# SOUTH INDIA COIR MILLS POOCHAKKAL v. THE ADDITIONAL COLLECTOR OF CUSTOMS AND CENTRAL EXCISE AND ANOTHER

- **Citation:** [1976] 3 S.C.R. 905
- **Court:** Supreme Court of India
- **Decided:** 1976-03-25
- **Case number:** Civil Appeal No. 244 of 1976
- **Bench:** Y. V. Chandrachud, V. R. Krishna Iyer, N. L.Untwalia
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/south-india-coir-mills-poochakkal-v-the-additional-collector-of-customs-and-6848
- **Pages:** 8

## Headnote

)).
Foreign Exchange Regulation Act (7 of 1947), s. 12(1) as amended by
Act 40 of 1969-Scope of.
The appellant is a dealer and exporter in coir yarn. On its behalf a shippino bill for export of 150 bales of coir yarn to a port in Italy was filed, but
th~ consignee was shown to be a firm of Yugoslavia. The invoice and the
form of declaration prescribed under the Foreign Exchange Regulation Acl,
1947, were drawn up by the appellant on rupee terms in accordance .wit!i the
contract with the Yugoslav firm.
The Collector of Customs, after 1ssu1ng a
show cause notice to the appellant and considering the explanation Qf the
appellant, held that the appellant had misde.~lared the material particulars regarding the prescribed manner of payment, and that there was a contravention
of s. 12(1), Fcreign Exchange Regulation Act read with s. 11 Customs Act,
and ordered the confiscation of the goods under s. 113 and imposed a penalty
of Rs. 25.000/- under s. 114. Customs Act. The High Court upheld the
order.
Dismissing the appeal to this Court,
HELD : In the circumstances of the case, the quantum of penalty is reduced
to Rs. 15,000/ .. [912 F]
(1) By virtue of s. 23A, Foreign Exchange Regulation Act the prohibition
imposed under s. 12(1) of the Act becomes a prohibition
imposed
under
c
D
s. 11, Customs Act. Section 11, Customs Act, empowers the Central GovernE
meat to prohibit the export of goods absolutely or conditionally and s. 113,
Customs Act, provides for confiscation of goods exported contrary to any
prohibition imposed, and the person attempting to export is liable to penalty
under s. 114. [908 D, F-0]
(2) Section 12(1). Foreign Exchange Regulation Act. as amended bv Act
40 of 1969, consists of 3 r;>arts : (a) Issuance of a notification by th"e Central
Government prohibiting the export of certain goods to any place specified in
the notification. (b) The prohibition is relaxed and export is permitted whe_n
F
the exporter furnishes a declaration in the prescribed form which must be true
in all material particulars including the amount representing the full export
value of the goods or the expected exported value of the goods.
( c) Apart
from furnishing the declaration containing the true statements in all material
particulars, the exporter is also required to affirm in the said declaration that
is, in the document or paper containing the declaration, that the full ~xport
value of the goods will, within the prescribed period be paid in the prescribed
manner. This affirmation is not required to be in anv prescribed form. Until
G
a11d unless the exporter so affirms, he cannot, in the interests of conserving
the foreign exchange, be allowed to export the goods. [910 B·D]
(3) Jn the present case there was no affirmation that the full export value
of th~ goods has been or will, within the prescribed period, be paid in the
prescribed manner, and, the absence C5f the affirmation is tantamount to failure
?n the p~rt of the. appellant to comply ~th the requi1rements of law engrafted
1h s. 12(1). pgre1gn Exchange Regulation Act. [912 DJ
·
(a) The declaration of the buyer's name as the Yugoslav firm was found
to be wr~ng, but that did no~ attract the provisions of s. 12(1), because. in
the prescribed form, the buyers name was not to be inserted.
[910 G-HJ
H
A
D
{19J:o] 3 S.C.R.
