# BECKER GRAY & CO. (1930) LTD. & ORS v. UNION OF INDIA & ANR

- **Citation:** [1970] 3 S.C.R. 445
- **Court:** Supreme Court of India
- **Decided:** 1970-01-23
- **Bench:** S. M. S!Kri, V. Bhargava, I. D. Dua
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/becker-gray-co-1930-ltd-ors-v-union-of-india-anr-5037
- **Pages:** 3

## Headnote

Foreign Exchange Regulation Act 7 of 1947, ss. 12(1) and 23ASea Customs Acl ss, 19 and 167(8)-l/nder-va/uation of ihvoices of goods
exported whether a violation of s. 12(1) of Act 7 of 1947-Dec/aration
of value of goods on the basis that they were sold to buyer when in fact
fhey were yet unsold whether a con:iravention of s. 12( 1 )-Whether penalty
frvfoble under s. 167(8) of Sea Customs Act.
The appellants were exporters of jute carpet backing cloth and in connection with some exports by them between January 1957 and January
1963 penalties were imposed on them under s. 167(8) of the. Sea Customs
Act for contravention of s. 12(1) of the Foreign Exchange
Regulation
Act No. 7 of 1947 in view of the provisions of s. 23A of the Act and
s. 19 of the Sea Customs Act by the Adjudicating Officer.
Appeals to
the Central Board of Revenue were dismissed. The Board in uplrolding
the penalties found two defects in the declarations filed by the appellants
in purported compilance with s. 12(1) 'of the Act 7 of 1947, namely:
( 1) that the invoice value of the goods was shown at a figure lower than
the real sale, value; (2) that in the declaration it was stated that the
invoice value declared was the full export value of the goods and was
the same as that contracted with the buyer, whereas the correct de~laration
should have been that the declarations contained a fair valuation of the
goods which \\-'ere unsold.
The declarations were given in form G.R. I
prescribed by the Rules framed under Act 7 of 1947. In appeal before
this Court against the decision of the Board it was urged on behalf. of
the appellants that the defects in question did not amount to contravention
of the restrictions imposed by s. 12(1) of the Act 7 of 1947, so that
the imposition of the penalties was not justified.
HELD : (i) In vi~w of the decision of this Court in the case of M /.r.
Rai Bahadur Shreeram Durga Prasad (P) Ltd. which was fully applicable.
to the facts of the present case the imposition of the penalties on the
basis that the under-valuation of the goods amounted to contravention of
s. 12(1), was unjustified. [447 BJ
Union of India v. M/s. Rai Bahadiu Shreeram Durga Prasad (P)
Lrd. and Ors. [1969] 1 S.C. Cases 91, applied.
(ii) The second defect found by the Board in the declarations related
to points on which s. 12(1) does not require a declaration. A declaration, which is in contravention of the Rules or the forms prescribed under
the Rules may be penali•ed under s. 23 of the Act but such contravention
will not attract the provisions of the Sea Customs Act.
Under s. 23A of
the Act 7 of 1947 only a breach of restrictions imposed by s. 12(1) of
the. Act is to be deemed to be a contravention of restrictions imposed by
s. 19 of the Sea Customs Act.
An incorrect declaration in contravention
of the Rules made under s. 27 of the Act 7 of 1947 is not to be deemed
a contravention of any restriction imposed by s. 19 of the Sea Customs
Act. Therefore the imposition on the appellants of penalties
under
s. 167(8) of the Sea Customs Act was totally unjustified. [447 C-FJ
446
SUPREME COURT REPORTS
[1970] 3 s.c.R.
CIVIL APPELi.ATE JUlllSDICTION : Civil Appeals Nos. 1178
A.
to 1180 of 1967.
Appeal by special leave from the Older dated March 13, 1967
of the Central Board of Excise and Customs
(Appeal), New
Delhi in appeals Nos. 47 to 50 of 1967.
N. A. Palkhivala, P. P. Ginwala, D. N. Mukherjee, R. S.
B
Kumar and A. Choudhiiry, for the appellants.
N. S. Bindra and S. P. Nayar, for the respondents.
M. C. Chagla and D. N. Gupta, for the intervener.

