TMI Blog1992 (9) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent necessary to give evidence and produce documents relating to import of the consignment and sales thereof. 2. The petitioner-respondent is the proprietor of M/s. Integrated Exports, M/s. Arasan Industries and a Director in M/s. Trio Imports and Exports (P) Ltd. During September, 1990, M/s. Integrated Exports imported hop extracts by Air. This however was not cleared by the Customs. He preferred a writ petition in W.P. No. 15553 of 1990 seeking a mandamus to Customs Authorities to assess the bill of entry. The writ petition however was allowed in the sense that he was allowed to clear the entire consignment on payment of duty subject to any adjudication proceedings. In December, 1990, M/s. Trio Imports and Exports Private Limited imported the very same item, i.e. to say, hop extracts by Air and when there was a delay, M/s. Trio Imports and Exports Private Limited filed this time a writ petition in W.P. No. 26 of 1991. The Court once again ordered for the release of the goods on payment of the duty as assessed. A further consignment of the very same item was imported in February, 1991 this time, again leading to a writ petition in W.P. No. 1587 of 1991. The Court this time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers that were passed with respect to different consignments in the cases of M/s. Integrated Exports, M/s. Trio Imports and Exports Private Limited and M/s. Arason Industries, however, on 18-11-1991, the impugned summons was issued. Petitioner-respondent challenged the same alleging that the goods imported by the above mentioned firm and companies were all cleared by the orders of this Court and orders of adjudication by the Customs Authorities and if the Authorities were aggrieved by the orders of adjudication or orders of release, they could have challenged the same in accordance with the provisions of the Customs Act before the appropriate forum and that once the goods were released on assessment and payment of duty, penalty, etc., the Customs Authorities cease to have any further jurisdiction to inquire or investigate into the alleged evasion of customs duty on the import. 3. In their written, the respondents maintained however that based on an intelligence report regarding evasion of customs duty on certain imports of Lupofresh Aromatic Hop Pellets with 15% Alpha in the name of M/s. Arasan Industries, the Officers of the Directorate of Revenue Intelligence carried out searche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d either in the writ petition or in the counter-affidavit except stating according to the petitioner-respondent, each consignment having once been subjected to duty and subjected to proceedings under the Customs Act for differential duty, redemption fine and penalty, there remained nothing for the respondents to inquire further or to have a fresh inquiry under Section 103 of the Customs Act, a contention which has been accepted by the learned single Judge. In opposition thereto, the respondents-appellants however have con- tended that when so many imports are found to be integrated to a chain of smuggling by those who imported Lupofresh Aromatic Hop Pellets and only because consignments were noticed and considered individually and actions taken for, then noticed defaults, it cannot be said that no further action under the Customs Act is permissible. 6. To appreciate the case of the respondents-appellants as learned Single Judge has done, we may also do to take notice of one basic fact that the goods have been imported from Lupofresh A F, Germany to Madras as well as Trivandrum Airports. Invoices, however, are issued by the intermediary at Singapore. According to the respondents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il Procedure, 1908 (5 of 1908) shall be applicable to any requisition for attendance under this section. (4) Every such inquiry as aforesaid shall be deemed to be a judicial proceeding within the meaning of section 193 and 228 of the Indian Penal Code (45 of I860)." Section 107 preceding this Section 108 reads as follows :- "107. Power to examine persons. - Any officer of customs empowered in this behalf by general or special order of the Collector of Customs may, during the course of any inquiry in connection with the smuggling of any goods, - (a) require any person to produce or deliver any document or thing relevant to the inquiry; (b) examine any person acquainted with the facts and circumstances of the case." The word "enquiry" in Section 107 and the word "inquiry" in Section 108 do not appear to cannote proceedings of two different kinds, but for the fact that when power to summon persons to give evidence and produce documents is envisaged, it is conferred upon any gazetted officer of customs, but when it is with respect to examining persons found during the course of any inquiry in connection with smuggling of any goods, it is conferred upon any Officer of Cust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used in the smuggling of any goods or in the carriage of any goods which have been smuggled. These are provided under Sections 100 to 106A. Sections 109 and 110 which also fall in Chapter XIII, provide about the power to require production of the order made under Section 47 of the Act permitting clearance of the goods and seizure of goods, documents and things. Sections 107 and 108 which intervene the power to require production of order permitting clearance of the goods