Custom, Excise & Service Tax Tribunal
Piyush Sanghavi vs Acc, Mumbai on 8 October, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEALS NOS: C/21, 22 & 43/2010
[Arising out of Order-in- Original No: CC-(RT) 41/2009 ACC dated 21/10/2009 passed by the Commissioner of Customs (Export), Air Cargo Complex, Sahar, Mumbai.]
For approval and signature:
Honble Shri P.R. Chandrasekharan, Member (Technical)
Honble Shri Ramesh Nair, Member (Judicial)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
:
No
2.
Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
Yes
3.
Whether Their Lordships wish to see the fair copy of the Order?
:
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
:
Yes
Nickunj Shah
Nickunj Eximp Enterprises Pvt. Ltd.
Piyush Sanghavi
Appellants
Vs
Commissioner of Customs (Export)
ACC, Mumbai
Respondent
Appearance:
Shri V.S. Nankani, Advocate with Mr. R.G. Sheth, Advocate for the appellants Shri V.K. Agarwal, Addl. Commissioner (AR) for the respondent CORAM:
Honble Shri P.R. Chandrasekharan, Member (Technical) Honble Shri Ramesh Nair, Member (Judicial) Date of hearing: 08/10/2014 Date of decision: 24/10/2014 ORDER NO: ____________________________ Per: P.R. Chandrasekharan:
The appeal arises from Order-in-Original No: CC-(RT) 41/2009 ACC dated 21/10/2009 passed by the Commissioner of Customs (Export), Air Cargo Complex, Sahar, Mumbai. Vide the impugned order, the ld. Adjudicating authority has absolutely confiscated 1135 kgs. and 35.5 kgs. of nuclear grade graphite blocks sought to be exported by the appellant M/s Nickunj Eximp Enterprises Pvt. Ltd. to Ward Commercial, Iran and Microsal International, Dubai and valued at ` 60,70,331/- and `1,91,422/- vide shipping bills nos. 6524973 dated 10/10/2007 and 6528077 dated 13/10/2007, respectively, under the provisions of Section 113(d) of the Customs Act, 1962. Further a penalty of ` 30 lakhs each and ` 5 lakhs has been imposed on the exporter firm and its director Mr. Nickunj Shah and Mr. Piyush N. Sanghvi, Partner of M/s Parth Enterprises under the provisions of Section 114 of the said Customs Act. Aggrieved of the same, the appellants are before us.
2. The facts relevant to the case are briefly as follows. The appellant M/s Nickunj Eximp Enterprises Pvt. Ltd. (M/s Nickunj, in short) filed two shipping bills Nos. 6524973 dated 10/10/2007 and 6528077 dated 13/10/2007 for export of 1135 kgs. and 35.5 kgs. of graphite blocks to Ward Commercial, Iran and Microsal International, Dubai. Samples of the goods were drawn on 05/11/2007 and sent to Bhabha Atomic Research Centre (BARC) for test and vide test report dated 29/11/2007, BARC confirmed that the purity level to be ranging from 0.575 to 1.749 ppm and density to be ranging from 1.83 to 1.85 and the graphite appeared to be nuclear grade. Therefore, the goods were seized under a panchnama dated 2-4-2008. Statements of Mr. Nickunj Shah, Director of the appellant firm and Mr. Piyush Sanghavi, Partner of M/s Parth Enterprises, who is alleged by the appellant to be the supplier of the goods were recorded. Since the goods sought to be exported were Nuclear grade graphite/carbon having a purity better than 5 ppm boron equivalent and with a density greater than 1.5 gram/ce and required a permission/licence for export which the appellant did not have, a show cause notice dated 09/04/2008 was issued proposing confiscation and imposition of penalties. The said notice was adjudicated by the impugned order and the proposals confirmed. Hence the appeal.
3. The ld. Counsel for the appellant makes the following submissions:-
3.1. The appellant had earlier exported to Iran 3.95 MTs of graphite blocks to Ward Commercial, Iran vide shipping bills dated 7-3-2007 and 22-7-2007 which had been permitted by the Customs. Therefore, the appellant was under the bonafide belief that the said goods sought to be exported were permissible items for export. The appellant had obtained letters from M/s Ward Commercial, Iran stating that these are required for industrial applications.