(b) The High Court was wrong in holding that because the mode· of payment mentioned in the declaration is contrary to r. 7 of the Foreign Exchange
Rules. 1952. there was a misdedaration of material farticulars. The appel-
.lant has managed to get the payment in Indian rupee through the Yugoslav
.firm. , Therefore. even after the statement that the country of destination \Vas
;Italy, the statement that the payment was to- be recei,,.ed in India in Indian
T,JJpees was not untrue, although. it was C<?ntrary to the mode prescribed in r. 7.
But the absehce of the affirmation is"
s~gnificant. [911 E-G; 912 BJ
(c) Rule 7 provides that the amount representing the full valu~ of the go

## Text

;
/
\
905
SOUTH INDIA COIR MILLS POOCHAKKAL
v.
THE ADDITIONAL COLLECTOR OF CUSTOMS AND
CENTRAL EXCISE AND ANOTHER
March 25, 1976
A
(Y. V. CHANDRACHUD, V. R. KRISHNA IYER AND N. L.UNTWALIA, JJ.J
)).
Foreign Exchange Regulation Act (7 of 1947), s. 12(1) as amended by
Act 40 of 1969-Scope of.
The appellant is a dealer and exporter in coir yarn. On its behalf a shippino bill for export of 150 bales of coir yarn to a port in Italy was filed, but
th~ consignee was shown to be a firm of Yugoslavia. The invoice and the
form of declaration prescribed under the Foreign Exchange Regulation Acl,
1947, were drawn up by the appellant on rupee terms in accordance .wit!i the
contract with the Yugoslav firm.
The Collector of Customs, after 1ssu1ng a
show cause notice to the appellant and considering the explanation Qf the
appellant, held that the appellant had misde.~lared the material particulars regarding the prescribed manner of payment, and that there was a contravention
of s. 12(1), Fcreign Exchange Regulation Act read with s. 11 Customs Act,
and ordered the confiscation of the goods under s. 113 and imposed a penalty
of Rs. 25.000/- under s. 114. Customs Act. The High Court upheld the
order.
Dismissing the appeal to this Court,
HELD : In the circumstances of the case, the quantum of penalty is reduced
to Rs. 15,000/ .. [912 F]
(1) By virtue of s. 23A, Foreign Exchange Regulation Act the prohibition
imposed under s. 12(1) of the Act becomes a prohibition
imposed
under
c
D
s. 11, Customs Act. Section 11, Customs Act, empowers the Central GovernE
meat to prohibit the export of goods absolutely or conditionally and s. 113,
Customs Act, provides for confiscation of goods exported contrary to any
prohibition imposed, and the person attempting to export is liable to penalty
under s. 114. [908 D, F-0]
(2) Section 12(1). Foreign Exchange Regulation Act. as amended bv Act
40 of 1969, consists of 3 r;>arts : (a) Issuance of a notification by th"e Central
Government prohibiting the export of certain goods to any place specified in
the notification. (b) The prohibition is relaxed and export is permitted whe_n
F
the exporter furnishes a declaration in the prescribed form which must be true
in all material particulars including the amount representing the full export
value of the goods or the expected exported value of the goods.
( c) Apart
from furnishing the declaration containing the true statements in all material
particulars, the exporter is also required to affirm in the said declaration that
is, in the document or paper containing the declaration, that the full ~xport
value of the goods will, within the prescribed period be paid in the prescribed
manner. This affirmation is not required to be in anv prescribed form. Until
G
a11d unless the exporter so affirms, he cannot, in the interests of conserving
the foreign exchange, be allowed to export the goods. [910 B·D]
(3) Jn the present case there was no affirmation that the full export value
of th~ goods has been or will, within the prescribed period, be paid in the
prescribed manner, and, the absence C5f the affirmation is tantamount to failure
?n the p~rt of the. appellant to comply ~th the requi1rements of law engrafted
1h s. 12(1). pgre1gn Exchange Regulation Act. [912 DJ
·
(a) The declaration of the buyer's name as the Yugoslav firm was found
to be wr~ng, but that did no~ attract the provisions of s. 12(1), because. in
the prescribed form, the buyers name was not to be inserted.
