1991 (3) TMI 136 - SC - Customs

Whether a sort of phatka business was being carried on by the so-called consignee abroad and the shippers in India were playing the role of brokers and in that role they had undertaken to remit to them invisibly the profits earned out of phatka business? Held that - Additional Collector of Customs conclusions on case clearly disclose that the petitioner firm had made an attempt to remit the profits to the consignees by discounting the profit of 79d. from the sale price and thus declaring the export value of the goods at a lower value. The above device was detected even before the export of goods. Thus, in our view, the present case stands on totally different circumstances and the ratio of the cases referred of this Court cannot be applied to the case in hand before us. The learned Judges of the Division Bench of the High Court had correctly distinguished the above cases and we find no reason to take a different view. Appeal dismissed.

Issues Involved:
1. Validity of the declaration under Section 12(1) of the Foreign Exchange Regulation Act, 1947.
2. Authority of M.V. Ashar to waive the issuance of a show cause memo.
3. Jurisdiction of the Customs authorities and the Board of Revenue to pass the impugned orders.
4. Applicability of the precedents set by previous Supreme Court cases.

Issue-wise Detailed Analysis:

1. Validity of the declaration under Section 12(1) of the Foreign Exchange Regulation Act, 1947:
The petitioner firm, M/s. Toolsidass Jewraj, submitted shipping bills and G.R.-I forms with the Customs authorities on June 1, 1962, for the shipment of 435 bales of Hessian Cloth. The full export value of the goods was not correctly stated in these documents. The Additional Collector of Customs found that the F.O.B. values declared by the shippers in the G.R. forms were incorrect and the object of these incorrect declarations was unethical and highly objectionable. The petitioner firm argued that the case was covered by the Supreme Court's decisions in Union of India & Ors. v. M/s. Rai Bahadur Shree Ram Durga Prasad (P) Ltd. & Ors. and Becker Gray & Co. (1930) Ltd. & Ors. v. Union of India & Anr. However, the Supreme Court found the facts of the present case distinguishable, noting that the undervaluation was detected before the goods were actually shipped or exported. The Court held that there was a violation of Section 12(1) of the Foreign Exchange Regulation Act, 1947, and thus the petitioner firm committed offenses attracting the provisions of Section 167(8) of the Sea Customs Act read with Section 23A and 23B of the Act.

2. Authority of M.V. Ashar to waive the issuance of a show cause memo:
On June 5, 1962, M.V. Ashar, representing the petitioner firm, submitted a letter to the Customs authorities stating that the firm did not want any show cause memo and agreed to abide by the decision of the Customs authorities. The petitioner firm later contended that M.V. Ashar had no authority to waive the issuance of a show cause memo. However, this stand was not believed by any of the Customs authorities or the High Court. The Supreme Court noted that the representative of the petitioner firm was in a hurry and pressing hard for exporting the goods, which led to the waiver of the show cause notice.

3. Jurisdiction of the Customs authorities and the Board of Revenue to pass the impugned orders:
The learned single Judge of the Calcutta High Court had initially quashed the orders of the Additional Collector and the Board of Revenue, directing the refund of the amounts imposed as fines and penalties. However, the Division Bench of the High Court set aside this order, and the Supreme Court upheld the Division Bench's decision. The Supreme Court found that the Customs authorities had correctly held that there was a violation of Section 12(1) of the Foreign Exchange Regulation Act, 1947, and thus the petitioner firm committed offenses attracting the provisions of Section 167(8) of the Sea Customs Act read with Section 23A and 23B of the Act.

4. Applicability of the precedents set by previous Supreme Court cases:
The petitioner firm relied on the Supreme Court's decisions in Union of India & Ors. v. M/s. Rai Bahadur Shree Ram Durga Prasad (P) Ltd. & Ors. and Becker Gray & Co. (1930) Ltd. & Ors. v. Union of India & Anr. In these cases, the controversy had arisen after the export of goods, and the Court had observed that under-valuation in a declaration under Section 12(1) of the Act does not amount to contravention of the restrictions imposed by that provision. However, the Supreme Court found that the present case was distinguishable as the undervaluation was detected before the goods were exported. The Court held that the petitioner firm had made an attempt to remit the profits to the consignees by discounting the profit from the sale price and thus declaring the export value of the goods at a lower value. The learned Judges of the Division Bench of the High Court had correctly distinguished the above cases, and the Supreme Court found no reason to take a different view.

Conclusion:
The Supreme Court dismissed the appeal with costs, upholding the decision of the Division Bench of the High Court. The Court found that the petitioner firm had violated Section 12(1) of the Foreign Exchange Regulation Act, 1947, and committed offenses attracting the provisions of Section 167(8) of the Sea Customs Act read with Section 23A and 23B of the Act. The Court also held that the precedents cited by the petitioner firm were not applicable to the present case due to the different factual circumstances.

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