and seizure of goods, documents and things, speak of the power to examine persons or to summon persons to give evidence and produce documents as above. Seen in this background, the inquiry in connection with the smuggling of any goods for the purposes either of Section 107 or of Section 108 must relate to the belief that any person has secreted about his person any goods liable to confiscation or there is any reason to believe that any goods are smuggled or intended to be smuggled. The word 'smuggling' in relation to any goods has been given a definite meaning in the Act, which means, any act or omission which will render such goods liable to confiscation under Section 111 or Section 113. Sections 111 and 113 are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earance of the goods for home consumption." Section 51 reads as follows : "Where the proper officer is satisfied that any goods entered for export are not prohibited goods and the exporter has paid the duty, if any, assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance and loading of the goods for exportation." There has been cases brought to the Courts by persons who obtained such clearance of goods when there were any attempts to seize such goods and confiscate them. Seizure of goods is contemplated under Section 110 of the Act/ which reads as follows : "(I) If the proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods : Provided that where it is not practicable to seize any such goods, the proper officer may serve on the owner of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer." This provision uses the expression 'goods are liable to confiscation'. Sections 107 and 108 use the words 'any enquiry in connection with the smuggling o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stoms Act, 1962, in material particulars...." Delhi High Court also said : "Considering Section 47 of the Customs Act in the light of the legislative history, we are clear that the section attaches finality to the satisfaction of the officer that the goods are not prohibited. The finality cannot be disturbed unless the department successfully shows that there was fraud or deliberate suppression. The respondents have alleged that the containers were painted and thus the original identity of the drums was suppressed by the petitioners. This allegation is on the assumption that stainless steel drums was a prohibited item. We do not agree. The law as it then stood, did not require of an importer to disclose the nature of the material or the price of the containers. A new requirement in this regard was introduced for the first time by Public Notice dated September 6, 1979 i.e. after the importation of oil by the petitioner. We, therefore, hold that the proper officer's satisfaction that the goods were not prohibited goods, had reached finality by the time the goods were cleared." The judgment of the Delhi High Court was followed by a Bench of the Bombay High Court in Union of Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) of the Foreign Exchange Regulation Act, 1947, in relation to goods which had been exported beyond India? and (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? and observed as follows : "We have earlier set out the provisions of Section 11 of the Customs Act which confers power on the Central Government to prohibit importation or exportation of goods for purposes mentioned therein. These purposes indeed cover very very wide fields. Some of the purposes for which the prohibition may be imposed as stated in Section 11(2) are, prevention of smuggling, prevention of shortage of goods of any description and prevention of the contravention of any law for the time being in force. Section 113 provides for liability of the goods to confiscation in case of any violation of the prohibition imposed under Section 11 of the Act and Section 114 provides for personal penalty for those whose acts or omissions render the goods liable to confiscation under Section 113. To c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he liability of the goods to confiscation under Section 113 of the Act at the stage of the attempt to export the said goods, clearly remains and the said liability is capable of enforcement. In the case of illegal export of any goods contrary to prohibition the effect may be that the liability of the goods to confiscation which arises and accrues may not be capable of enforcement but the personal liability which arises with the accrual of liability of the goods to confiscation can be enforced and by enforcement of the personal liability the offender can still be brought to book and this kind of offence may be checked. We must, therefore, hold that by virtue of Section 23A of the Foreign Exchange Regulation Act, 1947 the provisions of Sections 113 and 114 of the Customs Act, 1962 are attracted, when there is a contravention of Section 12(1) of the Foreign Exchange Regulation Act, 1947 in relation to goods which had in fact been exported...." In a case where goods had been cleared under Section 47 of the Act, and a notice under Section 110 had been issued in the case of Madanlal Steel Industries Ltd. v. Union of India [1991 (56) E.L.T. 705], a Bench of this Court, to which one of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o know whether there has been any fraud, suppression of fact and/or any other invalidity in the import or export, or not. Both the Bombay Court judgment in the case of Union of India v. Popular Dyechem [1987 (28) E.L.T. 