[910 G-HJ
H
A
D
{19J:o] 3 S.C.R.
(b) The High Court was wrong in holding that because the mode· of payment mentioned in the declaration is contrary to r. 7 of the Foreign Exchange
Rules. 1952. there was a misdedaration of material farticulars. The appel-
.lant has managed to get the payment in Indian rupee through the Yugoslav
.firm. , Therefore. even after the statement that the country of destination \Vas
;Italy, the statement that the payment was to- be recei,,.ed in India in Indian
T,JJpees was not untrue, although. it was C<?ntrary to the mode prescribed in r. 7.
But the absehce of the affirmation is"
s~gnificant. [911 E-G; 912 BJ
(c) Rule 7 provides that the amount representing the full valu~ of the goods
exported to the countries specified in the 2nd scht;dule shall be paid through
.an authorised dealer and unless authorised by the Reserve Bank, shall be paid
in the manner specified in the schedule. _The approved methods of payment in
.the case of Italy, which is in Group A of the schedule, are : liJ Currency of
·any country in the sub-group; (ii) sterling from an 'Extern:il Account' as
•defined .under the U.K. Exchange Control Regulations; and (iii) Rupees from
the account of a bank in any country in the Convertible Account group. [91 I
G-912 A]
(d) The appellant could not have affirmed that the full export value of the
goods would be paid in one of the prescribed modes. If such a..'firmation ".Vas
.made it would have been false because of the statement in the d:!claratjon that
the. value of the goods was to be received in India in Indian rui::ees.
If in the
:affirmation the aripellant had stated that for the valW! of the soods exported
to Italy it was to receive payment in Indian rupees, then the affirmation would
have violated s. 12(1) as it would not have been an affirmaticn stating that
the export_ value would be paid in the prescribed manner. Hence, the decision
of the High Court that the appellant had attempted to export goods in violatioh of s. 12(1) is correct, though it is upheld on a different lnsis. [912 B-EJ
( 4) Though it is an economic offence and relates . to the la.w of foreign
exchange since the Jaw was not clear either to the Customs authorities Or the
High Court and has resulted in the recording of finding against the-- appellant
on a wrong basis, although not affecting the substance of the viey.r that the
appe1Jant violated s. 12(1), the quant_μm of penalty is reduc_ed. [912 F.G]
.E
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 244 of 1976.
Appeal by Special Leave from the Judgment and Order d;tcd
9-10-74 of the Kerala High Court in W. A. No. 142 of 1972.
M. N. Phadke, S. K. Mehta, K. R. Nagaraja and P. N. Puri, for
the Appellant.
F
G. L. Sanghi and Girish Chandra, for Respondent No. I.
H
D. N. Misra,. for, Respondent No: 2.
The Jlldgment of the Court was delivered by
UNTWALIA, J.-In this appeal by special leave an important question of law falls for our determination .. It concerns the interpretation of section 12 ( 1) of the Foreign Exchange Regulation Act, 19 4 7,
Central Act 7 of 1947 as it stood ameniJed at the relevant time by
Act 40 of 1969.
· ··
,
The appellant is a firm, one of the partners or proprietors of which
is Shri T. K. Seethy. It is a dealer in Coir Yam and exports the said
commodity to foreign buyers also. On March 24, 1971 a shipping
bill was filed on behalf of the appellant for the export of 150 bales of
Coir Yarn to Trieste a port in Italay. · The consignee's name in the
shlJ?ping bill was shown as M/s Ferolektro, Sarajavo, Yugoslavia.
IndtSputably the Central Government had published a notification in
••
•
•
•
, ,
SOUTH INDIA COIR MILLS v. ADDL. COLLECTOR CUSTOMS 907
( Untwalia, !.)
the official gazette under section 12(1) of the Foreign Exchange Regulauon Act prohibiting the export of coir yarn from India to certain
places specified in the notification including Italy unless ccrtacn conditions were fulfilled.
The exporter was, therefore, required to
comply with the requirement of the said provision of law and file a
declaration in the prescribed form.
