Select Customs Law Case laws applicable for CA Final May 2012 Exams

1. Case Law:    Tirupati Udyog Ltd. V. UOI 2011 (AP. HC)

Issue:               Clearance of goods from DTA to SEZ chargeable to excise duty under the SEZ Act 2005 or Customs Act,1962.

Analysis:         1.Charging section has to be construed strictly, with clear words (If an action or s person is  not brought within the ambit , he cannot be taxed).

2. Since SEZ Act does not contain any provision to levy and collection of export duty for goods supplied by a DTA to SEZ unit, export duty cannot be levied.

3. A  conjoint reading of Sec 12(1),2(18),2(23) & 2(27) of  Customs Act 1962 , customs duty can  be levied only on goods exported/ imported beyond the territorial waters of India.

Conclusion:    On the basis of above the Hon. HC held that,

1. Since the SEZ Act does not have a charging section so as to levy and collection of export duty and

2. SEZ unit and DTA unit is located within the territorial waters in India, it is not liable to export duty either under SEZ Act 2005 or under Customs Act 1962.

2. Case Law:    Texotoplast Industries v.ACC 2011 (Bom. HC)

Issue:               Can Penalty under Sec 112 of Customs Act imposed on partners as well the firm.

Analysis:         1. Explanation to Sec 140 of Customs Act 1962 brings “Firm” to the purview of Company “and “Partner” to the purview of “Director”.

                        2. This deeming fiction is applicable to criminal prosecution as well as to adjudicating procedure.

3. An understanding of the overall scheme and object of the Act shows no reason to the effect that penalty on partnership firm should be excluded

Conclusion:    On the basis of above the Hon. HC held that in an appropriate case the adjudicating authority can impose penalty both upon a partnership firm as well as on partners.

3. Case laws:   CCus, Chennai v. BPL Ltd 2010 (Mad. HC)

Issue:               Whether CA’s certificate alone is sufficient to rule out unjust enrichment under customs laws.

Analysis:         1. Sec 27 Customs Act mandates importer to produce evidence for seeking refund claiming that duty has not been passed by him to other person.

2. A CA’s certificate is only a piece of evidence acknowledging certain facts.

3. In the absence of any other evidence, CA’s certificate cannot be construed as a evidence itself.

Conclusion:    On the basis of above the Hon. HC held that CA’s Certificate cannot be treated as an evidence U/s 27 and hence not a proof to rule out unjust enrichment for the purpose of refund.

4. Case law:    CCus. (Prev), Mumbai V. M Ambalal & Co 2010 (SC).

Issue:               Benefit of Exemptions meant for Imported goods apply to smuggled goods also.

Analysis:         1.Two separate definitions  for Smuggled goods and smuggled goods.

2. One of the prime object of Customs Act 1962 is to curb the ills of smuggling to economy.

Conclusion:    Hon. SC held that on the basis of above, benefit of exemption cannot be given to smuggled goods.

5. Case Law:    SJ Fabrics Pvt Ltd v. UOI 2011 (Cal. HC)

Issue:               Can goods be detained indefinitely without any formal order under Sec110 of the Customs Act 1962.

Analysis:         1.U/s 110 & proviso: No time limit for issuance of an order.

2. But should be issued immediately upon interception and detention of goods, but cannot indefinitely detain without any order u/s 110.

3.However sec 110(2) provides when goods are seized u/s 110(1) and no notice is issued u/s 124 within 6 months (extendable for a further period 6 months, by Comm: of  Customs) of  seizure, the goods shall be returned to the person.

Conclusion:    On the basis of above the Hon. HC held that goods cannot be indefitely detained without any order u/s 110.

6. Case law:    Manish Lalit Kumar Bavishi v. Addl. DIR. General,DRI 2011 (Bom. HC)

Issue:               Is it mandatory for the Revenue Officers to make available the copies of the seized documents to the person form whose custody such documents were seized.

Analysis:         1. U/s 110(4) the customs officers has to make such copies of mandatorily. However the party has a choice to ask or not.

2. Denial if any will be clearly an act without jurisdiction.

Conclusion:    On the basis of above the Hon. HC held that Revenue has to make available copies of the documents asked for by the assessee which were seized during the course of the seizure action.

7. Case law:    O.T Enasu v. UOI 2011 (Ker. HC)

Issue:               Circumstances under which penalty U/s 112 (a)(ii)of the customs Act 1962.

Analysis:         1. U/s 112(a)(ii)  Liability to penalty is determined on the basis of duty sought to be evaded.

( Evade means : to escape , slip away , to escape or avoid artfully ,to shirk, to baffle, elude  being a conscious exercise by the person who evades. )

Conclusion.    On the basis of above the Hon.  HC held that unless it is established that a person has by his omissions and commissions , led to a situation where duty is sought to be evaded , there cannot be a impostioin of penalty U/s 112(a)(ii).


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