Specified Goods: Preventing Illegal Exports

Section 11K is the provision peculiar to this chapter: transport of specified goods to be covered by vouchers. No specified goods shall be transported from, into or within any specified area, or loaded on any animal or conveyance in such area, except under a transport voucher in the prescribed form and containing the prescribed particulars, prepared by the person owning, possessing, controlling or selling the goods.

The section carries two important qualifications. It does not apply to goods in personal baggage of a passenger, or goods of a value below the prescribed limit, or goods transported in the manner and to the extent the rules allow. And the Central Government may, by rules, permit transport under a different document where a transport voucher is impracticable.

Section 11L requires accounts, on the pattern of section 11E. Every person who owns, possesses or controls specified goods at any time after the specified date must maintain a true and complete account of the goods in the prescribed form, keep it at the intimated place, and preserve it for the prescribed period, with separate accounts where there is more than one intimated place.

Section 11M imposes the duty on sellers and transferors. Every person who sells or otherwise transfers within a specified area any specified goods must, where the value exceeds the prescribed limit, take the prescribed steps, which include obtaining and keeping particulars of the person to whom the goods are sold or transferred. The section is the counterpart of the voucher duty in section 11F, adapted to the export context by requiring the seller to record who took the goods away.

Section 11N is the power to exempt. The Central Government may, by notification, exempt any goods or class of goods from all or any of the provisions of Chapters IVA and IVB. This is the safety valve for both chapters and it belongs to both.

Enforcement

The enforcement chain is the export mirror of Chapter IVA's.

Section 113 makes goods liable to confiscation where they are attempted to be improperly exported, and its clauses include goods in relation to which the provisions of Chapter IVB have been contravened.

Section 114 attaches the penalty for an attempt to export goods improperly, against any person who does or omits to do any act rendering the goods liable to confiscation or who abets such an act.

And the presumption in section 123 does not apply here, which is a difference worth noticing: section 123 is confined to goods seized in the reasonable belief that they are smuggled, which by section 2(39) covers both import and export contraventions, but the notified list under section 123 is drawn for the import side. The department's proof in a Chapter IVB case therefore rests on the absence of the vouchers and accounts the chapter required.

Distinguishing Chapter IVA from Chapter IVB

Worked example

The Central Government specifies silver bullion under section 11I and specifies as the area a belt of districts along the western coast. Dhanraj Metals holds silver stock in that belt on the specified date.

Dhanraj must intimate the place of storage within seven days under section 11J, and thereafter may keep the silver only at that place.

He must maintain a true and complete account under section 11L at the intimated place, preserved for the prescribed period.

When he moves silver from his godown to a refinery inside the specified area, section 11K applies. He must prepare a transport voucher in the prescribed form before the goods are transported or loaded on any conveyance. Moving the consignment by truck without one is a contravention whether or not any export was contemplated, because the section attaches to the movement itself.

When he sells to a dealer within the area, section 11M requires him to take the prescribed steps, including recording the particulars of the transferee, so that the officer can trace where the metal went.

Suppose officers stop a truck within the specified area carrying 40 kilograms of silver with no transport voucher. The absence of the voucher is a contravention of section 11K; the goods, being specified goods in relation to which Chapter IVB has been contravened, are liable to confiscation under section 113; and the persons concerned are liable to penalty under section 114. The department does not need to prove that the silver was destined for a dhow: the obligation broken is the transport obligation, and that is the point of drafting the chapter around movement.

Contrast a passenger carrying a silver ornament in her handbag. Section 11K expressly does not apply to goods in the personal baggage of a passenger, so no transport voucher is owed.

What it does NOT mean

It does not mean the whole of India is covered. Chapter IVB operates only within an area specified under section 11I as adjoining the land frontier or the coast.

It does not mean specified goods may not be exported. The chapter regulates movement, storage and sale; lawful export under a shipping bill remains lawful.

It does not mean there is a personal-use exemption as broad as section 11G. Chapter IVB has no general equivalent: section 11K excludes personal baggage and low-value goods, and section 11N gives a power to exempt, but a trader in a specified area cannot claim the Chapter IVA exemption.

And it does not mean section 11N belongs only to this chapter. It empowers exemption from all or any of the provisions of both Chapter IVA and Chapter IVB.

Quick revision

• The mirror with a difference: Chapter IVA follows illegally imported goods inland; Chapter IVB stops illegally exported goods before they leave, and therefore controls movement, not only storage.
• Section 11H defines illegal export, intimated place, specified area (an area adjoining the land frontier or the coast, as the Central Government specifies), specified date and specified goods.
• Section 11I: the Central Government, having regard to the magnitude of illegal export and satisfied that it is expedient, may specify goods and the area.
• Section 11J: intimation within seven days of the place of storage by a person owning, possessing or controlling specified goods above the prescribed value in a specified area on the specified date; storage only at the intimated place; intimation before acquisition thereafter.
• Section 11K: no transport of specified goods from, into or within a specified area, and no loading on any animal or conveyance there, except under a transport voucher in the prescribed form. Does not apply to a passenger's personal baggage or to goods below the prescribed value.
• Section 11L: true and complete accounts at the intimated place, separately for each place, preserved for the prescribed period.
• Section 11M: on sale or transfer within a specified area above the prescribed value, the seller must take the prescribed steps, including recording the transferee's particulars.
• Section 11N: the Central Government may exempt goods from all or any provisions of Chapters IVA and IVB.
• Enforcement: confiscation under section 113, penalty under section 114.

