By TIOL News Service

CHENNAI, JAN 27, 2016: THE department is in appeal before the High Court with the following questions of law:

"1. Whether the Tribunal was correct in holding that Section 113 of the Customs Act cannot be invoked for confiscation of goods already exported?

2. Whether the Tribunal was justified in setting aside the order of penalty on the exporter under Section 114 of the Customs Act?"

The respondent had imported several tonnes of Cassia duty free under DEEC Scheme against advance licence issued in their favour . In the course of investigation, it was found by the authorities that instead of exporting the cassia oil, to fulfill the export obligation, the importers exported castor oil mixed with certain additives with the help of supporting manufacturer and transporter and clandestinely disposed the cassia so imported in the local market. The Adjudicating Authority inter alia held that the goods exported are liable for confiscation under Section 113 of the Customs Act, 1962 and as the goods are not available for confiscation, imposed penalty under Section 114 of the Act. On appeal, the Tribunal held that since the goods were already exported, they were not liable for confiscation under Section 113 of the Customs Act. Consequently, the exporter could not be penalised under Section 114 of the Customs Act. Aggrieved by the same, revenue is in appeal before the High Court.

After hearing both sides, the High Court held:

+ The question is whether the interpretation of Section 113(d) of the Customs Act, as has been propounded by the Tribunal, can be accepted. The Tribunal came to hold that Section 113 could not be invoked for confiscation of goods already exported. According to the Tribunal, the legislative intent behind Section 113 is only in relation to confiscation of goods attempted to be exported and therefore, it would not get attracted in a case of goods already exported. This proposition propounded by the Tribunal does not found to be correct, for the reason that Section 113(d) of the Customs Act makes it clear that the liability of goods for confiscation arise as soon as the goods are attempted to be exported and an attempt to export the goods necessarily precedes the actual export of the goods. This proposition has been propounded by the Full Bench of the Calcutta High Court in the case of Euresian Equipment and Chemicals Ltd. and others V. Collector of Customs and others.

+ The Full Bench has clearly held that even in respect of goods already been exported, the provisions of Section 113(d) of the Customs Act would stand attracted and Penalty under Section 114 is justified. The reasoning of the Full Bench of the Calcutta High Court is that the goods are liable for confiscation as soon as an attempt is made. The reasoning adopted by the High Court is agreed with.

Accordingly, the High Court answered the questions of law in favour of the revenue and set aside the order of the Tribunal.

(See 2016-TIOL-151-HC-MAD-CUS)