GURCHARAN SINGH v. DIRECTORATE OF REVENUE INTELLIGENCE

Citation: [2008] 5 S.C.R. 856

Court: Supreme Court of India

Bench: S.B. SINHA, V.S. SIRPURKAR

Case summary

GURCHARAN SINGH v. DIRECTORATE OF REVENUE INTELLIGENCE.pdf

Judgment text

[2008) 5S. C. R. 856 "! ' . ".... GURCHARAN SINGH v. DIRECTORATE OF REVENUE INTELLIGENCE (Criminal Appeal No. 576 of 2008) APRIL 1, 2008 ,... [S. B. SINHA AND V. S. SIRPURKAR, JJ. ] )> application. 9. Mr, G. S. Vahanvati, the learned Solicitor General of India, on the other hand, would submit that the allegations made as against the appellant being covered by Section 135(b)(i) of the Act, the complaint petition discloses an offence within the meaning of Section 135 of the Act. 10. Before embarking on the rival contentions raised at the Bar, we may notice the relevant provisions of the Customs Act, as they stood prior to enactment of Customs Amendment ,,. Act, 2003. -y Section 2(33) of the Act defines "prohibited goods" as under:- "2.

(33) "prohibited goods" means any 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. " INTELLIGENCE [S. 8. SINHA, J. ] . -~ Section 11 empowers the Central Government by issuing 'i a Notification 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 goods of any specified description. The Notification can be issued for the purpose mentioned in sub-section (2). 8 Section 50 provides for presenting the entry of goods .... for exportation. "50. Entry of goods for exportation.

- (1) The exporter of any goods shall make entry thereof by presenting to the proper officer in the case of goods to be exported in vessel or aircraft, a shipping bill, and in the case of goods to be exported by land, a bill of export in the prescribed form. (2) The exporter of any goods, while presenting a shipping bill or bill of export, shall at"the foot thereof make and .. ~ subscribe to a declaration as to the truth of its contents. " Section 113 of the Act provides for confiscation of goods attempted to be improperly exported, clause (d) whereof reads as under:- "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 '- ' ..

namely,- "(i) any goods entered for exportation which do not correspond in respect of value or in any material particular with the entry made under this Act or in the case of baggage with the declaration made under Section 77. " (c) in clause (k), the words "under a claim for drawback" shall be omitted. " .. ~ 15. It is significant to note that clause (ii) of Section 113(h)(i), which was inserted by Finance (No. 2) Act, 1991 w. e. f. 27th September, 1991 remained in the statute book. As there was a duplication, one of the clauses, namely clause (i) of Section 13(h) was sought to be substituted by the other. 16. The amendments made in Section 135 of the Act by reason of the Amending Act, 2003 must be viewed from that • _.. J angle. We have noticed hereinabove that the allegations made against the appellant in the complaint petition refer to illegal claim of drawback.

The effect of the interpretation of the words "prohibited goods" came up for consideration before this Court in Om Prakash Bhatia vs. Commissioner of Customs, Delhi : (2003) 8 6 SCC 161 wherein a Division Bench of this Court observed :- ).. "6. At the outset, we would state that the learned counsel for the appellant has not pressed for the drawback in view of the specific provision of Section 76 which inter alia provides that no drawback shall be allowed "(b) in respect of any goods the market price of which is less than the amount of drawback due thereon". Therefore, for the purpose of getting drawback, the relevant consideration is the market price of the goods prevailing in the country and not the price of the goods which the exporter expects to receive from the overseas purchaser. " -JI/. ; The Court opined that the prohibition of importation and exportation could be subject to certain prescribed conditions to be .

fulfilled before or after clearance of goods and in the event the conditions are not fulfilled, it may amount to prohibited goods. 17. Noticing that such a Notification had been issued by the Central Government in terms of Section 18 of the Foreign Exchange Regulation Act, 1973 viz-a-viz Section 14 thereof providing for valuation of goods for the purposes of assessment, it was held: "16. The aforesaid section would be applicable for y' determining the value of goods for the purposes of assessment of tariff under the Act or any other law for the time being in force whereunder a duty of customs is chargeable on any goods by reference to their value. In the present case, on export of goods in question, no duty was payable under the Act. It was, therefore, contended ).. • that there is no scope of application of Section 14 tor determining the value of goods by applying the criterion laid down in the said section. In our view, this submission cannot be accepted.

For determining the export value of the goods, we have to refer to the meaning of the word "value" given in Section 2(41) of the Act, which specifically provides that value in relation to any goods means the value thereof determined in accordance with the provisions of sub-section (1) of Section 14. Therefore, if the export value of the goods is to be determined, then even if no duty is leviable, the method (mode) for determining the value of the goods provided under Section 14 is required to be followed. Section 14 specifically provides that in case of assessing the value for the purpose of export, value is to be determined at the price at which such or like goods are ordinarily sold or offered for sale at the place of exportation in the course of international trade, where the seller and the buyer have no interest in the business 0 of each other and the price is the sole consideration for sale.