## Text

A
B
c
D
E
F
G
H
445
BECKER GRAY & CO. (1930) LTD. & ORS.
v.
UNION OF INDIA & ANR.
January 23, 1970
[S. M. S!KRI, V. BHARGAVA AND I. D. DUA, JJ.]
Foreign Exchange Regulation Act 7 of 1947, ss. 12(1) and 23ASea Customs Acl ss, 19 and 167(8)-l/nder-va/uation of ihvoices of goods
exported whether a violation of s. 12(1) of Act 7 of 1947-Dec/aration
of value of goods on the basis that they were sold to buyer when in fact
fhey were yet unsold whether a con:iravention of s. 12( 1 )-Whether penalty
frvfoble under s. 167(8) of Sea Customs Act.
The appellants were exporters of jute carpet backing cloth and in connection with some exports by them between January 1957 and January
1963 penalties were imposed on them under s. 167(8) of the. Sea Customs
Act for contravention of s. 12(1) of the Foreign Exchange
Regulation
Act No. 7 of 1947 in view of the provisions of s. 23A of the Act and
s. 19 of the Sea Customs Act by the Adjudicating Officer.
Appeals to
the Central Board of Revenue were dismissed. The Board in uplrolding
the penalties found two defects in the declarations filed by the appellants
in purported compilance with s. 12(1) 'of the Act 7 of 1947, namely:
( 1) that the invoice value of the goods was shown at a figure lower than
the real sale, value; (2) that in the declaration it was stated that the
invoice value declared was the full export value of the goods and was
the same as that contracted with the buyer, whereas the correct de~laration
should have been that the declarations contained a fair valuation of the
goods which \\-'ere unsold.
The declarations were given in form G.R. I
prescribed by the Rules framed under Act 7 of 1947. In appeal before
this Court against the decision of the Board it was urged on behalf. of
the appellants that the defects in question did not amount to contravention
of the restrictions imposed by s. 12(1) of the Act 7 of 1947, so that
the imposition of the penalties was not justified.
HELD : (i) In vi~w of the decision of this Court in the case of M /.r.
Rai Bahadur Shreeram Durga Prasad (P) Ltd. which was fully applicable.
to the facts of the present case the imposition of the penalties on the
basis that the under-valuation of the goods amounted to contravention of
s. 12(1), was unjustified. [447 BJ
Union of India v. M/s. Rai Bahadiu Shreeram Durga Prasad (P)
Lrd. and Ors. [1969] 1 S.C. Cases 91, applied.
(ii) The second defect found by the Board in the declarations related
to points on which s. 12(1) does not require a declaration. A declaration, which is in contravention of the Rules or the forms prescribed under
the Rules may be penali•ed under s. 23 of the Act but such contravention
will not attract the provisions of the Sea Customs Act.
Under s. 23A of
the Act 7 of 1947 only a breach of restrictions imposed by s. 12(1) of
the. Act is to be deemed to be a contravention of restrictions imposed by
s. 19 of the Sea Customs Act.
An incorrect declaration in contravention
of the Rules made under s. 27 of the Act 7 of 1947 is not to be deemed
a contravention of any restriction imposed by s. 19 of the Sea Customs
Act. Therefore the imposition on the appellants of penalties
under
s. 167(8) of the Sea Customs Act was totally unjustified. [447 C-FJ
446
SUPREME COURT REPORTS
[1970] 3 s.c.R.
CIVIL APPELi.ATE JUlllSDICTION : Civil Appeals Nos. 1178
A.
to 1180 of 1967.
Appeal by special leave from the Older dated March 13, 1967
of the Central Board of Excise and Customs
(Appeal), New
Delhi in appeals Nos. 47 to 50 of 1967.
N. A. Palkhivala, P. P. Ginwala, D. N. Mukherjee, R. S.
B
Kumar and A. Choudhiiry, for the appellants.
N. S. Bindra and S. P. Nayar, for the respondents.
M. C. Chagla and D. N. Gupta, for the intervener.
The Judgment of the Court was delivered by
Bhargava, J.--The appellants in these appeals were exporters
of Jute Carpet Backing Cloth and, in connection with some exports
by them between the period January 1957 to January 1963, penalties have been imposed on them under section 167 ( 8) of the Sea
Customs Act for contravention of section 12(1) of the Foreign
Exchange Regulation Act No. 7 ol 1947 (hereinafter referred to
