collector. So also what penalty he should impose is also a matter of discretion. The proper legal approach is illustrated by the following cases: 109 . In Shah Rikhabdas Bharwanlal v. The Collector of Customs. (1961) (II) M.L.J. 443, identical facts situation was present. The goods of the appellants were confiscated while some other merchant for the same offences were let off with a warning. Rajmanner C.J., speaking for the Division Bench of Madras High Court, held: It should not be overlooked that here we have the case of deprivation of property because confiscation is just that. It is idle to say that it is not, because on payment of a fine which is equal to the value of the goods, the importer can take delivery of the goods. It only means that the appellants having been deprived of their goods are given an offer to purchase such goods (Page 4). The learned Chief Justice further observed the language (of old Section 167 of the Sea Customs Act) does necessarily imply that there is a discretion because the language is not such good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... offence has reference Penalties (1) (2) (3) If any goods the importation or exportation of which is for the time being prohibited or restricted . be imported or exported from India contrary to such prohibition. 18 19 Such goods shall be liable to confiscation. Any person concerned in any such offence shall be liable to a penalty not exceeding three times the value of the goods, or not exceeding one thousand rupees. The third column says that if an offence under Item 8 is committed, the goods concerned ''shall be liable to confiscation . The learned Government Pleader had to concede that the Customs Authorities have got the discretion either to confiscate or not in a particular case. In this very case reference has been made to two other cases in which in spite of an offence having been committed, the party in each case has been let off with a warning, and without the goods being confiscated. The language does necessarily imply that there is a discretion because the language is not such goods shall be confiscated . On the othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this confiscation is not under challenge. 17. If the adjudicating authority confiscates the goods and if the goods are not prohibited goods, he has to allow them to be redeemed on payment of fine under section 125. Even if they are prohibited goods, he may still allow the goods to be redeemed on payment of redemption fine. There is no formula to determine the quantum of redemption fine nor is there a minimum fine but the fine cannot exceed the market value of the goods. The quantum of fine must be determined based on the facts and circumstances of the case. 18. Thus, the adjudicating authority has to determine first if the goods fall under section 113 and if so, decide if they should be confiscated or not and after confiscation, if they are allowed to be redeemed on fine, he has to decide what should be the fine with the only condition that it cannot exceed the value of the goods. 19. In this case, considering that it was only a technical offence, the Commissioner imposed a redemption fine of Rs. 1,00,000/- only. We do not find that the department has made out a case to seek enhancement of redemption fine. In our considered view, this calls for no interference. In fact, th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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