3.2. Nuclear grade graphite is prohibited for export only if the quantity sought to be exported is exceeding 30 metric tonnes in any period of 12 months. In the present case, the total quantity including those under confiscation is only 5.12 MTs (3.95 MTs exported earlier + 1.17 MTs under confiscation) which is much less than the limit of 30 MTs. Therefore, the goods are not prohibited goods liable to confiscation.
3.3. The appellant had written letters to DGFT and BARC vide letter dated 13/04/2007 seeking clarification regarding the scope of SCOMET items for which they did not receive any reply. They had also sought amendment of shipping bills and recalling of Iran consignment vide letter dated 13/11/2007 followed by reminders which has not been responded to by the Customs. In these circumstances, absolute confiscation of the goods and imposition of penalties on the appellants are not justified.
3.4. In the present case, though shipping bills had been filed, let export order allowing the exports had not been given by the Customs. Therefore, the export transaction is not complete. Hence the provisions of Section 113(d) are not attracted. Reliance is placed on the decision of the apex court in the case of Asian Food Industries [2006 (204) ELT 8 (SC)] in support of this contention.
3.5. In the present case, there was no attempt to export and only preparation to export the goods was made by the appellant. Hence, there is no violation of Section 113 inviting confiscation and consequently, no penalty can be imposed under section 114. Reliance is placed on the decisions of this Tribunal in the case of Dooars Transport Pvt. Ltd. [1993 (64) ELT 322] and Ramayan Impex [2005 (189) ELT 446] in support of the above contention.
In the light of the above, it is pleaded that the appellants should be allowed to take the goods back to town by setting aside the absolute confiscation and penalties imposed.
4. The ld. Additional Commissioner (AR) appearing for the Revenue strongly refutes the contentions of the ld. Counsel for the appellant and his submissions can be summarized as follows:-
4.a. Vide notification No. 47 (RE-2006)/2004-2009 dated 20-2-2007, the Foreign Trade Policy 2004-2009 was amended to provide that Direct or indirect export and import of all items, materials, equipment, goods and technology which could contribute to Irans enrichment-related, reprocessing or heavy water related activities, or to the development of nuclear weapon delivery systems as mentioned below whether or not originating in Iran, to/from Iran is prohibited:
i) items, listed in INFCIRC/254/Rev8/Part I in document S/2006/814, in sections B.2 to B.7 as well as A.I and B.I except the supply, sale or transfer of equipment covered in B.I when such equipment is for light water reactors and low-enriched uranium covered by A.I.2 when it is incorporated in assembled nuclear fuel elements for such reactors;
ii) items listed in S/2006/815 except the supply, sale or transfer of items covered by 19.A.3 of Category II The above mentioned UN Security council documents are accessible from the home page of DGFT web site.
This issues in public interest.
4.b. The items listed in INFCIRC/254/Rev8/Part I read with S/2006/815, in paragraph 2.2 relating to Nuclear grade graphite reads as follows:-
Graphite having a purity level better than 5 parts per million boron equivalent and with a density greater than 1.50 g/cm2 for use in a nuclear reactor as defined in paragraph 1.1 above, in quantities exceeding 30 metric tones for any one recipient country in any period of 12 months. Thus the quantity restriction is placed recipient country wise and not exporter wise.
4.c. Resolution No. AEA/27 (1) 2005-ER dated 1-2-2006 issued by the Dept. of Atomic Energy prescribes guidelines for nuclear transfers (exports) under the provisions of the Atomic Energy Act, 1962. As per the Specific Guidelines provided therein, there is prohibition of export for development of nuclear explosives in paragraph 1. Paragraph 1 (c ) specifically provides that (c) Transfer of the following items (prescribed substances and prescribed equipment) and related technology shall be authorized only upon formal governmental assurances from recipients explicitly excluding uses, which would result in any nuclear explosive device.
(i) Source material, specified fissionable material, nuclear grade graphite and heavy waters;
(ii) . Under the General guidelines, contained in the said resolution, it has been specifically provided that export of any prescribed substance, prescribed equipment or related technology shall be permitted only against an export licence issued in this behalf unless export is prohibited. Each and every application shall be scrutinized on case by case basis and on the merits of each case. Notwithstanding the specific guidelines as applicable, general guidelines will be applicable in all the cases and following relevant factors shall be taken into consideration while examining the application for export licences. Further the conditions for transfers specified in the resolution states that in the process of determining that the transfer will not pose any unacceptable risk of diversion, exporter shall obtain the following from the recipient and furnish the same along with export licence application to the Licensing authority in the Department of Atomic Energy, Govt. of India, the statements from the end-user specified in clauses (a) to (f) thereof.