The relevant prescribed from in
the Foreign Exchange Regulation Rules, 1952-hereinafter referred
A
to as the Rule>-framed under section 27 of the Act of 1947 was
B
Form G.R.I.
The Invoice and G. R. I. Form were drawn up by
the appellant on rupee terms in accordance with the contract dated
1.3.1971 which it claimed to have had with M/s Ferolektro, Sarajavc,
Yugoslavia.
The Customs Authority found that the goods were attempted to be exported to Italy while payment, according to the
form, was to be received in rupees.
So the appellant was asked to
explain the discrepancy in the declaration.
A request was made on
behalf of the appellant to amend the lnvoicc and G.R.i. shewing
payment in Sterling. It was not allowed to do so.
On April 20,
c
,. !971 the premises of the appellant firm and the house of its owner
were simultaneously searched and certain documents including some
letters exchanged between the appellant and some foreign firms of
Italy were seized.
It appeared to the Assistant Collector of Cust0ms,
Customs House, Cochin that the goods in question were being bought
D
by M/s Tobia Giacomini, Italy while the buyer shown in the shipping
document was M/s Ferolektro, Sarajavo, Yugoslavia.
Such a discrepancy in the bill was against the provisions of section 50 of the
Customs Act, 1962-Central Act 52 of 1962. The Assistant Collector further found that in the declaration furnished by the appellant in accordance with section 12(1) of the Foreign Exchange Regulation Act the manner of payment for the goods sought to be exported was contrary to Rule 7 of the Rules.
The misdeclaration or
untrue declaration made by the appellant in the shipping bill and
G.R.I.
Form was rrima facie not true in material particulars ;;nd
violated section 12(1) of the Foreign Exchange Regulation Act. In
·view of the 11th section in the Customs Act, the violation attracted
E
the
confiscation
of
the
goods
under
section
1 l3(d)
and
imposition of penalty under section 114 of the said Act.
A showcause notice dated May 19, 1971 was issued by the Assistant Collector to the appellant. The appellant filed a long reply to the show
cause notice.
'The Additional Collector of Customs by bis order
dated July 6, 1971 held:
"By declaring the buyer's name
as
FEROELETRO
YUGOSLAVIA and the port of discharge and country of
final destination as 'Trieste' and Italy respectively in
the
shipping bill and the mode of payment as in rupees in the
shipping bill as well as in the G. R. I. form, the exporters
have misdeclared the material particulars
regarding
the
prescribed manner of payment and have thus clearly contravened the provisions of Section 12(1) of the F.E.R.A. read
with section 11 of the Customs Act.
The goods are, therefore, liable for confiscation under section 113(d) and 113(i)
of the Cn<toms Act anrl the, exoorters are liable for penalty
under section 114 of the Customs Act."
F
G
H
A
B
c
D
E
F
G
H
908
~UPREME COURT REPORTS
[1976) 3 S.C.R.
I
He accordingly confiscated the goods, giving an option to the appellant to redeem them on payment of Rs. 5,000/- in lieu thereof.
A
penalty of Rs. 25,000/- was imposed under section 114 of the Customs Act.
' .
The appellant filed a writ petition in the Kerala High Court to challenge the erder of the Additional Collector.
It had exercised its option
of getting the goods released on payment of Rs. 5,000/-. The fine
of Rs .. 25,000/- was also paid.
A learned single Judge of the High
Court took the view that there was no violation of section 12 (l) of
the Foreign Exchange Regulation Act and quashed the order of the
Additional Collector.
The Customs Authority took the matter in appeal before a Bench
of the High Court.
The Bench has allowed the appeal and upheld the order of the Additional Collector.
Hence this appeal was
. filed after obtaining special leave of this Court.
Section 23A of the Foreign Exchange Regulation A~t provides, inter i
alia, that the restrictions imposed by or under sub-section ( 1) of section 12 shall be deemed to have been imposed under section 11 of the
Customs Act and all the provisions of that Act shall have the effect
accordingly.
