9911796707
TMI Blog1979 (7) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... a. (2) Whether, when goods have been exported beyond India such goods may be said to be "export goods" as defined in Section 2(19) of the Customs Act, 1962 and liable to confiscation under Section 113 for the purpose of imposition of penalty under Section 114 of the said Act. The Division Bench noticed that the above points had come up for consideration before other Division Benches of this Court but the decisions of the Division Benches were conflicting. As, according to the Division Bench there was a conflict of decisions of the Division Benches of this Court, the Division Bench referred the appeal for final decision to a Full Bench under Rule 2 read with Rule 7, Part II, Chapter VII of the Appellate Side Rules. 2. In referring this appeal for final decision to a Full Bench, the Division Bench in its judgment delivered by M.M. Dutt, J., Sabyasachi Mukherji, J. agreeing with him, had recorded after setting out the above points which arose for their consideration :- "The above points which came up for consideration before the Division Bench of this Court but the decisions of the Division Bench are conflicting. In Jute Investment Company Ltd. v. S K Srivastava - 77 C.W.N. 501, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16th June, 1979 and the description of the value of the goods covered by the above shipping bills were incorrectly and untruly declared in the shipping bills as well as in relative G.R.I. Forms. The relevant portion of the notice which sets out in details of the various allegations against the appellants for issuing the same reads : "M/s. Euresian Equipments and Chemicals Ltd. & Others, Calcutta, therefore appear to have contravened the provision of Section 12(1) of the Foreign Exchange Regulation Act, 1947 as amended by the Foreign Exchange Regulation Amendment Act, 1949 read with Government of India, Ministry of Finance (E.A.D.) Notification No. G.S.R. 2641, dated 14-11-1969. Sri Lakshmi Prasad Jajodia, a director of M/s. Euresian Equipments and Chemicals Ltd., Calcutta signed the 11 shipping bills confirming the truth of the declarations of those shipping bills and also the G.R.I. Forms. The total quantity and F.O.B. value of the goods covered by the said 11 shipping bills are 9465 Kg. and Rs. 12,37,706.30 P. respectively, while the value of magnesium silicate for the equivalent quantity is Rs. 28,395 (approx.) at the rate of Rs. 2 per Kg. Shri Manik Chand Jajodia and Jugal Kis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceeding under the Customs Act, and (2), in any case the goods having been exported the offence, if any, could not come within the mischief of Section 114 of the Customs Act, 1962. In support of the aforesaid contentions raised before the learned trial Judge reliance was placed on the judgment of the Division Bench in the case of M/s. Jute Investment Co. Ltd. v. S.K. Srivastava, 77 CWN 501 and also on the decision in the case of United Minerals and others v. Assistant Collector of Customs reported in 1971, Criminal Law Journal, 1370. 6. It was contended on behalf of the respondent Customs Authority that the aforesaid two decisions had no application as the said decisions were before the amendment of Section 12(1) of the Foreign Exchange Regulation Act. It was argued that the show cause notice was issued under Section 114 of the Customs Act, 1962 on the allegation that there was a contravention of Section 12(1) of the Foreign Exchange Regulation Act, 1947 after its amendment and the goods were therefore liable to confiscation under Section 113(d) of the Customs Act, 1962 and the petitioners were liable to penalty under Section 114 of the Customs Act. The learned trial Judge consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing before a Division Bench of this Court consisting of Sabyasachi Mukherji and M.M. Dutt, JJ. who have referred this appeal to the Full Bench. 9. Before we proceed to note the various arguments advanced on behalf of the parties it will be convenient to set out the material provisions of the relevant statutes to which reference was made in course of the submissions made on behalf of the parties. Section 12(1) of the Foreign Exchange Regulation Act, 1947 prior to its amendment by Act 40 of 1969 was in the following terms :- "The Central Government may, by notification in the Official Gazette, prohibit the taking or sending out by land, sea or air (hereafter in this section referred to as export) of any goods or class of goods specified in the notification from India directly or indirectly to any place so specified unless a declaration supported by such evidence as may be prescribed or specified, is furnished by the exporter to the prescribed authority that the amount representing the full export value of the goods have been, or will within the prescribed period be paid in the prescribed manner." By Act 40 of 1969 Section 12(1) was amended and the following provision was substitu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be imported or exported have been complied with." "Section 11. Power to prohibit importation or exportation of goods :- (1) If the Central Government is satisfied that it is necessary so