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TMI Blog1976 (3) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of the Division Bench of the High Court that the appellant had attempted to export goods in violation of the restrictions imposed under Section 12(1) of the Foreign Exchange Regulation Act is fit to be upheld, but on a different basis. on the facts and in the circumstances of this case we feel persuaded to reduce the amount of penalty imposed upon the appellant from ₹ 25,000/- to ₹ 15,000/-. The direction as to the payment of ₹ 5,000/- in lieu of confiscation of the goods is upheld. Since the law engrafted in the amended Section 12(1) of the Foreign Exchange Regulation Act was not very clear either to the Custom Authorities or to the High Court resulting in the recording of the findings against the petitioner on a wrong basis, although not affecting the substance of the view that the appellant had violated Section 12(1) of the Foreign Exchange Regulation Act, we have thought it fit to reduce the quantum of penalty by ₹ 10,000/-. - 244 of 1976 - - - Dated:- 25-3-1976 - Y.V. Chandrachud, V.R. Krishna Iyer and N.L. Untwalia, JJ. [Order per : N.L. Untwalia, J.]. - In this appeal by special leave an important question of law falls for our deter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound that in the declaration furnished by the appellant in accordance with Section 12(1) of the Foreign Exchange Regulation Act the manner of payment for the goods sought to be exported was contrary to Rule 7 of the Rules. The mis-declaration or untrue declaration made by the appellant in the shipping bill and G.R. 1 Form was, prima facie, not true in material particulars and violated Section 12(1) of the Foreign Exchange Regulation Act. In view of the 11th section in the Customs Act, the violation attracted the confiscation of the goods under Section 113(d) and imposition of penalty under Section 114 of the said Act. A show cause notice dated May 19, 1971 was issued by the Assistant Collector to the appellant. The appellant filed a long reply to the show cause notice. The Additional Collector of Customs by his order dated July 6, 1971 held : "By declaring the buyer's name as FERDELETRO YUGOSLAVIA and the port of discharge and country of final destination as 'Trieste' and Italy respectively in the shipping bill and the mode of payment as in rupees in the shipping bill as well as in the G.R. 1 Form, the exporters have misdeclared the material particulars regarding the prescribed m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 113(d) of the Customs Act. Consequently the person attempting to export the goods also became liable to pay penalty under Section 114. There has been no difficulty in correct appreciation of the law so far either by the Customs Authority or the High Court. A good deal of difficulty and confusion however cropped up in the interpretation of Section 12(1) of the Foreign Exchange Regulation Act. Sub-section (1) of Section 12 as it stood prior to the amendment brought about by Act 40 of 1969 read as follows : "The Central Government may, by notification in the Official Gazette, prohibit the taking or sending out by land, sea or air (hereinafter in this section referred to as export) of any goods or class of goods specified in the notification from India directly or indirectly to any place so specified 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 that prescribed period be, paid in the prescribed manner." In Union of India v. Shree Ram Durga Prasad (P) Ltd., (1969) 2 SCR 727, Hegde, J. speaking fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of the goods. Apart from the furnishing of the declaration containing the true statements in all material particulars the exporter under the amended Section 12(1) of the Foreign Ex-change Regulation Act was also required to affirm in the said declaration, i.e., in the document or the paper containing the declaration, that the full export value of the goods will within the prescribed period be paid in the prescribed manner. The affirmation under the last part of Section 12(1) is not required to be in any prescribed form. Therefore, in the form prescribed for the declaration no form of affirmation has been specified. 6.Broadly speaking Section 12(1) consists of 3 parts (1) issuance of a notification by the Central Government prohibiting the export of certain goods to any place specified in the notification; (2) the prohibition is relaxed and export is permitted when the exporter furnishes a declaration and (3) when he affirms in the said declaration that the payment will be in the prescribed manner. Until and unless the exporter affirms that the payment would be in the prescribed manner, he cannot be allowed to export the goods. This is for the purpose of conserving and pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed; which declaration must be true in all material particulars and that among others shall include 'the amount representing the full export value of the goods'; and he(c) must affirm in the said declaration that the full export value of the goods will, within the prescribed period, be paid in the prescribed manner." Stating that "There is no case that there is no affirmation in the declaration" the single Judge held that Section 12(1) was not violated. The Division Bench, however, noted the fact that the declaration furnished by the appellant "did not contain an affirmation as required by the last portion of the said sub-section." Yet because of the mode of payment mentioned in the declaration being contrary to Rule 7 of the Rules the Division Bench upheld the view of the Additional Collector that the appellant "had misdeclared the material particulars and attempted to export the goods in question in contravention of the prohibition contained in Section 12(1) of the Act." On the facts and in the circumstances of this case we are constrained to hold that even after the statement in column 2 of Form G.R. 1 that the country of destination of goods was Italy the statement in colu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of the law engrafted in Section 12(1) of the Foreign Exchange Regulation Act. That being so, the decision of the Division Bench of the High Court that the appellant had attempted to export goods in violation of the restrictions imposed under Section 12(1) of the Foreign Exchange Regulation Act is fit to be upheld, but on a different basis. 12.In cases of, economic offences and specially in relation to the law of Foreign Exchange no leniency in the quantum of punishment is warranted. But on the facts and in the circumstances of this case we feel persuaded to reduce the amount of penalty imposed upon the appellant from Rs. 25,000/- to Rs. 15,000/-. The direction as to the payment of Rs. 5,000/- in lieu of confiscation of the goods is upheld. Since the law engrafted in the amended Section 12(1) of the Foreign Exchange Regulation Act was not very clear either to the Custom Authorities or to the High Court resulting in the recording of the findings against the petitioner on a wrong basis, although not affecting the substance of the view that the appellant had violated Section 12(1) of the Foreign Exchange Regulation Act, we have thought it fit to reduce the quantum of penalty by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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