Customs, Excise and Gold Tribunal - Tamil Nadu
Commissioner Of Customs vs M.R. Exports on 21 October, 2005
ORDER P.G. Chacko, Member (J)
1 .The respondents filed a Shipping Bill on 17-7-2000 for export of 59.994 MTs of Bangalore Rose Onions to Malaysia. Concerned officers of Customs, upon examination of the goods, found the consignment to be consisting of 39.994 MTs of Bangalore Rose Onions and 20 MTs of small variety onions. As the exporter did not produce any permit or licence from the competent authority for export of the small variety onions and did not fulfil certain requirements stipulated in respect of the Bangalore Rose Onions in Notification No. 21 (RE-2000) 1997-2002 issued by the DGFT, the original authority confiscated the entire consignment under Section 113(d) of the Customs Act, but with option for redemption of the goods against payment of a fine of Rs. 83,000/-. It also imposed a penalty of Rs. 50,000/- on the party under Section 114 of the Act. The first appellate authority set aside the order of the lower authority, by relying on the Tribunal's decision in Prayag Exporters Pvt. Ltd. v. Commissioner of Customs affirmed by the Supreme Court in Commissioner of Customs v. Prayag Exporters Pvt. Ltd. . Hence this appeal of the Revenue.
2. Heard both sides. Ld. SDR challenges the finding of the lower appellate authority that the onions are not in the nature of prohibited goods for export. Referring to the further finding recorded by ld. Commissioner (Appeals) that the goods are only restricted for export, ld. SDR points out that, where any goods are found to be 'restricted' for export, they should be held to be 'prohibited' for export. In this connection, reliance is placed on the following decisions of the Supreme Court:
(1) Sheikh Mohd. Omer v. CC (2) Om Prakash Bhatia v. CC It is also pointed out that the review petition filed by M/s. Om Prakash Bhatia against the Supreme Court's judgment cited above was dismissed by the court vide 2003 (158) A177 (S.C.). It is submitted that 'prohibited goods' are liable to be confiscated under Section 113(d) of the Customs Act and the person who attempts export of such goods is liable to be penalized under Section 114 of the Act. Thus ld. SDR has pleaded for restoration of the order passed by the original authority.
3. Ld. Counsel for the respondents seeks to justify the reliance placed by ld. Commissioner (Appeals) on the Supreme Court's judgment in Prayag Exports case and also submits that, unless it is shown by the department that the Central Government had specifically prohibited, restricted or otherwise regulated export of onions by order under Section 3(2) of the Foreign Trade (Development & Regulation) Act, 1992, the subject goods cannot be dubbed as "prohibited" and, for that matter, the apex court's judgments cited by ld. SDR cannot be applied to this case. Without prejudice to this argument, ld. counsel submits that the respondents were permitted to withdraw the goods from export and, in such circumstance, the authorities should be lenient in the matter of determining the quanta of redemption fine and penalty.
4. After giving careful consideration to the submissions, I find that the question whether "restriction" on export of goods would amount to "prohibition" is no longer res integra inasmuch as it was ruled by the Hon'ble Supreme Court as early as in 1970 in the case of Sheikh Mohd. Omer (supra) that "prohibition" included "restriction". Of course, that decision was rendered in relation to Section 111(d) of the Customs Act and Section 3 of the Imports & Exports (Control) Act, 1947. The provisions invoked by both sides in the present case are Section 113(d) of the Customs Act, 1962 and Section 3 of the Foreign Trade (Development & Regulation) Act, 1992. On a perusal of these provisions, I find that, while Section 111 of the Customs Act deals with cases of improper import of goods, Section 113 of the Act deals with attempted improper export of goods. Clause (d) of Section 111 and Clause (d) of Section 113 are, in pith and substance, literally identical. These provisions read as under:
Section 111. Confiscation of improperly imported goods, etc. The following goods brought from a place outside India shall be liable to confiscation:
(a)...
(b)...
(c)...
(d) any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force;
Section 113. Confiscation of goods attempted to be improperly exported, etc. - The following export goods shall liable to confiscation:
(a)...
(b)...
