Case Note & Summary
The case involves two appeals filed by the Commissioner of Customs & Central Excise, Goa, under Section 130 of the Customs Act, 1962, against a common order dated 13.8.2004 of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai. The Revenue sought to raise two substantial questions of law: whether the goods were liable for confiscation under Section 111(d) read with Section 11 of the Foreign Trade (Development & Regulation) Act, 1992, and under Section 111(m) of the Customs Act for misdeclaration. The background facts are that based on intelligence, the Directorate of Revenue Intelligence (DRI) scrutinized import manifests of seven consignments of fabrics at Marmagoa Port. Two consignments were in the name of M/s. Ayesha Exports, three in the name of M/s. R. T. & Co., and two in the name of M/s. Ruchitra Impex. Bills of entry were filed only for the two consignments of M/s. Ayesha Exports. Investigations revealed that M/s. R. T. & Co. and M/s. Ruchitra Impex were fictitious entities, and the goods were misdeclared as Polyester Knit Fabric when they were actually classifiable under a different heading attracting higher duty, with undervaluation. The respondent, M/s. Kabul Textiles (LLC), Dubai, was the supplier of the consignments in the names of M/s. R. T. & Co. and M/s. Ruchitra Impex. The respondent wrote a letter seeking permission to re-export the goods as the consignees had refused to retire documents. Show cause notices were issued to the consignees. The respondent replied, stating that orders were placed through a broker named Daulat, and they had acted in good faith. The CESTAT allowed the appeals of the respondent, holding that the goods were not liable for confiscation. The High Court dismissed the Revenue's appeals, holding that Section 111(d) requires import contrary to a prohibition, and no such prohibition was established. Section 111(m) requires misdeclaration by the importer or his agent, and the respondent supplier had no knowledge of the misdeclaration. The court found no substantial question of law.
Headnote
A) Customs Law - Confiscation - Section 111(d) Customs Act, 1962 - Prohibition - Goods imported by fictitious entities - Whether liable for confiscation - Held that Section 111(d) applies only if import is contrary to any prohibition imposed under the Customs Act or any other law. The Foreign Trade Act does not automatically prohibit import; no specific prohibition was shown. Confiscation under Section 111(d) not sustainable (Paras 6-8). B) Customs Law - Confiscation - Section 111(m) Customs Act, 1962 - Misdeclaration - Supplier's liability - Goods misdeclared by consignee - Respondent supplier had no knowledge of misdeclaration and acted in good faith - Held that misdeclaration must be by the importer or his agent; supplier not liable for acts of consignee. Confiscation under Section 111(m) not sustainable (Paras 9-10).
Issue of Consideration
Whether the goods are liable for confiscation under Section 111(d) read with Section 11 of the Foreign Trade (Development & Regulation) Act, 1992, and under Section 111(m) of the Customs Act, 1962 for misdeclaration.
Final Decision
Appeals dismissed. No substantial question of law. Goods not liable for confiscation under Section 111(d) or 111(m) of the Customs Act, 1962.
Law Points
- Confiscation under Section 111(d) requires goods to be imported contrary to any prohibition
- Section 111(m) requires misdeclaration in the bill of entry or manifest
- Supplier not liable for acts of consignee without knowledge or complicity