4.d. Vide notification dated 20-1-2006, the Central Government has notified the substances to which the provisions of the Atomic Energy Act, 1962 will apply and category 0 specifies Nuclear materials, nuclear-related other materials, equipment and technology. Serial No. 0A302 specifies nuclear grade graphite/carbon, having a purity level better than 5 ppm boron equivalent and with a density greater than 1.5 gram/cc in quantities exceeding 30 metric tonnes in any period of 12 months. Notification No. 27 (RE-2007)/2004-2009 dated 7-9-2007 also specifies the said goods under the list of Special Chemicals, Organisms, Materials, Equipment and Technologies to which the restrictions relating to exports apply. Thus a combined reading of all the above notifications/resolutions make it abundantly clear that the export of nuclear grade graphite needed a specific licence. In the present case, the appellant did not have any such licence nor had it made any application for issue of such a licence. Hence the goods are prohibited goods for the purposes of Section 2(33), 11 and 113 (d) of the Customs Act, 1962, liable to absolute confiscation. Reliance is placed on the decision of the honble Apex Court in the case of Om Prakash Bhatia [2003 (155) ELT 423 (SC)].
4.e. As regards the contention of the appellant that the goods had not attained the status of export goods as let export order had not been given, the ld. AR relies on the decision of the Tribunal in the case of Vetri Trading & Exports [2008 (227) ELT 222] wherein it was held that when a shipping bill is filed and the goods are brought to customs area, attempt to export goods starts and at such stage goods attain the status of export goods. Reliance is also placed on the decision of the Tribunal in the case of KK Imports and Exports vs. Commr. Of Customs, Chennai [2009 (237) ELT 739] in support of the above contention.
4.f. The ld. AR further submits that there was no bona fide conduct on the part of the appellant in the attempted export of graphite blocks. The appellant had created a web of paper transactions (without supply of goods) to conceal the source of procurement of graphite blocks. According to Mr. Nickunj Shah, in the statement given on 22-10-2007 before the investigating officer, the goods were procured from M/s Parth Enterprises and they had not undertaken any quality control test and only the dimensions were checked. However, as per the statements of Mr. Piyush N. Sanghvi, Partner of Parth Enterprises, dated 2-11-2007 and 3-11-2007, Mr. Parag, Manager in Graphite Division of M/s Nickunj had contacted him and enquired whether graphite of grade 1940 was available and he in turn, had enquired with M/s Bright Global Paper Pvt. Ltd. who had informed that they had grade Ellor + 50 grade which information was passed on to M/s Nickunj. Thereafter M/s Nickunj informed their interest in Ellor+50 grade and had sent the technical specifications on 21-6-2007 and requested for sending 2 samples which if found suitable would lead to order of 50 pieces. Accordingly, he had obtained 2 samples from M/s Bright Global Paper and forwarded the same to M/s Nickunj vide letter dated 27-6-2007 and M/s Nickunj tested the samples and confirmed the order for 225 pieces. In the meanwhile M/s Parth had confirmed the order for 50 pieces to M/s Bright Global Paper who had supplied 25 blocks of size 400x400x600 mm which he gave to M/s Midpoint Engineers for machining into size 250x245 mm length. The said goods were sent to M/s Nickunj on 20-9-2007. However as per the statement of Mr. Rasik Savla, Director of M/s Bright Global Paper Pvt. Ltd. dated 7-11-2007, he did not know any one from M/s Nickunj and M/s Parth and he had received the order for M/s Nickunj from Mr. Manish Patel, Director of M/s Dimash India Pvt. Ltd. with a request to issue bills and delivery notes backdated for June 2007 and accordingly he had raised 5 invoices dated 11-6-2007, 12-6-2007, 13-6-2007 and 14-6-2007 for 25 graphite blocks of size 400x400x600 mm without actually supplying any goods. Mr. Manish Patel, Director of M/s Dimash India Pvt. Ltd. in his statement dated 14-11-2007 had admitted that Mr.Nickunj Shah of M/s Nickunj had approached him about 6 months back with a proposal that he wanted to show some paper transactions in respect imports of graphite blocks from China for a consideration. Accordingly he approached Mr. Rasik Savla of M/s Bright Global Paper Pvt. Ltd. who agreed to issue bills/delivery notes for supply of graphite blocks without any actual supply of materials. All the transactions took place in the last week of October 2007 and it was Mr. Nickunj Shah who told him to have the papers issued in the name of Parth and he had told Mr. Savla accordingly. Thus M/s Nickunj had created a web of paper transactions to conceal the source of procurement of the graphite blocks which in fact were imported by M/s Nickunj itself from China. This conduct of the appellant clearly show their malafide intention to export prohibited goods to Iran. Mr. Piyush Sanghvi assisted Mr. Nickunj Shah in creation of these paper transactions. Thus the involvement of both these persons are clearly established in the illegal attempt to export nuclear grade graphite blocks.