Section 11 of the Customs Act empowers the Central
Government to prohibit eit_her absolutely or subject to such conditions
as may be specified in a notification the import or export of goods of
a~ specified description.
Section 113 says:
·
"The following export goods sha:ll be liable to confiscation.-
(d) any goods attempted to be exported or brought with-
'\
in the limits of any customs area for the purpose of
being exported, contrary to any prohibition imposed
by or under this Act or any other law for the time
being in force;"
By virtlie of Section 23A of the Foreign Exchange Regnlation Act the
prohibition imposed under section 12(1) of that Act becomes a prohibition imposed nnder section 11 of the Customs Act.
And if the
goods wete attempted to be exported contrary to the said prohibition
the goods became liable to confiscation under section 113 ( d) of the
Customl! Act.
Consequently the person attempting to export the goods
also became liable to pay penalty under section 114.
There has been
no difficulty in correct appreciation of the law so far either by the
Customs Authority or the High Court.
A good deal of difficulty and
confusion however cropped up in the interpretation of section l 2 (1)
of the Foreign Exchange Regulation Act.
Sub-section ( l ) of section 12 as it stood prior to the amendment brought about by Act 40
of J 969 read as follows :
"The Central Government may, by notification in the
Official Gazette, prohibit the taking or sending out by land,
sea or air (hereinafter-in this section referred to as export)
/
SOUTH INDIA COIR MILLS V. ADDL. COLLECTOR CUSTOMS
909
(Untwalia, /.)
of any goods or class of goods specified in the notification
from India directly or indirectly to any place so specified
unless a declaration supported by such evidence as may be
prescribed or so specified, is furnished by the exporter to
the prescribed authority that the amount representing the full
export value of the goods has been, or will within the prescribed period be paid in the prescribed manner."
In Union of India & Ors. v. M/s Rai Bahadur Shree Ram Durga Prasad (P) Ltd: & Ors.(')., Hegde, J. speaking for himself and Bachawat,
J gave a narrow interpretation to section 12(1) as it stood then. Sikri,
J, as he then was, in his dissenting judgment said :
A
B
"I have to construe an Act which was enacted in the interest of the national economy.
A deliberate large-scale contravention of its provisions would affect the. interests
of
C
every man, woman and child in the country.
Such an Act,
I apprehend, should be construed so as to make it workable;
it should, however, receive a fair construction,
doing no
violence
to
the
language
employed
by
the
Legislature.
It was said that if two constructions are possible the
one that is in favour of the subject should be accepted. It
is not necessary to pronounce on this proposition for I have
D
come to the conclusion that there is one true construction of
s. 12(1). But I should not be taken to be assenting to this
proposition in so far as it is applicable to an enactment like
the Exchange Act, for no subject has a right to sabotage the
national economy."
Section 12(1) was, thereafter, amended by Act 40 of 1969. It then
E
read as follows :
"The Central Govermnent may, by notification in the
Official Gazette, prohibit the taking or sending out by land,
sea or air (hereinafter in this section referred to as export)
of all goods or of any goods or class of goods specified in the
notification from India directly or indirectly to any place so
specified unless the exporter furnishes to the prescribed authority a declaration in the prescribed form supported by such
evidence as may be prescribed or so specified and true in
all material particulars which, among others, shall include
the amount representing-
( i) the full export value of the goods; or
(ii) if the full export value of the goods is not ascertainable at the time of export, the value which the exporter, having regard to the prevailing market conditions, expects to
receive on the sale of the goods in the course of international
trade,
F
G
and affirms in the said declaration that the full export
value of the goods (whether ascertainable at the time 0f
H
(I) [1969] 2 S.C.R. 727.
8-725SC!/76
A
B
c
D
E
F
G
H
910
SUPREME COURT REPORTS
[1976) 3 S.C.R.
export or not) has been, or will within the prescribed
period be, paid in the prescribed manner."
Under the changed law the Exporter was required to furnish a declaration in the prescribed form which must be true in all material particulars including the amount representing the full export value of the
goods or the expected export value of the goods.