to do for any of the purposes specified in sub-section (2), it may, by notification in the Official Gazette, prohibit either absolutely or subject to such conditions (to be fulfilled before or after clearance) as may be specified in the notification, the import or export of goods of any specified description. (2) The purposes referred to in sub-section (1) are the following :- (a) the maintenance of the security of India. (b) the maintenance of the public order and standards of decency or morality; (c) the prevention of smuggling; (d) the prevention of shortage of goods of any description; (e) the conservation of foreign exchange and the safeguarding of balance of payment; (f) the prevention of injury to the economy of the country by the uncontrolled import or export of gold or silver; (g) the prevention of surplus of any agricultural product or the product of fisheries; (h) the maintenance of standards for the classification, grading or marketing of goods is international trade; ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of a customs area for the purpose of exportation; (f) any dutiable or prohibited goods which are loaded or attempted to be loaded in contravention of the provisions of Section 33 or Section 34; (g) any dutiable or prohibited goods loaded or attempted to be loaded on any conveyance or water-borne, or attempted to be water-borne for being loaded on any vessel, the eventual destination of which is a place outside India, without the permission of the proper officer; (h) any dutiable or prohibited goods which are not included or are in excess of those included in the entry made under this Act, or in the case of baggage in the declaration made under Section 77; (i) any dutiable or prohibited goods which do not corresponds in any material particular with the entry made under this Act or in the case of baggage with the declaration made under Section 77 in respect thereof; (j) any goods on which import duty has not been paid and which are entered for exportation under a claim for drawback under Section 74; (k) any goods cleared for exportation under a claim for drawback which are not loaded for exportation on account of any wilful Act, negligence or default of the exporter his agen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prohibition or restriction imposed under Section 12(1) of the Foreign Exchange Regulation Act, 1947, will, therefore, be deemed to be a violation of the prohibition or restriction of Section 11 of the Customs Act, by virtue of the provisions contained in Section 23A of the Foreign Exchange Regulation Act, 1947. He argues that violation of Section 111 of the Customs Act will bring into effect the provisions contained in the said Act dealing with such violation. It is, however, his argument that even assuming that there has been a violation of Section 11 of the Customs Act in consequence of any violation of Section 12(1) of the Foreign Exchange Regulation Act, because of the deeming provision contained in Section 23A of the Foreign Exchange Regulation Act, Sections 113 and 114 of the, Customs Act cannot have any application in the instant case, as the goods in respect of which the violation is alleged had already been exported. Referring to the provisions of Section 113 of the Customs Act, 1962, Mr. Burman contends that on a true construction of the said section, the said section cannot be said to have any application to a case where goods have actually been exported, even if the go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 1971 Criminal Law Journal 1370. Mr. Burman has pointed out that this judgment was reversed on appeal by Division Bench and the judgment of the Division Bench is reported in A.I.R. 1976 Cal., 21 (also reported in 79 C.W.N. 900). Mr. Burman has commented that because of the judgment of the Division Bench in the case of Assistant Collector of Customs, Special Section, Calcutta and others v. United India Minerals Ltd. - A.I.R. 1976 Cal. 26 (also reported in 79 C.W.N. 900) the present Full Bench reference has been made, as this judgment appears to be in conflict with the two earlier decisions of the Division Bench of this court. Mr. Burman has criticised the decision of the Division Bench in A.I.R. 1976 Cal. 21 (79 C.W.N. 900), mainly on the ground that in this judgment the court did not properly consider the judgment of the Division Bench in the case of Jute Investment Co. Ltd. - 77 C.W.N. 501 which was cited before the court. It is also the criticism of Mr. Burman that no cogent reasons have been given for the views taken and the court has not correctly construed the provisions of the Customs Act and the view expressed to the effect that the words "would render such goods liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12(1) of the Act will be deemed to be a violation of the prohibition or restriction under Section 11 of the Customs Act, 1962 and all the provisions of the Customs Act shall have effect accordingly. Mr. Bose contends that violation of the restriction or prohibition imposed under Section 11 of the Customs Act, 1962 will, in the facts and circumstances of the case, undoubtedly, attract the provisions contained in Sections 113 and 114 of the Customs Act, 1962. It is his contention