as "the Act") in view of the provisions of section 23A of the Act
and section 19 of the Sea Customs Act by the Adjudicating Officer.
Their appeals to the Central Board of Excise and Customs (hereinafter referred to as "the Board") were dismjssed, though the
amounts of penalties imposed were reduced.
The' order of the
Board dismissing the appeals has been challenged in these appeals
before us by special leave.
The Board based its decision for upholding the penalties on
the finding that the declarations given in purported compliante
with s. 12 (1) of the Act were defective in two respects.
One
defect found was that, in the declarations, the invoice value of the
goods was shown at a figure lower than the real sale value. The
· second defect found was that, in the declarations, it was stated
that the invoice value declared was the full export value of the
goods and was the same as that contracted with the buyer whereas,
in fact, the goods had not been sold to the buyer and were being
exported on consigrunent ba:sis, so that the correct declarations
should have been that the declarations contained a fair valuation of
the goods which were unsold.
The declarations were given in
Fonn G.R.I. prescribed by the Rules framed under section 27 of
the Act.
On behalf of the appellants, the argument advanced was
that these defects in the declarations did not amount to contravention of the restrictions imposed bys. 12(1) of the Act, so that the
imposition of these penalties was not justified.
Sc far as the question of under-valuation ol the exported goods
in the declarations or the documents accompanying the declarations is concerned, reliance was placed on the decision of this
c
D
E
F
G
H
A
B
c
D
E
F
G
,
BECKER GRAY "' co. v. UNION (Bhargava, J.)
447
Court in Union of India and Others v. M/s. Ra; Bahadur Shreeram
Durga Prasad (P) Ltd. and Others(') where this Court held that
under-valuation in a declaration under s. 12(1) of the Act does
wt amount to contravention of the restrictions imposed by that
provision.
That decision ,is fully applicable to the present cases
before us on this point and, in view of that decision, the imposition
of the penalties, on the basis that the under-valuation of the goods
amounted to contraventiqn of s. 12( 1), is unjustified.
We may
add that we see no justification for granting the request of
Mr. Bindra, learned counsel for the respondents, that that decision
should be reconsidered by a larger Bench.
Mr. Bindra, however, urged that, i,n these cases, there was the
distinctive feature that the Board also found that the declarations
were further incorrect inasmuch as the goods were declared to have
been sold, while they were being exported on consignment basis
as unsold goods, and it was further stated in the declarations that
the lull export value of the goods is the value show,n instead of
stating that it was the fair valuation of unsold goods.
The finding
recorded by the Board, no doubt, shows that the declarations
required to be made under the Rules in Form G.R.I. contained
incorrect information; but that incorrect information retated to
points on which s. 12(1) does not require a declaration.
A
declaration, which is in contravention of the Rules of the Forms
prescribed under the Rules, may be penaliSed u,rlder section 23 of
the Act, but such contravention will not attract the provisions of
the Sea Customs Act.
Under s. 23A of the Act, only a breach
of restrictions imposed bys. 12(1) of the Act is to be deemed to
be contravention of restrictions imposed bys. 19 of the Sea Customs
Act.
An incorrect declaration in contravention of the Rules made
under s. 27 qf the Act is not to be deemed a contravention of any
restriction imposed by s. 19 of the Sea Customs Act.
It is, therefore, quite clear that, in these cases, the imposition of the penalties
under s. 167 ( 8) of the Sea Customs Act was l!Otllly unjuStified~
Consequently, these appeals are allowed with COila, aDd the order•
of the Adjudicating Officer, and the Board impelling the penalties
under s. 167(8) of the Sea Customs Act are set Uide.
Penalties,
if recovered, sha!J be refunded.
G.C.
Appeals allowed.
(!) (1969) I s.c. cases 91.