Test yourself

1. Explain the scheme of Chapter IVB and how it differs from Chapter IVA. Chapter IVB addresses illegal export, and its scheme follows from the fact that goods on their way out of the country can still be intercepted, whereas goods already smuggled in must be detected after the event. Section 11I empowers the Central Government, having regard to the magnitude of the illegal export of goods of a class or description and being satisfied that it is expedient, to specify those goods by notification and to specify the area in which the chapter operates; section 11H defines that area as one adjoining the land frontier or the coast of India, along with illegal export, intimated place, specified date and specified goods. Section 11J then requires a person owning, possessing or controlling specified goods above the prescribed value in a specified area on the specified date to intimate within seven days the place of storage, and to keep the goods only there. Section 11L requires true and complete accounts in the prescribed form kept at that place. Section 11M requires a seller or transferor within the area to take the prescribed steps on a transfer above the prescribed value, including recording the transferee's particulars. Section 11N permits exemption from either chapter.

The structural difference is section 11K, which has no counterpart in Chapter IVA. It forbids the transport of specified goods from, into or within a specified area, and their loading on any animal or conveyance in such an area, except under a transport voucher in the prescribed form, excluding a passenger's personal baggage and goods below a prescribed value. Because an intending exporter must physically move the goods towards the frontier, controlling movement is the most effective point of intervention, and Chapter IVB is therefore built around movement while Chapter IVA is built around storage. Two further differences follow: Chapter IVB is confined to a specified area near the frontier, whereas Chapter IVA applies wherever the notified goods are; and Chapter IVA contains the express precaution on acquisition in section 11D and the personal-use exemption in section 11G, neither of which has a general equivalent in Chapter IVB.

2. What does section 11K require, and why is it the centre of the chapter? Section 11K provides that no specified goods shall be transported from, into or within any specified area, or loaded on any animal or conveyance in such area, except under a transport voucher prepared in the prescribed form and containing the prescribed particulars by the person owning, possessing, controlling or selling the goods. It does not apply to goods in the personal baggage of a passenger, or to goods of a value below the prescribed limit, or where the rules permit transport under another document or in a prescribed manner.

It is the centre of the chapter because the mischief is a movement rather than a state of affairs. A person intending to export goods illegally must bring them to the frontier or the coast, and that journey is the only stage at which the intention becomes observable. Requiring every movement within the specified area to be covered by a contemporaneous voucher means that goods travelling without one are in breach at the moment of interception, so the department need not prove a destination or an intention to export at all; the contravention is complete on the transport. That converts an evidential problem, proving what a person meant to do with goods, into a documentary one, and it is why the export chapter reads differently from the import chapter.

3. What are the consequences of contravening Chapter IVB? Section 113 renders goods liable to confiscation where they are attempted to be improperly exported, and it extends to goods in relation to which the provisions of Chapter IVB have been contravened, so a breach of the intimation, transport voucher, accounts or transfer obligations makes the goods themselves liable to confiscation without proof that any export was in fact attempted by stealth. Section 114 then imposes a penalty on any person who does or omits to do any act which renders the goods liable to confiscation under section 113, or who abets such an act, and the quantum under that section is graduated according to whether the goods are prohibited goods and by reference to their value.

The department's proof in such a case rests on absence rather than on positive evidence of smuggling: the voucher that section 11K required does not exist, or the account that section 11L required does not record the stock. It is worth noting that the reversed burden in section 123 does not ordinarily assist here, since the notified list under that section is drawn for the import side, so the case is built on the documentary obligations the chapter itself creates.

4. Why does Chapter IVB apply only in a "specified area"? Because its purpose is interception rather than audit, and interception is only worthwhile where the goods are close enough to the frontier for an export attempt to be imminent. Section 11H defines a specified area as such area adjoining the land frontier or the coast of India as the Central Government may specify, and section 11I requires the Government to specify both the goods and the area. Extending the obligations of transport vouchers, intimation and accounts to the whole country would burden every internal movement of a commodity such as silver, most of which has nothing to do with export, and would produce an enormous compliance cost for a negligible enforcement gain. Confining the chapter to a belt along the frontier and the coast targets the obligation on the stage of the journey at which illegal export becomes a real possibility, which is both administratively sensible and, since the restriction on trade must be reasonable under Article 19(6), constitutionally safer than a nationwide control would be.