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PETITIONER: BECKER GRAY & CO. (1930) LTD. & ORS.

       Vs.

RESPONDENT: UNION OF INDIA & ANR.

DATE OF JUDGMENT: 23/01/1970

BENCH: BHARGAVA, VISHISHTHA BENCH: BHARGAVA, VISHISHTHA SIKRI, S.M. DUA, I.D.

CITATION:  1971 AIR  116            1970 SCR  (3) 445  1970 SCC  (1) 352  CITATOR INFO :  D          1991 SC1061  (6,7,8)

ACT: Foreign  Exchange  Regulation Act 7 of 1947, ss.  12(1)  and 23A--Sea  Customs Act ss. 19 and  167(8)-Under-valuation  of invoices  of goods exported whether a violation of s.  12(1) of Act 7 of 1947-Declaration of value of goods on the basis, that  they  were sold to buyer when in fact  they  were  yet unsold  whether  a  contravention of s.  12  (1)  -Whether-- penalty leviable under s, 167(8) of Sea Customs Act.

HEADNOTE: The  appellants were exporters of jute carpet backing  cloth and in connection with some exports by them between  January 1957  and January 1963 penalties were imposed on them  under s.  167(8)  of the Sea Customs Act for contravention  of  s. 12(1)  of the Foreign Exchange Regulation Act No. 7 of  1947 in view of the provisions of s. 23A of the Act and s. 19  of the Sea Customs Act by the Adjudicating Officer.  Appeals to the  Central Board of Revenue were dismissed.  The Board  in upholding   the   penalties  found  two   defects   in   the declarations filed by the appellants in purported competence with  s. 12(1) of the Act 7 of 1947, namely : (1)  that  the invoice value of the goods was shown at a figure lower  than the  real sale, value;- (2) that in the declaration  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 the correct declaration should have  been that  the  declarations contained a fair  valuation  or  the goods  which  were unsold.  The declarations were  given  in form  G.R. It prescribed by the Rules framed under Act 7  of 1947.   In appeal before this Court against the decision  of the Board it was urged on behalf of the appellants that  the defects  in question did not amount to contravention of  the restrictions  imposed by s. 12(1) of the Act 7 of  1947,  so that the imposition of the penalties was not justified. HELD : (i) In view of the decision of this Court in the case of M/s. Rai Bahadur Shreeram Durga Prasad (P) Ltd. which was fully  applicable  to  the facts of  the  present  case  the imposition  of  the penalties on the basis that  the  under-

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valuation of the goods amounted to contravention of s. 12(1), was unjustified. [447 B] Union  of  India v. M/s’ Rai Bahadur Shreeram  Durga  Prasad Ltd. and Ors. [1969] 1 S.C. Cases 9 1, applied. (ii) The   second   defect  found  by  the  Board   in   the declarations  related to points on which s. 12(1)  does  not require   a  declaration.   A  declaration,  which   is   in contravention of the Rule or’ the forms,prescribed under the Rules  may  be  penalised under s. 23 of the  Act  but  such contravention  will  not attract the provisions of  the  Sea Customs  Act  Under  s. 2 3 A of the Act 7 of  1947  only  a breach of restrictions imposed by s,’12(1) of the Act is  to be  deemed to be a contravention of restrictions imposed  by s.  19 of the Sea Customs Act.  An incorrect declaration  in contravention of the Rules made under s. 27 of the Act 7  of 1947 is not to be deemed a contravention of any  restriction imposed  by  s. 19 of the Sea Customs  Act.   Therefore  the imposition on the appellants of penalties under s.     167(8) of the Sea Customs Act was totally unjustified: [447 C-F] 446

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 1178 to 1180 of 1967.  Appeal by special leave from the order dated March 13, 1967 of  the  Central Board of Excise and Customs  (Appeal),  New Delhi in appeals Nos. 47 to 50 of 1967. N.   A.  Palkhivala, P. P. Ginwala, D. N. Mukherjee,  R.  S. Kumar and A. Choudhury, for the appellants. N.   S. Bindra and S. P. Nayar, for the respondents. M.   C. Chagla and D. N. Gupta, for the intervener. The Judgment of the Court was delivered by Bhargava, J.-The appellants in these appeals were  exporters of  Jute Carpet Backing Cloth and, in connection  with  some "ports  by them between the period January 1957  to  January 1963,  penalties  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 of  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  (hereinafter referred  to  as  "the Board") were  dismissed,  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 declaration  s  given  in  purported compliance  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  consignment  basis,  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 Form 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  contravention  of   the

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restrictions imposed by S. - 12 (1) of the Act, so that  the imposition of these penalties was not justified. So  far as the question of under-valuation of  the  exported goods in the -declarations or the documents accompanying the declarations  is  concerned,  reliance  was  placed  on  the decision of this 447 Court  in  Union of India and Others v.  M/s.   Rai  Bahadur Shreeram  Durga  Prasad (P) Ltd. and  Others(1)  where  this Court  held  that undervaluation in a declaration  under  s. 12(1)  of the Act does. not 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  contravention  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, in 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  full  export value  of  the goods is the value shown 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  related  to points on which s. 12(1)  does  not require   a  declaration.   A  declaration,  which   is   in contravention of the Rules or the Forms prescribed under the Rules,  may  be penalised under 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 by s. 12(1) of the Act is to be  deemed to be contravention of restrictions imposed by s. 19 of  the Sea   Customs,:   Act.    An   incorrect   declaration    in contravention  of the Rules made under s. 27 of 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   totally unjustified.  Consequently, these appeals -are allowed  with costs,  and the orders of the Adjudicating Officer, and  the Board  imposing  the penalties under S. 167(8)  of  the  Sea Customs  Act are set aside.  Penalties, if recovered,  shall be refunded. G.C.                      Appeals allowed- (1) (1969) 1 S.C..Cases 91. 448