63] and the Delhi Court judgment in the case of Jain Shudh Vanaspati Ltd. and Others v. Union of India and Others [1982 (10) E.L.T. 43], on their peculiar facts, are good for taking notice of the order under Section 47 of the Act and saying accordingly that unless that order was set aside, no proceeding for confiscation should have been taken. It is difficult, however, to accept this as a law, as once there is a clearance under Section 47 and/or Section 51 of the Act is ordered, unless that order is set aside, the proper officer cannot act on his reasonable belief under Sections 110, 111 or 113 of the Act. The Calcutta Full Bench judgment in the case of Euresian Equipments Chemicals v. Collector of Customs [AIR 1980 Calcutta 188 = 1980 (6) E.L.T. 138 (Cal.)] has, in substance, pronounced that such proper officer's satisfaction for confiscation proceedings shall remain unaffected by the order of the proper officer permitting the clearance of goods under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having once subjected to a proceeding for confiscation, the goods, after enquiry under Section 124 of the Act, any further enquiry under Section 107/108 of the Act is permissible, and since we have already noticed that enquiry under Sections 107 and 108 is preliminary to any action to confiscate the goods or to impose any penalty on any person found to have indulged in smuggling of the goods or to pay fine in lieu of confiscation and smuggling means any act or omission, which renders goods liable to confiscation under Section 111 or Section 113, we attempt to understand as to what the words 'liable to confiscation' convey. Ordinarily, the word 'liable' denotes, '(1) Legally subject or amenable to'; (2) 'Exposed or subject to or likely to suffer from (some thing prejudicial)'; (3) 'Subject to the possibility of (doing or undergoing something undesirable)' and according to Webster's New World Dictionary, 'something external which may befall us'. The Courts have given a narrower or a wider meaning to this word, depending upon the context and the nature of the statute concerned. In Superintendent and Remembrancer of Legal Affairs to Government of West Bengal v. Abani Maity [1979 (4) S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Section 63(2) and 64(1) thereof in these words : "The provisions of Sections 63 and 64 of the Act are to be interpreted in the light of this principle. The language and scheme of the Excise Act, taken as a whole, show that the purpose of this legislation is not only to raise revenue but also to control and restrict the import, export, transport, manufacture and sale of intoxicants. Free and unrestricted use of intoxicants and illicit trade in contraband intoxicants not only means a loss of revenue to the public exchequer but also has a harmful effect on public health and morals. Moreover, illicit trade and smuggling of intoxicants is often committed, in an organised and clandestine manner, and is difficult to detect. We have, therefore, to adopt that construction of the expressions 'shall be liable to confiscation' used in Section 63(2), and 'may' in sub-section (1) of Section 64, which will preserve the efficacy of the provisions as an instrument for combating these anti-social activities, and reject the other which will render them ineffective." For the above, the Supreme Court quoted once again from an earlier judgment of the Court in the case of Indo-China Steam Na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her mitigating circumstances are not irrelevant when considering the imposition of the penalty. Section 167(12A) of the Act declares such vessels to be 'liable' to confiscation, that is to say, open to the peril of confiscation. It may, however, be that the Customs authorities, having considered all the facts of a given case, would not consider the matter deserving of the extreme penalty of confiscation. I will explain this a little farther. Section 52A speaks about construction, adaptation, alteration, etc., for the purpose of concealing goods. Such construction, adaptation, etc., must necessarily be of an infinite variety. A ship may be big or small. Even a medium size ship would nowadays cost a gigantic sum. A large size ship may cost crores. Supposing that a sailor makes a little hole underneath his bunk in order to conceal a smuggled watch he has picked up in the last port. That would certainly make the vessel an offending vessel, upon a strict interpretation of Section 52A. But does it mean that the whole ship worth crores should by that reason alone be automatically confiscated? In my opinion, that is neither the provision of law. As I find it, not could it have been the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t goods are not involved in any act or omission constituting smuggling. In that case, any other appropriate action may be taken, goods may be cleared for home consumption or cleared for exportation. There is, however, no possibility of confiscation, penalty or fine in lieu of confiscation, unless there are grounds to proceed under Section 124 of the Act, except, perhaps, provisions where punishments may be awarded for acts like false declaration, false documents, etc., relating to the customs as provided under Section 132 of the Act. The above, in our view, thus lead to only one conclusion that it is the existence of the suspicion and the satisfaction of the proper officer in the sense that he has reason to believe that there has been anything secretive