Apart from
the
furnishing of the declaration containing the true statements in all
material particulars the exporter under the amended section 12 (1 ) of
the Foreign Exchange Regulation Act was also required· to affirm in
the said declaration, i.e. in the document or the paper containing the
declaration, that the full export value of the goods will within the
prescribed period be paid in the prescribed manner.
The ailirmation
under the last part of section 12(1) is not required to be in any prescribed form.
Therefore, in the form prescribed for the declaration
no form of ailirmation has been specified.
Broadly speaking section 12(1) consists of 3 parts (1) issuance of
a notification by the Central Government prohibiting the export of
certain goods to any place specified in the notification; (2) the prohibition is relaxed and export is permitted when the exporter furnishes
a declaration and (3) when he ailirms in the said deolaration that the
payment will be in the prescribed manner.
Until and unless the exporter affirms that the payment would be in the prescribed manner,
he cannot be allowed to export the goods.
This is for the purpose of
conserving and preserving the foreign exchange so that by a subterfuge
no person may be able to harm the national economy by exporting
the goods without such affirmation.
In the instant case on the findings of fact recorded by the Additional Collector which were accepted to be correct by the High Court,
both by the single Judge and the Division Bench, the stress seems to
have been laid on the alleged violation of the requirement of giving
true material particulars in the declaration.
And that enabled Mr.
M. N. Phadke to strenonsly attack the decision of the High Court in
appeal.
Counsel submitted that whatever the appellant had stated
in the declaration was all true and nothing but true. It may well be,
he submitted, that it violated certain provisions of the Customs Act
or the Foreign Exchange Regulation Act.
Bnt surely the material
particulars furnished by the appellant in its declaration not being untrue in any respect, there was no infraction of section 12 (1) of the
Fon;ign Exchange Regulation Act.
The argument as presented had
substance and force but did not merit acceptance on close scrutiny.
The declaration of the buyer's name even if wrong in the shipping
bill and invoice did not attract the provisions of section 12(1) of the
Foreign Exchange Regulation Act.
In the form prescribed under
Rule 3 of the Rules (G.I.R. being one such form) the buyer's name
was not to be inserted. It was not given in the declaration furnished
by the appellant in tha~ to:m.
But the finding of t~e Ad~itional Collector is that the destmal!on of the goods was Tneste m Italy and
in the declaration furnished in form G.I.R. the appellant had stated
that the pavment was to be received in India in Indian rupees and this
statement was untrue as being against the prescribed manner.
)
,
SOUTH INDIA COIR MILLS V. ADDL. COLLECTOR CUSTOMS
(Untwalia, J.)
911
It is to be noticed that under section 12 ( 1) as it stood prior to
the amendment by Act 40 of 1969 the declaration had to contain a
statement that the amount representing the full export value of the
goods will be paid in the prescribed manner.
But now this is not to
be a part of the declaration but has to be separately affirmed although
in the declaration itself.
The learned single Judge noticed in his
judgment that section 12(1 )(ii) will not apply and the obligation of
the exporter was :
"(a) to furnish to the prescribed authority a declaration
in the prescribed form supported by such evidence
as may be prescribed :
A
B
(b) which declaration must be true in all materia,l particulars and
that among others shall include 'the
amount representing the full export value of the
C
goods' aud
( c) he must affirm in the said declaration that the full
export value of the goods will, within the prescribed
period, be paid in the prescribed mauner."
Stating that "There is no case that there is no affirmation in the decclaration" the single Judge held that section 12(1) was not violated.
D
The Division Bench, however, noted the fact that the declaration
furnished by the appellant "did not contain an affirmation as required
by the last portion of the said sub-section". Yet because of the mode
of payment mentioned in the declaration being contrary to Rule 7
of the Rules the Division Bench upheld the view of the Additional
Collector that the appellant "had misdeclared the material particulars
and attempted to export the goods in question in contravention of the
E
prohibition contained in section 12(1) of the Act." On the facts and
in the circumstances of this case we are constrained to hold that even
after the statement in column 2 of Form G.R. I that the country of
destination of goods was Italy the statement in column 5 that the
payment was to be received in India in Indian Rupees was not untrue.
