Legal principle

Import through non-existent firms without an Importer-Exporter Code violates Section 7 of the FTDR Act, 1992, making the goods 'prohibited' and liable to confiscation under Section 111(d) of the Customs Act, 1962, and an exporter who has parted with title under endorsed 'To Order' bills of lading cannot claim reshipment.

Court decision

The Bombay High Court dismissed the appeal, holding it raised no substantial question of law; the concurrent findings that the appellant was not the owner, that the importers were fictitious and without IEC, that the goods were prohibited and liable to confiscation under Section 111(d), and that penalties were correctly imposed, were upheld in favour of the Commissioner of Customs, with no order as to costs.

Facts

Donald McArthy Trading Pte. Ltd., a Singapore exporter in which Vinod Kumar Didwania held 49,99,999 of 50,00,000 shares, shipped goods to several Indian firms that investigation showed were non-existent, sham, and without Importer-Exporter (IEC) codes, with documents transferred directly rather than through banking channels. The department adjudicated that the import violated Section 7 of the FTDR Act, 1992, confiscated the goods as prohibited goods under Section 111(d) of the Customs Act, 1962, disposed of them, and imposed penalties on the company and its directors under Section 112(a). CESTAT upheld the confiscation and penalties by order dated 24 April 2017, and the exporter appealed to the Bombay High Court.

Key provisions

• Section 111(d), Customs Act, 1962 — Confiscation of improperly imported goods etc
• Section 112(a), Customs Act, 1962 — Penalty for improper importation of goods
• Section 11, Customs Act, 1962 — Power to prohibit importation or exportation of goods
• Section 3, Customs Act, 1962 — Classes of officers of customs