LexSOUTH INDIA COIR MILLS POOCHAKKAL versus THE ADDITIONAL COLLECTOR OF CUSTOMS AND CENTRAL EXCISE AND ANOTHER
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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 shipp-
ino 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 re-
garding 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 Govern-
E
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
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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
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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 pay-
ment 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 mExcerpt shown. Read the full judgment & AI analysis in Lexace.