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TMI Blog1966 (9) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... Petitioners committed offences punishable under Sea Customs Act, 1878 and Customs Act, 1962 read with Foreign Exchange Regulation Act, 1947. It is stated that the documents showed that the Petitioners had resorted to under-invoicing of Mineral Ores, particularly manganese ores to the extent of a few crores of rupees. In February, 1965, 53 show cause notices were issued to the Petitioners, and 50 more subsequently. These related to the shipment of manganese ores from Visakhapatnam. According to the respondents, the extent of under-valuation is about Rs. 2,96,63,353. The show cause notices were issued by the Deputy Collector of Customs, Visakhapatnam calling upon the Petitioners to show cause in writing to the Collector of Customs as to why penalties should not be imposed upon them under Section 167(8) of the Sea Customs Act, 1878, for being persons concerned in the export of manganese ore from Visakhapatnam in contravention of the restrictions and prohibitions, imposed under Section 19 of the Sea Customs Act, 1878, read with Section 12(1) and the notification No. 12(17) F. 1/47 dated the 4th August, 1947 (as amended) issued thereunder, and Section 23-A of the Foreign Exchange Regul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 12 enables the Central Government to prohibit by any notification the export of any goods from India, unless a declaration 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. The Central Government issued a notification dated 4-8-1947 prohibiting the export of goods to any place outside India, unless a declaration supported by such evidence as may be prescribed 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. Apart from the powers conferred on the Central Government under Section 12(1) of the Act, Section 27 of the Foreign Exchange Regulation Act, 1947 also empowered the Central Government by notification in the Gazette to make rules for carrying into effect the provisions of the Act. Sub-section (2)(a) of Section 27 specifically conferred powers on the Government to make rules prescribing forms and the circumstances of their use for the purposes of this Act. The Foreign Exchange ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ular. If any person contravenes the provisions of Section 4, 5, or 9 or Section 12(2) or any rule or direction or order made thereunder, he shall be liable to a penalty not exceeding three times the value of the foreign exchange in respect of which the contravention has taken place or five thousand rupees, whichever is more under Section 23(1)(a) of the Act. Section 23(1)(b) provided that for the offences above stated a person upon conviction by a Court shall be punishable with imprisonment for a term which may extend to two years or with fine or with both. Section 23(1A)(a) provided that a person who contravenes any of the provisions of the Act other than those referred to in sub-section (1) of Section 23, and Section 19 shall, upon convinction by a Court, be punishable with imprisonment for a term which may extend to two years, or with fine, or with both. Section 23A provided as follows :- "Without prejudice to the provisions of Section 23 or to any other provision contained in this Act, the restrictions imposed by sub-sections (1) and (2) of Section 8, sub-section (1) of Section 12 and clause (a) of sub-section (1) of Section 13 shall be deemed to have been imposed, under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sea Customs Act. While Section 23(1)(b) of the Foreign Exchange Regulation Act provides that contravention of Section 12(2) is punishable on conviction with imprisonment for a term which may extend to two years, or with fine, or with both, Section 23A of the Foreign Exchange Regulation Act, 1947 read with Sections 19 and 167(8) of the Sea Customs Act provides that without prejudice to the provisions of Section 23(1)(q) the goods are liable to confiscation and the person concerned in any such offence shall be liable to a penalty not exceeding three times the value of the goods. The contravention of Section 12(2) is punishable under Section 23 of the Act and the offender is liable to a penalty not exceeding three times the value of the foreign exchange in respect of which the contravention has taken place, whereas in the case of an offence under Section 12(1) of the Foreign Exchange Regulation Act, to which Section 167(8) of the Sea Customs Act is attracted the punishment would extend to confiscation of the goods and penalty not exceeding three times the value of the goods. The punishment under Section 167(8) of the Sea Customs Act is far more severe, in that the goods are liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to prohibit the export of any goods, unless certain conditions are fulfilled. To safeguard the economic and financial interests of the country it is necessary that the goods exported by way of sale obtain the best price possible and that the price shall be remitted to the country within the prescribed period and in the prescribed manner. For achieving this object sub-section (1) of Section 12 provides that the Government may prohibit the export of any goods 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. The authorities may require the exporter to produce evidence in support of the declaration in the prescribed manner for establishing that the amount representing the full export value of the goods has been paid in the prescribed manner. The contention of the learned counsel for the Petitioner is that what is required of the exporter is an undertaking from him that the full export value of the goods has been paid and that the declaration does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the form requires that the exporter should declare that the invoice value is the full export value of the goods. Even assuming for the purpose of argument that the working of sub-section (1) of Section 12 is not