COMMNR. OF CUSTOM vs. M/S BROOKS INTERNATIONAL

C.A. No.-004559-004561 - 2002Supreme Court24 May 2007Bench: DR. ARIJIT PASAYAT LOKESHWAR SINGH PANTA7 pages
For Petitioner: B. KRISHNA PRASADFor Respondent: YASH PAL DHINGRA
AI SummaryRemanded

What were the facts?

The Commissioner of Customs directed confiscation of goods attempted to be exported by M/s Brooks International & Ors. (respondents) under Section 113(d) and (i) of the Customs Act, 1962. The goods were detained by the Directorate of Revenue Intelligence (DRI) on suspicion that their description, quantity, and value did not match the declared bills. The respondents were allowed to redeem the goods on payment of a fine of Rs. 10,00,000/-, and their claim for duty drawback was disallowed. The Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) allowed the respondents' appeals, holding that there was no power of confiscation and insufficient material to suggest the goods did not correspond to the bills. The revenue appealed this decision.

What did the Supreme Court hold?

The Supreme Court set aside the order of CEGAT and remitted the matter for fresh consideration. The Court noted that the issue involved a divergence of opinion among CEGAT benches and referred to its own decision in Om Prakash Bhati v. Commissioner of Customs, Delhi. The Court emphasized that for confiscation under Section 113(d), it must be established that the attempt to export was contrary to a prohibition imposed by law. It clarified that 'prohibited goods' include those where conditions for import or export are not complied with, and that 'any prohibition' in Section 111(d) includes restrictions. The Court also highlighted the importance of Section 14 of the Act, read with Section 2(41), for determining the true export value of goods, even if no duty is leviable. Over-invoicing or not mentioning the true sale consideration would amount to a violation of export conditions and potentially illegal/unauthorised money transactions. The Court directed CEGAT to rehear the appeals considering the principles laid down in the Om Prakash Bhati case.

What were the issues?

1. Whether goods attempted to be exported can be confiscated under Section 113(d) and (i) of the Customs Act, 1962, when their market value is less than the claimed duty drawback, and the goods allegedly do not match the declared particulars. Assessee's arguments: The respondents supported the CEGAT's order, which held that there was no power of confiscation and insufficient material to dispute the declared FOB and description of goods. They contended that the CEGAT had correctly interpreted Section 113(d) and (c) of the Act. Revenue's arguments: The appellant (revenue) argued that Section 113(1)(d) and (c) of the Act were applicable as they dealt with excisable goods, prohibited goods, and goods entered for exportation. They contended that the respondents attempted to export old and used readymade garments, which is impermissible under Rule 3 of the Drawback Rules, and that the market value being less than the duty drawback was not admissible under Section 76(1)(b) of the Act. The revenue also argued that CEGAT had erroneously interpreted Section 113(d) and (c) and had not properly analyzed the show-cause notice.

Which sections of the Income-tax Act were involved?

Section 113,Section 76,Section 14,Section 2(41),Section 111,Section 11,Section 50

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 7 CASE NO.: Appeal (civil) 4559-4561 of 2002 PETITIONER: Commissioner of Custom, New Delhi RESPONDENT: M/s Brooks International & Ors. DATE OF JUDGMENT: 24/05/2007 BENCH: Dr. ARIJIT PASAYAT & LOKESHWAR SINGH PANTA

JUDGMENT: J U D G M E N T [With C.A. Nos. 140-143 of 2004] Dr. ARIJIT PASAYAT, J.

1.

Since all these appeals relate to identical question, they are taken up for disposal by this common judgment.

2.

The basic issue is when the market value of goods under export is much less than the amount of drawback claimed, whether such goods can be confiscated for violation of the provisions of the Customs Act, 1962 (in short the ’Act’). In the matters relating to CA No.4559-4561 of 2002, the respondent had sent a consignment to the export shed of ICD, TKD, New Delhi for exporting the same under claim for duty drawback. On the basis of intelligence, Directorate of Revenue, Intelligence (in short ’DRI’) detained the consignment. It was, prima facie, noted that the goods did not appear as per description, quantity and value disclosed in the bills. The consignments of the respondents were examined on differ

The order continues below.

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