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1971 Supreme(Cal) 52
HIGH COURT OF CALCUTTA
SABYASACHI MUKHERJI
G. AMBALAL (EXPORT) PRIVATE LTD. - Appellant
Versus
THE ASSISTANT COLLECTOR OF CUSTOMS, CALCUTTA - Respondent
Matter 428 Of 1970
Decided On : FEBRUARY 11, 1971
The definition of 'dutiable goods' in Section 2 (14) of the Customs Act, 1962, requires that the goods be chargeable to duty and duty has not been paid. The term 'material particulars' in Section 113 (i) of the Customs Act, 1962, refers to particulars that are material for the purposes of the Act, which are primarily the levy and realization of duty and the prevention of exportation or importation of prohibited goods.
Headnote:
CUSTOMS ACT, 1962 - SECTION 113 (I), 114 (II), 2 (14), 2 (33), 2 (41), 12, 14, 28, 50, 51, 117, 125, 132, 135 - FOREIGN EXCHANGE REGULATION ACT, 1947 - SECTION 12 (1), 23A, 23B - EXPORT TRADE OF SCHMITTHOFF (4TH EDITION) - PAGE 17 - INTERPRETATION OF STATUTES BY MAXWELL - 1969 EDITION, PAGE 232 - GOODS NOT DUTIABLE - MISDECLARATION OF VALUE NOT MATERIAL - NO OBLIGATION TO DECLARE VALUE ON BASIS OF PRICE PAID BY FOREIGN BUYER - PENALTY UNDER SECTION 114 (II) NOT IMPOSABLE - SHOW CAUSE NOTICE QUASHED.
Fact of the Case:
Petitioner, a jute goods exporter, entered into contracts with Reliance Commercial Corporation, Bombay, for the sale of hessian cess bags on F.O.B. basis. Reliance Commercial Corporation, in turn, entered into contracts with foreign buyers. Petitioner presented shipping bills along with declarations under Section 12 (1) of the Foreign Exchange Regulation Act, 1947, for shipment of goods to Yugoslavia. A show cause notice was issued alleging contravention of various provisions of the Customs Act, 1962, and the Foreign Exchange Regulation Act, 1947. Petitioner challenged the notice under Article 226 of the Constitution. The High Court quashed the notice.
Finding of the Court:
1. The goods in question were not dutiable goods as they were not chargeable to duty and duty had been paid on them. 2. The alleged misdeclaration of value was not in respect of material particulars as it did not affect the payment of duty or prohibition of goods. 3. Petitioner was not under any obligation to declare the value of the goods on the basis of the price paid by the foreign buyer. 4. Penalty under Section 114 (ii) could not be imposed as no duty was sought to be evaded.
Issues: 1. Whether the goods in question were dutiable goods. 2. Whether the alleged misdeclaration of value was in respect of material particulars. 3. Whether petitioner was under any obligation to declare the value of the goods on the basis of the price paid by the foreign buyer. 4. Whether penalty under Section 114 (ii) could be imposed.
Ratio Decidendi: 1. The definition of 'dutiable goods' in Section 2 (14) of the Customs Act, 1962, requires that the goods be chargeable to duty and duty has not been paid. In this case, duty had been paid and the goods were not dutiable. 2. The term 'material particulars' in Section 113 (i) of the Customs Act, 1962, refers to particulars that are material for the purposes of the Act, which are primarily the levy and realization of duty and the prevention of exportation or importation of prohibited goods. The alleged misdeclaration of value did not affect these purposes. 3. There is no provision in the Customs Act, 1962, requiring the exporter to declare the value of the goods on the basis of the price paid by the foreign buyer. 4. Section 114 (ii) of the Customs Act, 1962, provides for a penalty not exceeding five times the duty sought to be evaded or Rs. 1,000/-, whichever is greater. In this case, no duty was sought to be evaded, so the penalty could not be imposed.
Final Decision: The show cause notice was quashed and the respondents were restrained from proceeding with the said notice.
( 1 ) THE petitioner at all material times carried on business in jute goods. In the course of the said business the petitioner entered into several contracts with one Reliance Commercial Corporation, Bombay, for file sale of hessian cess bags. The said contracts with Reliance were on F. O. B. basis. The said Reliance Commercial Corporation, Bombay, it has been alleged, in its turn used to enter into contracts with the foreign buyers. According to the petitioner's case the petitioner had nothing to do with the contracts of Reliance Commercial Corporation, Bombay, with the foreign buyers. I am not here concerned actually whether the petitioner had anything to do with the foreign buyers and I do not decide that question. From the tenor of the show cause notice it appears that it is the case of the respondents that the petitioner had something to do with the sale to the foreign buyers but as mentioned hereinbefore, I do not decide this question in this application. It has been further alleged by the petitioner that the petitioner used to get the contracts with the said Reliance Commercial Corporation, Bombay, registered with the Export Contract Registration Committee. On the 4th May, 1967, the petitioner presented four shipping bills along with the declaration under Section 12 (1) of the Foreign Exchange Regulation Act, 1947, for the purpose of effecting shipment of goods to Yugoslavia for and on account of the said Reliance Commercial Corporation. Bombay. On the 26th July. 1967, the petitioner presented three shipping bills for effecting shipment of goods for and on account of the said Reliance Commercial Corporation, Bombay, to Yugoslavia along with the declarations under Section 12 (1) of the Foreign Exchange Regulation Act, 1947. The values declared in the said shipping bills and declarations under Section 12 (1) of the Foreign Exchange Regulation Act, 1947, were on the basis of the values mentioned in the contracts of the petitioner with the Reliance Commercial Corporation, Bombay. That is an admitted position. It has further been alleged by the petitioner that the values mentioned were the market price on the material dates. It is not necessary for me to decide if they were so. On the 31st August, 1967, a show cause notice dated the 26th August, 1967, issued by the respondent No. 1, namely, the Assistant Collector of Customs for Exports, Calcutta, was received requiring the petitioner and the said Reliance Commercial Corporation Bombay, to show cause why the goods covered by the said shipping bills should not be confiscated under Section 113 (d) of the Customs Act, 1962, and why penal action should not be taken against the petitioner under Section 114 (1) of the Customs Act, 1962. It was alleged in the said show cause notice that the goods that were sought to be exported without declaring the full export value on the shipping bills and G. R. I. forms were in contravention of the provisions of Sections 11, 14 (1) and 50 (2) erf the Customs Act, 1962, read with Section 12 (1) of the Foreign Exchange Regulation Act, 1947 and the notification thereunder and Sections 23a and 23b of the Foreign Exchange Regulation Act, 1947. It appears that in respect of the shipping bills as mentioned hereinbefore presented on the 4th May, 1967, the duty payable on the goods to be exported was paid on the 13th November, 1967. in January. 1968, the said export duty paid by the petitioner had been refunded. Prior thereto on the 18th November, 1967, another show cause notice was issued by the respondent No. 1, namely, the Assistant Collector of Customs, requiring the petitioner and the said Reliance Commercial Corporation, Bombay, to show cause why the goods should not be confiscated under Section111 (d) of the Customs Act, 1962 and why penal action should not be taken under Section 112 of the Act for violation of Section 12 (1) of the Foreign Exchange Regulation Act. 1947, read with Section 11 of the Customs Act. The petit