In the light of these evidences available on record, the ld. AR pleads for upholding the impugned order in its entirety.
5. We have carefully considered the rival submissions. Our findings and conclusions are enumerated in the ensuing paragraphs.
5.1. The appellant has not disputed the fact the graphite blocks sought to be exported by them are nuclear grade as certified by the BARC in their test report dated 29-11-2007. During the course of the arguments, the ld. Counsel also had agreed to this fact and confirmed that they are not disputing the test report of the BARC. Their only contention is that they were not aware that the items were restricted for export and needed a licence from the Dept. of Atomic Energy. Their only contention is that since the customs had allowed export of 2 consignments earlier, they could export upto 30 MTs of nuclear grade graphite in a period of 12 months.
5.2. From the notification No. 47 (RE-2006)/2004-2009 dated 20-2-2007 of the DGFT, it is clear that export of nuclear grade materials to Iran is prohibited. The items, listed in INFCIRC/254/Rev8/Part I and S/2006/815 to which the prohibition/restriction applies were put on the public domain through the website of the DGFT and was accessible to the public. The said documents make it abundantly clear that Graphite having a purity level better than 5 parts per million boron equivalent and with a density greater than 1.50 g/cm2 , in quantities exceeding 30 metric tonnes for any one recipient country in any period of 12 months was a restricted item. Further Resolution No. AEA/27 (1) 2005-ER dated 1-2-2006 issued by the Dept. of Atomic Energy prescribes guidelines for nuclear transfers (exports) under the provisions of the Atomic Energy Act, 1962, which again was in the public domain. From the said resolution, it can be seen that export of nuclear grade graphite could be authorized only upon formal governmental assurances from recipients explicitly excluding uses, which would result in any nuclear explosive device . The said resolution also provided that export of any prescribed substance, prescribed equipment or related technology shall be permitted only against an export licence issued in this behalf unless export is prohibited. Each and every application shall be scrutinized on case by case basis and on the merits of each case. Notwithstanding the specific guidelines as applicable, general guidelines will be applicable in all the cases and following relevant factors shall be taken into consideration while examining the application for export licences. From these documents available in the public domain, it is crystal clear that export of nuclear grade graphite blocks of certain specifications needed a specific licence and were subject to conditions. From the DGFT notification as well as from the resolution issued by the Dept. of Atomic Energy, it can be seen that the restriction is in respect of the goods and not in respect of any particular individual exporter. In other words, the quantity restrictions were qua recipient country and not qua exporter. Therefore, the appellant cannot plead that they were ignorant of the provisions of law governing export of nuclear grade graphite.
5.3. In the documents available on record, a list of customers to whom the appellant had supplied graphite items is given. Two of the customers listed therein are M/s BARC, Mumbai and M/s Nuclear Fuel Complex, Hyderabad which are well known institutions dealing with nuclear materials in India. Therefore, the appellant cannot take the plea that they did not know what nuclear grade graphite is. Further as per the product brochure of Nickunj Group available in the file, they are dealers/distributors for Carbonne Lorraine group who are world-wide leaders in manufacture of graphite products including specific components for nuclear and aerospace industries. It is also on record that till 2006, the appellant had represented Carbonne Lorraine/Carbone of America who are manufacturers and exporters of graphite products world-wide, and were their exclusive agents for India. It is also on record that when they represented the said company, the said company used to apply for licences in respective countries and past records of the purchasers were relevant criteria in getting licences for graphite exports. From these documents available on record, it is clear that the appellant had the knowledge about the procedures to be undertaken for export of nuclear grade material and therefore, the appellant cannot take the plea of ignorance to escape the consequences of their actions.