that this position is made manifestly clear on a proper construction of Sections 113 and 114. Mr. Bose argues that Section 113 provides for liability to confiscation of export goods and Section 113(d) provides that any goods attempted to be exported or brought within the limits of any customs area for the purpose of being exported contrary to any prohibition imposed by or under this Act or any other law for the time being in force shall be liable to confiscation; and Section 113(i) provides that any prohibited goods which are not included or are in excess of those included in the entry made under this Act, or in the case of baggage in the declaration made under Section 77 shall also be liable to confiscation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the contention raised on behalf of the appellant that Sections 113 and 114 cannot have any application once the goods have been exported is not borne out on a true construction of the said Sections 113 and 114. It is his submission that Sections 113 and 114 have indeed nothing to do with actual export of the goods; and, as already noted, it is his argument that Section 113 lays down the conditions when goods incur liability to confiscation and Section 114 stipulates that any person whose act or omission in relation to the goods renders such goods liable to confiscation under Section 113, will be liable in the manner indicated in the said Section 114. He submits that this result clearly follows on a proper construction of the relevant provisions of the statute applying the well settled principle of construing the said provisions with reference to the language used in the relevant sections. He contends that if it can be said that there is any ambiguity in the said provisions, the said provision should, in that event, be construed in a manner which will best serve the objects and purposes for which the said provisions have been introduced. It is his contention that both the Forei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erji, J. in the case of United India Minerals Ltd. v. The Assistant Collector of Customs, 1971 Criminal Law Journal, 1370 has been reversed by the Division Bench consisting of the Chief Justice Sankar Prasad Mitra, and Salil Kumar Datta, J. and the judgment of the Division Bench is reported in A.l.R. 1976 Cal. 21 (also 79 C.W.No. 900). It is his submission that the decision of the Division Bench in A.I.R. 1976, Cal. 21 (79 C.W.N. 900) correctly lays down the law. He has concluded his submissions by saying that in the instant case the learned trial Judge on a proper consideration of the facts and circumstances of the case and the changes brought about by the amendment of Section 12(1) of the Foreign Exchange Regulation Act, has correctly come to the conclusion that on the allegations made in the notice the said notice is justified and valid and the decision of the learned trial Judge should be upheld. 16. Before we proceed to deal with the respective contentions of the parties we shall briefly consider the cases cited from the Bar. In the case of Union of India and others v. Rai Bahadur Shreeram Durga Prasad (P) Ltd., A.I.R. 1970 S.C. 1597, the Supreme Court had to consider the q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise and another, A.I.R. 1976 SC 1527, the validity of an order of imposition of penalty and confiscation of goods with the direction of payment of Rs. 5000/- in lieu of confiscation of the goods was challenged and in this case the Supreme Court had to consider Section 12(1) of the Foreign Exchange Regulation Act after its amendment. The Supreme Court held that the Collector of Customs was justified in its order in imposing penalty and in relation to the confiscation of goods; the Supreme Court, however, reduced the amount of penally imposed. In the judgment of the Supreme Court the observation of Sikri, J. which we have earlier set out were quoted at page 1530. 19. The effect of the decision of the Supreme Court, as we read it, appears to be that any untrue declaration in all material particulars will amount to a violation of Section 12(1) of the Foreign Exchange Regulation Act as amended and the infraction of Section 12(1) of the Foreign Exchange Regulation Act will, by virtue of the provisions contained in Section 23A of the said Act, result in contravention of the prohibition of restriction contained in Section 11 of the Customs Act. 20. In the case of Jute Investment Co. Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds which has already been exported pursuant to orders made under Section 51 of the Customs Act, 1962, cannot therefore be deemed to be "export goods" within the meaning of Customs Act, 1962." 