clear, sub-section (1) read with Rules 3 and 5 and the undertaking in the form GR 1 make it clear that the declaration to be given by the exporter is not only that the value of the goods will be paid in the prescribed manner but also that the full export value of the goods given is the correct value. Oraies on Statute Law (6th Edition) at page 157 states as to how far assistance can be derived from the rules for construing the Language of the Act. The learned author observes : "Where the language of an Act is ambiguous and difficult to construe the Court may for assistance in its construction refer to rules made under the provisions of Act, especially where such rules are by the statute authorising them directed to be read as part of the Act". It is stated on the authority of James and Mellish, L.J. in Exparte Wier (1871 L.R. 6 Ch. Appeals 875 and 879) that "recourse may also be had to rules which have been made under the authority of the Act, if the construction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6th edition) at page 530 to the effect that unless penalties are imposed in clear terms they are not enforceable and that when the Legislature imposes a penalty the words imposing it must be clear and distinct, was relied on. At page 531 the position is summed up by the learned author as follows: 11.The distinction between a strict and a liberal construction has almost disappeared with regard to all classes of statutes, so that all statutes, whether penal or not, are now construed by substantially the same rules that penal provisions, like all others, are to be fairly construed according to the Legislative intent as expressed in the enactment, the courts refusing on the one hand to extend the punishment to cases which are not clearly embraced in them, and on the other equally refusing by any mere verbal nicety, forced construction, or equitable interpretation to exonerate parties plainly within their scope. 12.Learned counsel for the petitioner strongly relied on a decision of the Bombay High Court in (Misc. Application No. 376 of 1957) Hamad Sultan v. Abrol and Another (at page 100 of Compilation of Judgments in Customs Cases 1958 compiled by the Central Board of Revenue). In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of being satisfied prima facie that the declaration as to 'full export value' was correct especially in cases where they had reasons to believe that 'full export value' had not been stated in the declaration furnished". 14.An attempt was made to suggest that the provisions of sub-section (2) of Section 12 would apply in this case. A reading of the sub-section would show that the sub-section is applicable only to goods where the sale has not been completed. Sub-section (2) to Section 12 is applicable to consignors of goods, that is persons entitled to sell or procure the sale of the goods, that is to a stage before the actual sale. In such cases the permission of the Reserve Bank is required for doing or refraining from doing any Act with intent to secure that the sale of the goods is delayed to an extent which is unreasonable or to secure payment for the goods otherwise than in the prescribed manner or where the payment does not represent the full amount payable by the foreign buyer. It is admitted in this case that the goods had already been sold and the transaction of sale had been completed by the time the declaration was given. Section 12(2) has, therefore, no ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hen information, and yet there was some omission on his part due to some cause or other, but not to a case where the assessee deliberately failed to comply with the rule contained in Section 22(3). The court expressed its view that a return which deliberately failed to comply with the rule contained in Section 22(2) that the return was to be of the total income of the assessee was no return at all within the meaning of that rule of law. When the full export value given is correct, subject to variation of the particulars due to change in quantity or quality or fluctuation in the market rate, the full export value given cannot be said to be not true. But when the actual full export value of the goods was deliberately not given or a low value was given, as alleged in this case, for the purpose of secreting the balance of foreign exchange, it could not be said that the declaration regarding the full export value of the goods was given as required in the section. The result would be that the declaration will not be one according to the requirements of Section 12 (1). The prohibition imposed by the Central Government regarding the export of goods would not stand lifted, as the requiremen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble substance in the contention, but the Regulation empowered the Minister to declare any goods to be declared goods for the purposes of the regulation. Relying on the definition of the word 'any' in Strond's Judicial Dictionary, the Court held : "'Any goods' therefore includes all goods except where this wide construction is limited by the subject matter and context of a particular statute." The contention of the learned counsel for the petitioner that the Central Government acted beyond the scope of Section 12(1) in notifying all the goods cannot, therefore, be accepted. 17.It was next contended that Rule 3 of the Foreign Exchange Regulation Rules, 1952, which requires the exporter to make a declaration in the prescribed form. GR 1, that the invoice value declared is the full export value of the goods and is the same as that contracted with the buyer, in ultra vires of the powers conferred on the Government. This contention has to be rejected, in view of my holding that Section 12(1) by itself contemplates a declaration that the invoice value declared is the full export value of the goods. Further, the Government is also empowered to frame rules prescribing forms and circum ..... X X X X Extracts X X X X X X X X Extracts X X X X
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