Becker Gray & Co. (1930) Ltd. & Ors. v. Union of India & Anr.

Bhargava, J.--The appellants in these appeals were exporters of Jute Carpet Backing Cloth and, in connection with some exports by them between the period January 1957 to January 1963, penal­ ties have been imposed on them under section 167 ( 8) of the Sea Customs Act for contravention of section 12(1) of the Foreign Exchange Regulation Act No. 7 ol 1947 (hereinafter referred to as "the Act") in view of the provisions of section 23A of the Act and section 19 of the Sea Customs Act by the Adjudicating Officer. Their appeals to the Central Board of Excise and Customs (here­ inafter referred to as "the Board") were dismjssed, though the amounts of penalties imposed were reduced. The' order of the Board dismissing the appeals has been challenged in these appeals before us by special leave. The Board based its decision for upholding the penalties on the finding that the declarations given in purported compliante with s. 12 (1) of the Act were defective in two respects. One defect found was that, in the declarations, the invoice value of the goods was shown at a figure lower than the real sale value. The · second defect found was that, in the declarations, it was stated that the invoice value declared was the full export value of the goods and was the same as that contracted with the buyer whereas, in fact, the goods had not been sold to the buyer and were being exported on consigrunent ba:sis, so that the correct declarations should have been that the declarations contained a fair valuation of the goods which were unsold. The declarations were given in Fonn G.R.I. prescribed by the Rules framed under section 27 of the Act. On behalf of the appellants, the argument advanced was that these defects in the declarations did not amount to contraven­ tion of the restrictions imposed bys. 12(1) of the Act, so that the imposition of these penalties was not justified. Sc far as the question of under-valuation ol the exported goods in the declarations or the documents accompanying the declara­ tions is concerned, reliance was placed on the decision of this , BECKER GRAY "' co. v. UNION (Bhargava, J.) 447 Court in Union of India and Others v. M/s. Ra; Bahadur Shreeram Durga Prasad (P) Ltd. and Others(') where this Court held that under-valuation in a declaration under s. 12(1) of the Act does wt amount to contravention of the restrictions imposed by that provision. That decision ,is fully applicable to the present cases before us on this point and, in view of that decision, the imposition of the penalties, on the basis that the under-valuation of the goods amounted to contraventiqn of s. 12( 1), is unjustified. We may add that we see no justification for granting the request of Mr. Bindra, learned counsel for the respondents, that that decision should be reconsidered by a larger Bench. Mr. Bindra, however, urged that, i,n these cases, there was the distinctive feature that the Board also found that the declarations were further incorrect inasmuch as the goods were declared to have been sold, while they were being exported on consignment basis as unsold goods, and it was further stated in the declarations that the lull export value of the goods is the value show,n instead of stating that it was the fair valuation of unsold goods. The finding recorded by the Board, no doubt, shows that the declarations required to be made under the Rules in Form G.R.I. contained incorrect information; but that incorrect information retated to points on which s. 12(1) does not require a declaration. A declaration, which is in contravention of the Rules of the Forms prescribed under the Rules, may be penaliSed u,rlder section 23 of the Act, but such contravention will not attract the provisions of the Sea Customs Act. Under s. 23A of the Act, only a breach of restrictions imposed bys. 12(1) of the Act is to be deemed to be contravention of restrictions imposed bys. 19 of the Sea Customs Act. An incorrect declaration in contravention of the Rules made under s. 27 qf the Act is not to be deemed a contravention of any restriction imposed by s. 19 of the Sea Customs Act. It is, there­ fore, quite clear that, in these cases, the imposition of the penalties under s. 167 ( 8) of the Sea Customs Act was l!Otllly unjuStified~ Consequently, these appeals are allowed with COila, aDd the order• of the Adjudicating Officer, and the Board impelling the penalties under s. 167(8) of the Sea Customs Act are set Uide. Penalties, if recovered, sha!J be refunded. G.C. Appeals allowed. (!) (1969) I s.c. cases 91.