5.4. Further we note that the appellant has resorted to camouflage to conceal the source of procurement of graphite blocks which they have tried to export. From the statements of Mr. Manish Patel, Director of M/s Dimash India Pvt. Ltd. and Mr. Rasik Savla, Director of M/s Bright Global Paper Pvt. Ltd., paper transactions were created (without actual supply/delivery of goods) in respect of procurement of graphite blocks which the appellant had originally imported from China. This was done with the active assistance and connivance of Mr. Piyush N. Sanghvi, Partner of Parth Enterprises. The supply of 50 graphite blocks of size 225x225x600 mm from 25 blocks of size 400x400x600 mm is a physical impossibility which again shows that the so called transactions were bogus and fictitious. There is no satisfactory explanation as to why the appellant wanted to create a web of bogus transactions with respect to their procurement of nuclear grade graphite blocks. These transactions only strengthen the departments case of deliberate mis-declaration of the goods under export. The appellants plea of bona fide conduct by seeking clarifications from the DGFT and BARC is again a deliberate attempt to mislead. Notification No. 47 (RE-2006)/2004-2009 dated 20-2-2007, amending the Foreign Trade Policy 2004-2009 and Resolution No. AEA/27 (1) 2005-ER dated 1-2-2006 issued by the Dept. of Atomic Energy prescribing the guidelines for nuclear transfers (exports) under the provisions of the Atomic Energy Act, 1962 were already in the public domain as per which nuclear grade graphite needed a specific licence for the purposes of export. Therefore, the appellant cannot take shelter under the plea that these authorities did not give any clarifications sought by the appellant. In fact, there was no need for any clarification in the matter. Thus from the evidences available on record, the malafide conduct of the appellant is clearly established. As regards the contention that the customs had allowed export of similar consignments earlier, this argument is not tenable for the following reason. First of all, there is no estoppel in a customs transaction. Merely because the Customs committed an error in allowing a transaction, that cannot be a reason for repeating the error. The honble Apex Court in the case of Fuljit Kaur vs. State of Punjab [2010(262)ELT 40(SC)]s had held as follows:-
13. ..The respondent cannot claim parity with D.S. Laungia (supra) in view of the settled legal proposition that Article 14 of the Constitution of India does not envisage for negative equality. Article 14 is not meant to perpetuate illegality or fraud. Article 14 of the Constitution has a positive concept. Equality is a trite, which cannot be claimed in illegality and therefore, cannot be enforced by a citizen or court in a negative manner. If an illegality and irregularity has been committed in favour of an individual or a group of individuals or a wrong order has been passed by a Judicial Forum, others cannot invoke the jurisdiction of the higher or superior court for repeating or multiplying the same irregularity or illegality or for passing wrong order. A wrong order/decision in favour of any particular party does not entitle any other party to claim the benefits on the basis of the wrong decision. Even otherwise Art.14 cannot be stretched too far otherwise it would make function of the administration impossible. [vide Coromandel Fertilizers Ltd. Vs. Union of India & Ors. AIR1984 SC 1772; Panchi Devi Vs. State of Rajasthan & Ors.(2009) 2 SCC 589; and Shanti Sports Club & Anr. Vs. Union of India & Ors. (2009) 15 SCC 705]. In Bel Pharma Ltd. case [2010 (259) ELT 10 (SC)] the honble apex Court had held that in a tax matter, the doctrine of promissory estoppel as such may not be applicable and the revenue can be permitted to take a position different from its earlier stand provided it is able to demonstrate the distinguishable features of the case. In the present case, in our considered view, the Revenue has discharged this responsibility by obtaining the test report from BARC that the goods are nuclear grade which needs a specific permission/licence for its export.
