Customs Act, 1962 Section 114 — Penalty for attempt to export goods improperly etc
Customs Act, 1962 · Penalty for attempt to export goods improperly etc
Plain-English Explanation
Overview
Section 114 of the Customs Act, 1962 prescribes penalties for attempting to improperly export goods, specifically when such actions could lead to the confiscation of those goods under Section 113. This section is crucial for enforcing export regulations and deterring illegal export activities.
Who Does This Apply To?
This section applies to:
- Any person involved in exporting goods.
- Any person who does or omits to do something that would make the goods liable for confiscation under Section 113.
- Any person who abets (assists or encourages) such actions or omissions.
This includes exporters, their agents, and anyone else facilitating an improper export.
How It Works
The penalty under Section 114 is triggered when an attempt is made to export goods improperly, and the penalty amount depends on the type of goods involved:
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Prohibited Goods: If the goods are subject to a prohibition under the Customs Act or any other law, the penalty will be not exceeding three times the value of the goods as declared by the exporter or the value as determined under the Customs Act, whichever is greater.
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Dutiable Goods (excluding prohibited goods): Subject to the provisions of Section 114A, the penalty will be not exceeding 10% of the duty sought to be evaded or INR 5,000, whichever is higher.
- Provided, that if the duty determined under Section 28(8) and the interest payable under Section 28AA is paid within 30 days from the date of communication of the order determining the duty, the penalty shall be 25% of the penalty so determined.
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Other Goods (neither prohibited nor dutiable): The penalty will be not exceeding the value of the goods as declared by the exporter or the value as determined under the Customs Act, whichever is greater.
Important Conditions & Exceptions
- Value: The penalty is often tied to the value of the goods, determined either by the exporter's declaration or by Customs assessment.
- Section 113 Link: The actions or omissions must be such that they would render the goods liable for confiscation under Section 113. Section 113 lists the circumstances under which goods intended for export can be confiscated.
- Section 114A: Refers to special provisions related to the mens rea (guilty mind) required for imposing penalties on specific offenses.
Practical Example
ABC Exports attempts to export textiles worth INR 10,00,000, falsely declaring the fabric composition to circumvent export restrictions on certain materials. Customs authorities discover the misdeclaration. Because this action would make the textiles liable for confiscation under Section 113 (specifically, misdeclaration leading to evasion of restrictions), Section 114 applies. The textiles are not dutiable.
The penalty could be up to INR 10,00,000 (the value of the goods). The exact penalty will be determined by the adjudicating officer, based on the severity of the violation.
If, in another scenario, the goods were dutiable goods and the evaded duty was INR 60,000, the penalty would be INR 60,000/10 = INR 6,000 or INR 5,000, whichever is higher. Thus, the penalty amount would be INR 6,000. If ABC Exports pays the duty due, plus interest within 30 days, then the penalty would be 25% of INR 6,000, which is INR 1,500.
Key Amendments
No major amendments since enactment.
No case laws found for this provision yet.
Browse all case laws →Frequently Asked Questions
What activities trigger a penalty under Section 114 of the Customs Act, 1962?
Section 114 applies when someone acts, or fails to act, in a way that would make goods liable for confiscation under Section 113. This includes abetting such actions or omissions related to improper export of goods. Essentially, any attempt to illegally export goods faces penalty under this section.
How is the penalty amount calculated under Section 114 of the Customs Act, 1962, for prohibited goods?
For goods subject to export prohibitions under the Customs Act or any other law, the penalty under Section 114(i) is the greater of either three times the value of the goods as declared by the exporter or three times the value as determined by Customs authorities. This ensures a significant deterrent for attempting to export prohibited items.
What is the penalty for attempting to improperly export dutiable, non-prohibited goods under Section 114 of the Customs Act, 1962?
According to Section 114(ii), the penalty for improperly attempting to export dutiable, non-prohibited goods is the higher of 10% of the duty sought to be evaded or ₹5,000, subject to Section 114A. Further, if the duty and interest are paid within 30 days of the order, the penalty reduces to 25% of the determined penalty amount.
How does Section 114 of the Customs Act, 1962, apply to goods that are neither prohibited nor dutiable?
For goods that don't fall under prohibited or dutiable categories, Section 114(iii) prescribes a penalty not exceeding the value of the goods. The penalty amount is determined based on whichever is greater: the declared value by the exporter or the value as determined by Customs authorities.
Can a penalty under Section 114 of the Customs Act, 1962, be reduced if the evaded duty is paid promptly?
Yes, the proviso to Section 114(ii) provides an opportunity for penalty reduction. If the duty, as determined under Section 28(8), along with applicable interest under Section 28AA, is paid within 30 days of the communication of the order, the penalty is reduced to 25% of the originally determined penalty.
What constitutes an 'attempt to export goods improperly' that would attract a penalty under Section 114 of the Customs Act, 1962?
An 'attempt to export goods improperly' covers a broad range of actions, including misdeclaration of goods, concealment, undervaluation, or any other act intended to evade customs duties or violate export regulations. Any action that would render the goods liable to confiscation under Section 113 can trigger penalties under Section 114.
How does Section 114 of the Customs Act, 1962, interact with Section 113 concerning the confiscation of improperly exported goods?
Section 114 is directly linked to Section 113. If an action or omission would make goods liable for confiscation under Section 113 (which deals with goods improperly exported), then Section 114 specifies the monetary penalties that can be imposed on the person responsible for that action or omission. Section 114 acts as a financial consequence complementing the confiscation provisions of Section 113.
Key Conditions & Requirements
| Condition | Details |
|---|---|
| Goods liable to confiscation under Section 113 | Applies to persons who act or omit to act, or abet such action/omission, which would cause goods to be subject to confiscation under Section 113 of the Customs Act. |
| Prohibited goods penalty (value-based) | If a prohibition is in force, the penalty can be up to three times the declared value or the value determined under the Act, whichever is higher. |
| Dutiable goods penalty (duty-based) | For dutiable (non-prohibited) goods, the penalty is capped at 10% of the evaded duty or ₹5,000, whichever is higher, subject to Section 114A. |
| Reduced penalty for duty payment (30 days) | If duty and interest under Sections 28 and 28AA are paid within 30 days of the order, the penalty is reduced to 25% of the determined penalty. |
| Other goods penalty (value-based) | For goods that are neither prohibited nor dutiable, the penalty cannot exceed the declared or determined value, whichever is greater. |
Amendment History
Substituted by Act 14 of 2001, section 108(a), for "not exceeding five times the value of the goods or one thousand rupees" (w.e.f. 11.05.2001).
Substituted by the Finance Act, 2003 (32 of 2003), section 117(a), for "not exceeding the value of the goods or five thousand rupees" (w.e.f. 14.05.2003).
Substituted by the Finance Act, 2015 (20 of 2015), section 84, for clause (ii) (w.e.f. 14.05.2015). Earlier clause (ii) was amended by Act 14 of 2001, section 108(b) (w.e.f. 11.05.2001). Clause (ii) before substitution by Act 20 of 2015, stood as under: "(ii) in the case of dutiable goods, other than prohibited goods, to a penalty not exceeding the duty sought to be evaded or five thousand rupees, whichever is the greater;".
Substituted by the Finance Act, 2003 (32 of 2003), section 117 (b), for clause (iii) (w.e.f. 14.05.2003). Earlier clause (iii) was amended by Act 14 of 2001, section 108(c) (w.e.f. 11.05.2001).