No doubt, Section 14 would be applicable for determining the value of the goods for the purpose of tariff or duty of customs chargeable on the goods. In addition, by reference it is to be resorted to and applied for determining the export value of the goods as provided under sub-section (41) of Section 2. This is independent of any question of assessability of the goods sought to be exported to duty. Hence, for finding out whether the export value is truly stated in the shipping bill, even if no duty is leviable, it can be referred to for determining the true export value of the goods sought to be exported. " The question came up for consideration again in Commissioner of Central Excise & Customs, A. P vs. Suresh Jhunjhunwala and others: 2006 (10) SCALE 480 wherein this Court not only noticed Om Prakash Bhatia (supra) but also Commissioner of Customs (EP}, Mumbai vs. Prayag Exporters Pvt. Ltd. : (2003) 155 ELT 4 (SC) to hold :- "18.

However, it appears, the same Bench considered the matter at some length in Om Prakash Bhatia (supra) and )' , opined that the exporters were obliged to declare the value of the goods. In a detailed judgment, this Court not only took into consideration the provisions of the Customs Act, but also the provisions of Section 15 of the Foreign Exchange Regulation Act and the rules framed thereunder, as also the notifications issued by the Central Government from time to time.

The Court opined that for determining the export value of the goods, it is necessary to refer to the meaning of the word "value" as defined in Section 2(41) of the Act, and the same must be determined in accordance with the provision of Sub-section (1) of Section 14, stating: '-Section 14 specifically provides that in case of assessing the value for the purpose of export, value is to be determined at the price at which such or like goods are ordinarily sold or offered for sale at the place of exportation in the course of international ,.. l( • trade, where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for sale. No doubt, Section 14 would be applicable for determining the value of the goods for the purpose of tariff or duty of customs chargeable on the goods. In addition, by reference it is to be resorted to and applied for determining the export value of the goods as provided under Subsection (41) of Section 2.

This is independent of any question of assessability of the goods sought to be y exported to duty. Hence, for finding out whether the -export value is truly stated in the shipping bill, even if no duty is leviable, it can be referred to for determining the true export value of the goods sought to be exported. ' " This Court after noticing the finding of Om Prakash Bhatia (supra) in paragraph 18, observed as under : )... .. "20, This Court did not stop there, but also took into ~ " consideration the provision of Rule 11 of the Foreign Trade (Development and Regulation) Rules, 1993, holding: 'Hence, in cases where the export value is not correctly stated, but there is an intentional overinvoicing for some other purpose, that is to say, not mentioning the true sale consideration of the goods, then it would amount to violation of the conditions for import/export of the goods.

The purpose may be money-laundering or some other purpose, but it would certainly amount to illegal/unauthorised money transaction. In any case, over-invoicing of the export goods would result in illegal/irregular transactions in foreign currency. '" 21. It may be true that the said decision related to a matter concerning a drawback scheme, but a decision of this Court interpreting a different section by itself cannot, in )L our opinion, be brushed aside, only on the groun. d that the • decision of the same bench in Prayag Exporters (supra) is applicable being related to DEPB Scheme. The question, in our opinion, has to be considered having regard to the provisions of the definition of the 'prohibited goods', 'entry of goods' together with the provisions of the Foreign Exchange Regulation Act. " The question came up for consideration yet again in Commissioner of Customs, New Customs House, Mumbai vs. Mis.

Vishal Exports Overseas Limited : 2007 (3) SCALE 19 ~ wherein one of us (Sirpukar, J) was a Member. In that case also Om Prakash Bhatia (supra) was noticed. It was, however, found that the factual scenario therein in regard to applicability of the decision had not been established. It may also be noticed that in Sanjeev Kumar Gupta vs. Commissioner of Customs : 2001 CRI. L. J. 1963 a learned ~ ~ Single Judge of the Delhi High Court held :- "A person is said to have done anything fraudulently if he , 'f does that with an intent to defraud but not otherwise. The requisite guilty knowledge or mens rea under clauses (a) and (b) of Section 135(1) of the Customs Act can be established by circumstantial evidence. Here the petitioner is alleged to have floated fictitious firms with dishonest intention to obtain the duty draw back. In my view on the facts alleged, offence under section 135 of the Act is prima facie made out.

" We are not unmindful of the proposition of law that a penal statute must receive strict construction. 18. But it is also a trite law that the Court while interpreting a statute must consider the purpose for which the Act has been enacted. (See - Indian Handicraft Emporium and others vs. Union of India and others : (2003) 7 SCC 589 and Bairam Kumawat vs. Union of India : (2003) 7 SCC 628. 19. At this stage the court is concerned with establishment of a prima facie case. As the allegations made in the complaint .. >( prima facie discloses an offence under Section 135 of the Act, the High Court, in our view, has correctly refused to quash the proceeding. 20. Applying the said principle to the fact of the present case, we have no hesitation in holding that the High Court has not committed any error whatsoever in passing the impugned judgment. 21. For the aforesaid reasons we do not find any merit in this appeal which is dismissed accordingly. ~ -- D. G. Appeal dismissed.