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TMI Blog1996 (2) TMI 450X X X X Extracts X X X X X X X X Extracts X X X X ..... ting, inter alia , as follows : "The nine shipments .... were effected by us to S. K. Abdullah and Co., and Maideen Trading Agency . . . Singapore-2, only on consignment basis and not as sale to the foreign buyer. The values of each consignment mentioned in the G. R. 1 forms were..........not real values and those values were mentioned only at the instance of the customs authorities..........sharkfins have no internal market and they are highly perishable..........Singapore market fluctuates highly according to seasons and festivals..........The aboyesaid consignee have remitted the entire sale proceeds to us after deducting the expenses and commission due to them ..........they (consignee) had realised only Rs. 20,690.97 as sale price .... entries in the G. R. 1 forms themselves clearly prove the above facts and that the true value of the goods was ascertained only on sale made by the consignee and the full values of the goods have already been repatriated." (emphasis supplied) The order of the first authority also shows that the appellant filed copies of the account sales relating to the abovesaid nine shipments received from the abovesaid consignees. No doubt regardin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oints out the difference between the terminology used in section 12(2)( b ) of the old Act and the corresponding section 18(2)(A)( b ) of the new Act. In other words, while under the new Act, the term used is "full export value", which has to be repatriated, the term used in the old Act, with which alone we are concerned is, "the full amount payable by the foreign buyer" which alone has to be repatriated, no doubt, in both the cases, subject to the above referred to deductions permitted by the Reserve Bank. He also took us to the above referred to G. R. 1 forms, which were submitted by the appellant under rule 3 of the Foreign Exchange Regulation Rules, 1952. He also relied on Venkata Subbu v. Director of Enforcement [1969] 1 MLJ 281 and Krishnaswamy v. Government of India, AIR 1970 Mysore 3, and the subsequent Supreme Court decision in Enforcement Directorate v. Krishnaswamy [1980] 1 MLJ 47, confirming Krishnaswamy v. Government of India, AIR 1970 Mysore 3. He also relied on T. K M. Company v. Foreign Exchange Regulation Appellate Board [1982] T. L. N. J. 96 and an unreported judgment of this court dated September 21, 1981, in . A. M. Abdullah v. Foreign Excha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion under the new Act, a change has been effected in this regard. In other words, as per section 18(2)(A)( b ) the "full export value of goods" and not merely the full amount payable by the foreign buyer as under the old Act, has to be repatriated. This aspect has been considered by the above unreported judgment of this court in A. A. 0. Nos. 472 to 477 of 1979. The relevant observation therein is as follows : "There cannot be any dispute that in the case of consignment sales of the exported goods, mentioned in the G. R. 1 form, can only be approximate. Though, normally, the exporter is expected to give a fair value of the goods in the G. R. 1 forms having regard to the market conditions and the quality of the goods exported, it may be that by the time the goods are made available in the foreign market, the price may come down and the quality of the goods also might have deteriorated and this may result in the goods being sold at a lesser price than the value mentioned in the G. R. 1. forms. Therefore, the exporter cannot be prosecuted for non-repatriation of the amount mentioned in the G. R. 1. forms, in the case of consignment sales." Further, while interpreting the expres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... place. The relevant observation therein is as follows : "To substantiate his (appellant's) plea that the goods realised on the foreign market only a sum of Rs. 20,444.69 the appellant has produced a certificate from the Singapore Indian Chamber of Commerce indicating the market rate for the goods sold at the relevant date as also the accounts rendered by the Singapore agent to the appellant in respect of the sales at Singapore of the goods covered by the four consignments. Though the Appellate Board has accepted the certificates given by the Singapore Indian Chamber of Commerce by similar exporters on earlier occasions, in this case the appellate board has not considered the relevancy of the said certificate But so long as the department is not able to show that the appellant has refrained from repatriating any portion of the sale proceeds paid by the foreign buyer, the appellant cannot be taken to have contravened section 12(2) of the Act. Admittedly, the department is not in a position to say what is the actual price fetched by the sale of the goods in the foreign market. The department has merely proceeded on the basis of the assumption that the appellant has not repatr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lants by the foreign buyer in respect of the goods. In our opinion, the permission of the Reserve Bank is necessary under clause ( b ) only if any deduction is to be made from out of the amount payable to the consignor by the foreign buyer. In the case of consignment sales the amount payable to the consignor can be only the net proceeds left after deducting the expenses incurred by the consignee as well as his commission. The amount payable to the consignor being thus only the balance left after appropriation of the commission, the deduction of the commission is not from out of 'the full amount payable by the foreign buyer' in respect of the goods and hence there is no necessity for the exporter to obtain the prior permission of the Reserve Bank for entering into such a transaction of consignment sale involving the payment of commission to the consignee which is a necessary incident of such a transaction. We are supported in this view by the observations of a Division Bench of the Mysore High Court in Krishnaswamy v. Government of India, AIR 1970 Mysore 3, with which we are in respectful agreement." (emphasis supplied) With respect, we would like to, observe that the observat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "is not from out of the full amount payable by the foreign buyer" does not appear to be correct. Further, Krishnaswamy v. Government of India, AIR 1970 Mysore 3, also does not deal with the abovesaid deduction-aspect and so no support can be derived from the said decision. In view of the clear language used in section 12(2)( b ), if any deduction is claimed from the full amount payable by the foreign buyer, necessarily permission has to be obtained in that regard from the Reserve Bank of India. In the present case, admittedly, there was no such permission. We may also add that in M. G. Wagh v. Jay Engineering Works Ltd. [1987] 62 Comp Cas 658, 661 ; AIR 1987 SC 670, 672, it has been observed thus : "The avowed and the evident object of section 12 is to ensure that the nation does not lose foreign exchange which is very much essential for the economic survival of the nation. The exporter cannot be allowed to syphon away a part of the foreign exchange or to deprive the nation of the foreign exchange earned by the exports. Such is the philosophy of section 12." Therefore, in view of the fact that the abovesaid permission from the Reserve Bank of India has not been obt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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