5.5. The reliance placed by the appellant on the decisions in the case of Asian Food Industries and Dooars Transport Pvt. Ltd. actually do not support the case of the appellant at all as the facts are quite different and distinguishable. In the Asian Food Industries case, 20 containers of pulses and grains were exported during 22/06/2006 to 24/02/2006. In respect of another 87 containers, shipping bills were filed and let export orders given on 23rd, 24th and 26th June, 2006. On 27th June, 2006 the Central Govt. issued a notification banning the export of pulses. The question before the court was whether the ban would apply in case of export consignments where let export orders had already been given. The honble apex court observed that Section 51 of the Customs Act, which provides for grant of let export order by the proper officer of customs after satisfying that the goods are not prohibited and the exporter had paid the duty, does not say that unless and until the shipment crosses the international border, the notification imposing prohibition shall be attracted. Similarly in the case of Dooars Transport though the bill of export was presented to the Customs Officers, the goods were still in the custody of the party. Since nothing having been done to take the goods out of India, it was held that there was only preparation to export the goods and not an attempt to export so to attract the provisions of sections 113 and 114 of the Customs Act. These are not the facts obtaining in the present case. In the facts of the case before us, the appellant had filed the shipping bills and had presented the goods for examination by the Customs. No let export order had been granted. Samples of the goods were drawn and sent for testing. On testing, the goods were found to be nuclear grade which needed a licence to export which the appellant did not have. Thereafter, the goods were seized and subsequently confiscated. Thus the facts involved are completely different. It is a settled position in law that a ratio of a decision would apply only when the facts are identical. In Al Noori Tobacco Products Ltd. case [2004 (170) ELT 135 (SC)] the honble apex court held as follows:-
..Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are neither to be read as Euclid's theorems nor as provisions of the statute and that too taken out of their context. These observations must be read in the context in which they appear to have been stated. Judgments of Courts are not to be construed as statutes. To interpret words, phrases and provisions of a statute, it may become necessary for judges to embark into lengthy discussions but the discussion is meant to explain and not to define. Judges interpret statutes, they do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes. There is always peril in treating the words of a speech or judgment as though they are words in a legislative enactment, and it is to be remembered that judicial utterances made in the setting of the facts of a particular case."
Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases. Disposal of cases by blindly placing reliance on a decision is not proper.
The following words of Lord Denning in the matter of applying precedents have become locus classicus:
"Each case depends on its own facts and a close similarity between one case and another is not enough because even a single significant detail may alter the entire aspect, in deciding such cases, one should avoid the temptation to decide cases (as said by Cordozo) by matching the colour of one case against the colour of another. To decide therefore, on which side of the line a case falls, the broad resemblance to another case is not at all decisive."
5.6. The honble Apex Court in the case of Om Prakash Bhatia (supra) had an occasion to examine the scope of term prohibited goods and confiscation of such goods under the provisions of section 113 and held as follows:-
"113. Confiscation of goods attempted to be improperly exported etc. - The following export goods shall be liable to confiscation :-
(d) 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."
7. The aforesaid Section empowers the authority to confiscate any goods attempted to be exported contrary to any `prohibition' imposed by or under the Act or any other law for the time being in force. Hence, for application of the said provision, it is required to be established that attempt to export the goods was contrary to any prohibition imposed under any law for the time being in force.
8. Further, Section 2(33) of the Act defines "prohibited goods" as under :-
"prohibited goods" means goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with."
9. From the aforesaid definition, it can be stated that (a) if there is any prohibition of import or export of goods under the Act or any other law for the time being in force, it would be considered to be prohibited goods; and (b) this would not include any such goods in respect of which the conditions, subject to which the goods are imported or exported, have been complied with. This would mean that if the conditions prescribed for import or export of goods are not complied with, it would be considered to be prohibited goods. This would also be clear from Section 11 which empowers the Central Government to 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 the goods of any specified description. The notification can be issued for the purposes specified in sub-section (2). Hence, prohibition of importation or exportation could be subject to certain prescribed conditions to be fulfilled before or after clearance of goods. If conditions are not fulfilled, it may amount to prohibited goods. This is also made clear by this Court in Sheikh Mohd. Omer v. Collector of Customs, Calcutta and Others [(1970) 2 SCC 728] wherein it was contended that the expression `prohibition' used in Section 111(d) must be considered as a total prohibition and that the expression does not bring within its fold the restrictions imposed by clause (3) of the Import Control Order, 1955. The Court negatived the said contention and held thus :-
"...What clause (d) of Section 111 says is that any goods which are imported or attempted to be imported contrary to "any prohibition imposed by any law for the time being in force in this country" is liable to be confiscated. "Any prohibition" referred to in that Section applies to every type of "prohibition". That prohibition may be complete or partial. Any restriction on import or export is to an extent a prohibition. The expression "any prohibition" in Section 111(d) of the Customs Act, 1962 includes restrictions. Merely because Section 3 of different expression "prohibiting", "restricting" or "otherwise controlling", we cannot cut down the amplitude of the word "any prohibition" in Section 111(d) of the Act. "Any prohibition" means every prohibition. In other words all types of prohibitions. Restriction is one type of prohibition. From item (I) of Schedule I. Part IV to Import Control Order, 1955, it is clear that import of living animals of all sorts is prohibited. But certain exceptions are provided for. But nonetheless the prohibition continues."
