TMI Blog1993 (2) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... y also be mentioned that the residential premises of Jitraj Agarwal, a partner of the said firm, were also searched by the enforcement officers on the same day resulting in the recovery of some foreign currency and small amount of foreign exchange. A statement of the said Jitraj Agarwal was also recorded. On September 11, 1987, the Deputy Director, Enforcement Directorate, Calcutta, issued 23 several show-cause notices to the said firm and its partners in regard to different consignments for contravention of sub-section (2) of section 18 of the said Act read with sub-section (3) of section 18 on the ground that the said firm had failed to realise and did not take appropriate steps to realise the amounts of the invoices for the goods from the buyers in Bangladesh in the prescribed manner within the prescribed period of six months without the permission of the Reserve Bank of India in this behalf. In response thereto, the appellant-firm sent a common reply dated October 5, 1987, denying their liability in respect of the charges and asserting that the amounts as shown in the various invoices had been realised through letters of credit in respect of various exports and as such ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bligation upon the exporter to furnish to the prescribed authority a declaration in the prescribed form supported by such evidence as may be prescribed or so specified and true in all material particulars which, among others, shall include the amount representing, inter alia , the full export value of the goods. The exporter is also required to affirm in the said declaration that the full export value of the goods has been, or will within the prescribed period be paid in the prescribed manner. Rules 5 and 6 of the Foreign Exchange Regulation Rules, 1974, provide that an exporter shall furnish a declaration at the time of exporting the goods otherwise than by post, to the Collector of Customs. The word "declaration" in section 12(1) of the Foreign Exchange Regulation Act, 1947, and section 18(1)( a ) of the Foreign Exchange Regulation Act, 1973, means that the declaration must be a true declaration. Section 12(1) of the 1947 Act has been construed by this court as well as by the Supreme Court. In Additional Collector of Customs v. Toolsidass Jewraj [1975] 79 CWN 461, the Division Bench of this court held that section 12(1) of the Foreign Exchange Regulation Act, 1947, r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the attribute of having become 'payable' by him. And if that be so and the price actually agreed upon has been paid to the exporter, clause ( b ) does not come into operation in the case of the latter. Sub-section (1) of section 12 no doubt makes it imperative for the exporter to specify in his declaration the full (and true) export value of the goods but then a breach of this mandate is not covered by the contraventions embraced by sub-section (2). It may be that the false declarations made by the respondent-firms in the invoices submitted by them in respect of the goods exported make them liable under some provision (other than section 12(2) of the Act) of the penal law of the country, but that is an aspect of the case with which we are not here concerned." Our attention has been drawn to a Full Bench decision of this court in Euresian Equipments and Chemicals Ltd. v. Collector of Customs, AIR 1980 Cal 188. In that case, a notice was issued by the Deputy Collector of Customs asking the exporter to show cause why penal action should not be taken against the exporter under section 114 of the Customs Act, 1962. In the said show-cause notice, it was alleged that the exporter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue of the exported goods a show-cause notice was issued under section 12(2) of the Act initiating adjudication proceedings contemplated by section 23D of the Act against the appellant and its partners. In reply to the notice, the appellant submitted that the goods had been exported to the Oriental Imports, New York, who did not pay the entire amount but, instead, the buyer set up a counter-claim against the appellant on account of devaluation of the Indian rupee. The appellant further asserted that since the consignee had not paid, full export value of the goods could not be repatriates. The Deputy Director, Enforcement Directorate, by his order dated November 20, 1975, rejected the defence set up by the appellant, on the findings that there was no evidence to show that the foreign buyer had raised counter-claim against the appellant. The Reserve Bank of India had advised the appellant to get the goods returned to India or to approach the Indian Embassy at Washington, for its intervention. The appellant made no attempt to adopt either of the two courses of action advised by the Reserve Bank of India. The National and Grindlays Bank who were the appellant's bankers informed that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andidly come forward to state how much he realised and ought to have repatriated the said amount. Instead, the appellant resorted to manipulations to show that the importer had paid only 50 per cent, of the value which fact is established to be untrue. The full export value is reflected in the transaction which was made with the foreign buyer at $5976 but he has repatriated only $2931.42. He has thus clearly violated section 12(2). The order under appeal is unassailable." In our view, the principles laid down in the aforesaid decisions will apply to the facts of this case. It is clear that if the exporter does not declare the real value, but declares a lesser value in the GRI forms or under invoices the value of the goods exported, the provisions of sections 18(2) and 18(3) of the Foreign Exchange Regulation Act, 1973, will not be attracted. Under section 18(2) an exporter who exports the goods notified under sub-section (1) of section 18 shall not do anything or refrain from doing anything which may have the effect of delaying the sale of goods to an unreasonable period or which may have the effect of ensuring payments otherwise than in the prescribed manner or which has the eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did they initiate any proceedings for the alleged misdeclaration or for the alleged underinvoicing under section 18(1) of the Act. Inasmuch as the full export value as declared in the prescribed GRI forms has been admittedly repatriated in the prescribed manner and within the prescribed period, it must be held that there was no contravention of section 18(2) and section 18(3) of the Act. For the reasons aforesaid, it must be held that the facts disclosed in the show-cause notice do not substantiate the charge of contravention of sections 18(2) and 18(3) of the said Act; the show-cause notices issued by the authorities under the Foreign Exchange Regulation Act are, therefore, without jurisdiction. In the result, the appeals succeed and the orders under appeal are set aside and quashed. It is stated that the amounts of penalty had been deposited with the Enforcement Directorate. The Enforcement Directorate shall refund the amounts of penalty so deposited within four weeks from date of communication of the operative part of this judgment and order. All parties including the Enforcement Directorate to act on a signed copy of the operative part of the minutes of this judgment/ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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