1966 (9) TMI 151 - HC - Customs

Summary

Issues Involved:
1. Legality of the show cause notices issued by the Deputy Collector of Customs.
2. Interpretation of Section 12(1) of the Foreign Exchange Regulation Act, 1947.
3. Applicability of Section 12(2) of the Foreign Exchange Regulation Act, 1947.
4. Validity of the notification issued by the Central Government under Section 12(1).
5. Validity of Rule 3 of the Foreign Exchange Regulation Rules, 1952.
6. Impact of the repeal of the Sea Customs Act, 1878 by the Customs Act, 1962.

Detailed Analysis:

1. Legality of the Show Cause Notices Issued by the Deputy Collector of Customs
The writ petitions sought prohibition against the respondents from taking any action based on the show cause notices dated 17th February 1965. The respondents had issued these notices based on information that the petitioners had hoarded undeclared gold and engaged in under-invoicing of manganese ores, violating the Sea Customs Act, 1878, and the Customs Act, 1962, read with the Foreign Exchange Regulation Act, 1947. The show cause notices called upon the petitioners to explain why penalties should not be imposed under Section 167(8) of the Sea Customs Act, 1878, for exporting manganese ore in contravention of the restrictions imposed under Section 19 of the Sea Customs Act, 1878, read with Section 12(1) and Notification No. 12(17)(F)1/47 dated 4th August 1947, and Section 23-A of the Foreign Exchange Regulation Act, 1947.

2. Interpretation of Section 12(1) of the Foreign Exchange Regulation Act, 1947
The petitioners contended that Section 12(1) did not require the exporter to furnish the true export value of the goods, but merely an undertaking that the amount noted in the invoice would be paid in the prescribed manner. The court, however, held that Section 12(1) required a declaration that the amount given is the full export value of the goods and that this value has been paid in the prescribed manner. The court emphasized that the declaration must be truthful to fulfill the economic and financial interests of the country. The court also referred to the rules and forms prescribed under the Act, which required the exporter to declare that the invoice value is the full export value of the goods.

3. Applicability of Section 12(2) of the Foreign Exchange Regulation Act, 1947
The court clarified that Section 12(2) applies only to goods where the sale has not been completed and is relevant to consignors of goods. Since the goods in question had already been sold and the transactions were completed, Section 12(2) was deemed inapplicable.

4. Validity of the Notification Issued by the Central Government under Section 12(1)
The petitioners argued that the notification of the Central Government dated 4th August 1947, which prohibited the export of all goods, exceeded the powers granted under Section 12(1). The court rejected this argument, stating that the term "any goods" in Section 12(1) includes all goods, as supported by judicial interpretations and the definition provided in Stroud's Judicial Dictionary.

5. Validity of Rule 3 of the Foreign Exchange Regulation Rules, 1952
The petitioners challenged Rule 3 of the Foreign Exchange Regulation Rules, 1952, which required the exporter to declare that the invoice value is the full export value of the goods. The court upheld the validity of Rule 3, stating that Section 12(1) itself contemplates such a declaration and that the Government is empowered to frame rules prescribing forms and circumstances under Section 27 of the Foreign Exchange Regulation Act, 1947.

6. Impact of the Repeal of the Sea Customs Act, 1878 by the Customs Act, 1962
The petitioners contended that after the repeal of the Sea Customs Act, 1878, by the Customs Act, 1962, no further proceedings could be taken for contraventions before the amendments. The court dismissed this contention, citing Section 6(e) of the General Clauses Act, 1897, which ensures that investigations or legal proceedings may continue as if the repealing Act had not been passed.

Conclusion
All the contentions raised by the petitioners were rejected. The court concluded that the show cause notices were valid, the interpretation of Section 12(1) required a truthful declaration of the full export value, Section 12(2) was inapplicable, the notification under Section 12(1) was valid, Rule 3 of the Foreign Exchange Regulation Rules, 1952 was within the powers conferred on the Government, and the repeal of the Sea Customs Act, 1878 did not affect ongoing proceedings. The writ petitions were dismissed with costs.