The appellant had managed or manouvered to get the payment through
the firm of Yugoslavia in Indian Rupees.
The statement therefore,
F
was not untrue although it was against the mode prescribed under
Rule 7 of the Rules. But here comes in the importance of the affirmation in the declaration.
Rule 7 of the Rules says :
"The amount representing the full value of goods exported to the countries specified in the Second
Schedule
shall be paid through an authorised dealer and unless otherwise authorised by the Reserve Bank, shall be paid in the
manner specified in the said Schedule."
In the Second Schedule Italy occurs in Group A-"Convertible Account
Countries". In that case the approved methods of payment are
"(a) Currency of any country' in this sub-group. ·
(b) Sterling from an 'External Account',
as defined
under the U. K. Exchange Control Regulations.
G
H
912
SUPREME COUR'J.'. REPO~TS
[1!176) 3 S.C.R.
A
( c) Rupees from the accouut of a bauk iu imy couutry
iu the Couvertible Accouut group."·
Yugoslavia iu the Secoud Schedule fiuds place iu Group B "Bilateral
Accouut couutries" where the
approved
method of
paymeut is.
"Rupees from the accouut of a bauk iu the couutry of import."
Iu the preseut case the abseuce of affinnatiou had its owu siguiB
ficauce.
It was difficult, ahuost
impossible, for the appellant to·
affirm that the full export value of the goods was to be paid in oue
of the three modes prescribed iu the Secoud Schedule to the Rules
for the export of the goods to Italy. We are, therefore, of the opiniou
that although the statemeut in the declaration that the value of the
goods mentioned iu column 4 at Rs. 63,301.50 was to be received
iu Iudia in Iudian rupees for the export of goods to Italy was not
C
untrue, the affirmation, if made, would have been either false or contrary to the requirement of the law. If iu the affirmatiou the appellant
had stated that for the value of the goods exported to Italy it was
to receive the paymeut iu Iudian rupees through the Chartered Bank i
Ltd. Cochin as per the declaration, then the affirmation would have
violated section 12(1) as it would not have been an affirmation stating
that the. export value would be paid in the prescribed manuer. Absence
D
of affirmation in the declaration furnished by the appellant is tantamount to failure on the part of the appellant to comply with the
requirement of the law engrafted in section 12(1) of the Foreign
Exchange Regulation Act. That beiug so, the decisiou of the Division
Bench of the High Cqurt that the appellant had attempted to export
goods in violation of the restrictions imposed under section 12(1)
of the Foreign Exchange Regulation Act is fit to be upheld, but
E
on a different basis.
F
G
H
In cases of economic offences and specially in relation to the law
of Foreign Exchange uo leniency in the quantum of punishment is
warranted. But on the facts and in the circumstances of this case we
feel persuaded to reduce the amount of penalty imposed upon the
appellant from Rs. 25,000/- to Rs. 15,000/-. The direction as to
the payment of Rs. 5,000/- in lieu of confiscatiou of the goods is
upheld.
Since the law eugrafted in the amended Section 12(1) of
the Foreigu Exchange Regulation Act was not very clear either to
the Custom Authorities or to the High Court resulting iu the recQiding
of the findings against the petitioner ou a wrong b.asis, although not
affecting the substance of the view that the appellant had violated
Section 12(1) of the Foreign Exchange Regulation Act, we have
thought it fit to reduce the quautum of penalty by Rs. 10,000/-.
Before we part with this case we may just mention that now the
Foreign Exchange Regu.Jation Act iu force is an Act of 1973-Centrat
Act 46 of 1973. Section 18(1) (a) is ahuost the same as Section
12(1) of the Act of 1947.
In the result the appeal is dismissed but subject to the modification
iu the quautum of penalty imposed under Section 114 of the Customs
Act 1962. In the circumstances we shall make no order as to costs
iu this Court.
V.P.S.
Appeal dismissed~
'