(c)...
(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;
The expression "contrary to any prohibition imposed by or under this Act or any other law for the time being in force" is common to both the provisions. This was the expression interpreted by the Hon'ble Supreme Court in the case of Sheik Mohd. Omer (supra). Their lordships held that the expression "any prohibition" contained in Section 111(d) encompassed all types of prohibition and that "restriction" was one type of prohibition. This ruling of the apex court would squarely be applicable to the expression "any prohibition" used in Section 113(d) also. In the case of Om Prakash Bhatia (supra), the Supreme Court had occasion to consider the meaning of "prohibition" occurring in Section 113(d). In doing so, their lordships followed the ratio decidendi of Sheikh Mohd. Omer (supra) and held that, where the conditions stipulated for export of goods were not fulfilled, the goods would become prohibited for export. The question now arising for consideration is whether the respondents had fulfilled the conditions for export of Bangalore Rose Onions and small variety onions which were presented for export under the aforesaid shipping bill. The respondents have never contested the stand taken by the Customs that small variety onions were "restricted" for export in terms of EXIM Policy 1997-2002 ITC (HS) Code 0703. In so far as the Bangalore Rose Onions are concerned, it is not in dispute that certain conditions were stipulated by the DGFT in Notification No. 21(RE-2000) 1997-2002. This Notification is seen on record. It was under this Notification that DGFT appointed Karnataka State Agricultural Produce, Processing and Export Corporation (KAPPEC), Bangalore as the Canalising Agency for export of Bangalore Rose Onions. This Notification required KAPPEC to issue NOC for export of Bangalore Rose Onions and also to certify the identity of the goods at the time of stuffing and sealing of export consignment. Admittedly, the respondents did not obtain the requisite NOC and certificate from KAPPEC for the purpose of export of Bangalore Rose Onions. The above Notification was issued under Section 5 of the Foreign Trade (Development & Regulation) Act, 1992. Any Notification issued under a statutory provision will have such legal force as the statutory provision itself has. Non-fulfilment of the conditions laid down under the Notification amounted to breach of the provisions of the Foreign Trade (Development & Regulation) Act, 1992, which is comprised in the expression "any other law" used in Section 113(d) of the Customs Act. Thus obviously, the Bangalore Rose Onions in question were "prohibited" for export. Both the varieties of onions were prohibited for export. Consequently, the entire consignment was liable to confiscation under Section 113(d) of the Customs Act, as rightly held by the Joint Commissioner of Customs. In the circumstances, the penal liability of the exporter under Section 114 is undeniable. Alternative plea raised by ld. counsel needs to be considered at this juncture. He has pleaded for lower fine and penalty than imposed by the original authority. The reasons stated by ld. counsel is that the export consignment was voluntarily withdrawn. It appears from the Jt. Commissioner's order that the party had requested for immediate release of the goods which were of perishable nature. In their appeal filed with the Commissioner (Appeals), the party submitted that they had already requested for withdrawal of goods from export and hence there was no question of mala fide intention attracting the penal provisions of Section 114 of the Customs Act. But, mens rea is not a factor relevant in determination of redemption fine under Section 125 or penalty under Section 114 of the Customs Act. Market value of the goods less the Customs duty payable thereon is the normal measure of redemption fine under Section 125. Once the goods are found liable to confiscation under Section 113 of the Customs Act, the person who rendered the goods so liable would attract Section 114 of the Act. Whether he had any mala fide intention or not is immaterial. Hence the reasons stated by ld. counsel does not seem to be relevant. No other reason has been stated before me. I have also had a look at the quanta of fine and penalty imposed by the original authority. The fine imposed is Rs. 83,000/- in lieu of confiscation of goods valued at about Rs. 8.3 lakhs. The fine imposed by the original authority is, easily, reasonable. The authority has imposed a penalty of Rs. 50,000/- on the party under Section 114. I am unable to interfere with this quantum of penalty either, there being no cross-objection to this appeal.
5. In the result, the impugned order gets set aside and the order of the original authority gets restored. The Revenue's appeal is allowed.
(Dictated and pronounced in open Court)