about goods liable to confiscation or any documents relating thereto that officers empowered in this behalf will act and that will thus give rise to a prima facie satisfaction for the preliminary enquiry either under Section 107 or in appropriate cases under Section 108 of the Act. The problem posed before us is in principle like one already decided by a Bench of this Court in the case of Madanlal Steel Industries Ltd. v. Union of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of smuggled goods, notwithstanding any change in form, etc.); and Section 121 (confiscation of sale-proceeds of smuggled goods) and on the other hand, penalties under Sec. 112 for improper importation of goods, etc. under Sec. 114 penalty for attempt to export goods improperly, etc. under Section 116 penalty for not accounting for goods, and under Section 117 penalties for contravention etc., not expressly mentioned; which fall in Chapter XIV of the Act. Whereas confiscation is of the goods, penalty is imposed on any person who is found to have contravened the law and who is found engaged in improper importation of goods, improper export of goods, not accounting for goods, and contravening any provisions of the Act or abetting any such contravention or failing to comply with any of the provisions of the Act. Notice under Section 124 may be for imposition of penalty for the above reasons and purposes or for confiscating any goods for the above reasons and purposes. In a given case when there is a notice for the purpose of confiscation only and not for imposition of any penalty there can be imposition of fine in lieu of confiscation as provided under Sec. 125 of the Act. This must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of penalty for not accounting for goods or for contravention, etc. of the provisions of the Act. Chapter XVI deals with offences-and prosecutions giving a further clue to the scope of the enquiry under Sections 107 and 108 of the Act. There may not be a ground found for a notice under Section 124 in a given case yet there may be sufficient materials for action for punishment under Sections 132, 133, 134, 135 and 135A of the Act on the basis of what is found by the proper officer of customs during the course of enquiry in connection with smuggling of any goods. 11. From the above thus it is possible to hold that only because a notice under Section 124 has been issued on certain grounds for confiscation of the goods or for imposing any penalty on any person it will not be correct to say that there shall be no further enquiry under Section 107 or Section 108 of the Act. 12. The power to hold enquiry, as we have found, is founded on the suspicion that certain persons are engaged in smuggling. It is wide to cover all situations and circumstances, but wider the power the greater the responsibility of the officer holding the enquiry. It will be again only spelling out what may foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any documents relating thereto or secreted in any place any goods liable to confiscation or any documents or things which in his opinion will be used for or relevant to any proceedings under the Act or that any aircraft, vehicle or animal in India or any vessel in India or within the Indian customs waters has been, is being, or is about to be, used in the smuggling of any goods or in the carriage of any goods, which have been smuggled. The power to hold enquiry under Sections 107 and 108 shall not come to an end only with the seizure of goods, documents and things, but shall continue until appropriate action to confiscate the goods, to impose penalty on any person engaged in the smuggling of goods or to prosecute for the offences, are concluded in accordance with law. (3) The reason to believe that any person has secreted about his person or in any place or used any aircraft, vehicle or animal or any vessel for smuggling of any goods, etc. however, may not come to an end with the confiscation of the goods found smuggled. Such belief may be founded on the facts revealed subsequent to the confiscation that any person has done acts attracting the provisions for confiscation of good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the date of adjournment. Non-compliance with these summons is an offence under Sections 174 and 175 of the Indian Penal Code. You are informed that giving false evidence in this proceedings is an offence punishable under Section 193 of the Indian Penal Code, I860...." 15. This notice is clearly with respect to the alleged evasion of customs duty on the import of Lupofresh Brewary HOP extract Pellets in the name of M/s. Integrated Exports, M/s. Trio Imports and Exports (P) Ltd. and of Arasan Industries and cleared through Madras Air Cargo and Trivandrum Airport, a comprehensive notice relating to the import of goods which were ordered to be released to the writ petitioner/respondent herein by this Court in several writ proceedings as well as one which ended with the order of confiscation and penalty (fine in lieu of confiscation). 16. During the pendency of this appeal, however, the enquiry has been completed. The impugned notice has exhausted its purpose. All that needs a clarification by us is that in the case in which goods have been released under orders of this Court there is still a possibility of confiscation of sale proceeds thereof but in the case in which goods ..... X X X X Extracts X X X X X X X X Extracts X X X X
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