22. In the case of Thomas Duff and Co. (India) P. Ltd. v. Collector of Customs and others, 1976 Calcutta High Court Notes 242 (also reported in 80 CWN 305), a Division Bench of this Court set aside three notices issued by the Customs authorities to the company calling upon the company to show cause why penal action should not be taken against it under Section 114 of the Act for alleged mis-declaration of the value of the goods exported on the writ petition filed by the company under Article 226 of the Constitution, reversing the judgment and decision of the trial court, holding inter alia :- (1) As the goods had already been exported before the issue of the three impugned notices, the goods concerned cannot be "export goods" in terms of Section 113 read with Section 2(19) of the Act, which means any goods which are to be taken out of India to a place outside India. As the goods had already been shipped, these were no longer goods which were to be taken 'out of India.' (2) Duty admittedly ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sdiction to inflict personal penalty in a case where the goods had already been exported from the country. The Division Bench recorded the following reasons for holding that such a view is not correct:- "Now, the proposition that the Customs authorities have no jurisdiction to inflict personal penalty in a case where the goods have already been exported from the country, does not appear to us to be tenable on the following grounds: (i) Under Section 114 it is the doing of or an omission to do any act which is relevant for the purpose of penalty and not the existence of non-existence of the goods at the time the show cause notice is issued or the adjudication is made. (ii) The offence contemplated in Section 114 is an offence which arises under Section 113 and which are the ingredients of Section 114. (iii) Section 113 applies to export goods as defined in Section 2(19). An offence is committed under Section 113(d) before the export. (iv) It is not the intention of the Act to pursue the goods after export. The Act contemplates punishment of the offender for the offence committed before the export. From this point of view the omission of actual exportation in the new Act underst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods always include an attempt to export goods; whether the attempt is successful or unsuccessful makes, in our opinion, no difference. (vii) Unless we construe Section 113(d) in this manner we shall land in absurdities. For instance, let us take a case in which goods are brought within the customs area in an attempt to export illegally and the exporter faced with the possibility of detection tries to escape with the goods and while he is escaping, the goods fall into the river or the sea. Can it be said that the exporter cannot be punished for attempt to export? Obviously answer is in the negative.". 24. 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 contained 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 of Section 11 of the Customs Act will have effect. The question is whether the violation of the prohibition or restriction imposed under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 113 or abets the doing or omission of such an act, shall be liable to penalty as provided in the said Section. With the incurring of liability of the goods to confiscation under Section 113, any person who in relation to such goods has done or omitted to do any act which at or omission has rendered such goods liable to confiscation under Section 113 or abets the doing or omission of such an act, renders himself liable to penalty under Section 114. On a proper construction of Sections 113 and 114 of the Customs Act with reference to the language used in the said Section 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 exportism 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. lt may be noticed that this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attempt he places himself beyond the reach of law and no punishment is intended to be inflicted on the dead person or his heirs and legal representatives by imposing any fine or penalty, as they may in no way be liable or responsible for the said act. As we have earlier observed the liability of the goods to confiscation arises under Section 113(d), as soon as the goods are attempted to be exported and the 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 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 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the attempt, is not indeed of any material consequence. The goods are "export goods" as defined in Section 2(19) of the Customs Act, 1962 at the time the goods incur the liability to confiscation under Section 113 of the said Act. We accordingly answer the second question which came up for consideration before the Division Bench and which has been referred to the Full Bench in the manner indicated above. 27. The decisions of the Supreme Court in the cases of Rai Bahadur Shreeram Durga Prasad (P) Ltd. and Becker Gray & Co., noted earlier, are not of any material assistance in the instant ease, as in the said two decisions it was held that the mis-declaration did not result in violation of Section 12(1) of the Foreign Exchange Regulation Act prior to its amendment; and therefore there was no question of any violation of Section 11 of the Customs Act by virtue of the provisions contained in Section 23A of the Foreign Exchange Regulation Act. It is not in dispute now that an incorrect declaration violates Section 12(1) of the Foreign Exchange Regulation Act as it stands after the amendment. 28. In the instant case the allegations made in the notice to show cause make out a case of vi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