5.7. If we apply the ratio of the above decision to the facts of the case before us, the export of nuclear grade graphite required a specific licence for the purposes of export and in the absence of such a licence, the goods became prohibited goods as defined in Section 2(33) and 11 of the Customs Act. Consequently they were liable to confiscation under Section 113(d).
5.8. The appellant has also made an argument that in the present case, the appellant had not made any attempt to export and sought permission to take the goods back to town. Reliance has been placed on the decision of Ramayan Impex (supra). The said decision was rendered in a situation where the goods were brought to a customs area under a shipping bill and there was no prohibition in respect of the said goods with regard to their export. It was in that context it was held that there was only a preparation to export and there was no attempt to export. However in Vetri Trading and K.K. Imports & Exports (supra), this Tribunal had held that when a shipping bill had been filed and the goods were brought to the customs area, attempt to export goods had started and at such stage the goods attained the status of export goods. In the present case, we find that the goods were brought to the customs area for the purposes of export and the shipping bills had been filed. Further, the goods needed a specific licence for the purposes of export which the appellant exporter herein did not have. In these circumstances, the attempt to export prohibited goods is clearly established and the provisions of Section 113(d) are clearly attracted. Therefore, absolute confiscation of the prohibited goods under Section 113(d) by the adjudicating authority cannot be faulted at all as the discretion to absolutely confiscate or allow redemption lies with the adjudicating authority under the provisions of Section 125(1) of the Customs Act. In the present case, the adjudicating authority has exercised his discretion to absolutely confiscate the goods as the goods are prohibited/ restricted for export in terms of an international resolution to which India is a party. Therefore, the offence committed assumes significant dimension in the context of nuclear terrorism. Hence the absolute confiscation ordered by the adjudicated authority is well-judged and we uphold the same.
5.9. The next issue for consideration is imposition of penalty of ` 30 lakhs each on the appellant firm and its Director Mr. Nickunj Shah. Considering the value of ` 62 lakhs of the export goods, the penalty of ` 30 lakhs imposed on the appellant exporter cannot be faulted at all as it is much below the limit of three times the value of the goods as declared by the exporter in the case of prohibited goods. Similarly as regards the penalty on the Director of the appellant firm, it was Mr. Nickunj Shah who was the main brain behind the attempt to illegally export and who tried to camouflage the transaction. His involvement in the alleged illegal export is manifest from his statement as also the statements of others involved in the transactions. Since the transaction has ramifications on international nuclear terrorism, no leniency is merited. Therefore, we uphold the penalty of ` 30 lakhs imposed on Mr. Nickunj Shah also. As regards the penalty imposed on Mr. Piyush N. Sanghvi, there is no direct involvement on his part in the attempt to export nuclear grade graphite. He has only assisted Mr. Nickunj Shah in procuring fictitious bills showing purchase of graphite blocks. Therefore, it cannot be said that any of his action/omission to act made the goods liable to confiscation. Therefore, the provisions of Section 114 are not attracted in his case and accordingly we set aside the penalty imposed on Mr. Piyush N Sanghvi, Partner of M/s Parth Enterprises.
6. In sum, we uphold the impugned order except for setting aside the penalty on Mr. Piyush N. Sanghvi, Partner of M/s Parth Enterprises.
(Operative part of the order pronounced in the Court on 24 /10/2014) (Ramesh Nair) Member (Judicial) (P.R. Chandrasekharan) Member (Technical) */as 24