TMI Blog1993 (6) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... o Messrs. Omega Enterprises, U.S.A. 4. The respondent-writ petitioner in terms of the second contract manufactured 36,000 pieces of non-stainless steel rods and loaded the same in six containers for effecting export. It is claimed that due to inadvertence in the documents that were filed with the Customs Authorities these goods were mentioned as stainless steel rods, i.e. rods required to be supplied by the respondent-writ petitioner under the first contract. 5. It is claimed that the respondent-writ petitioner could not have done this deliberately. Before any export could be effected the Excise Authorities are obliged to take samples. In the instant case, the Excise Authorities took samples on 2nd September, 1992 which they forwarded to the Customs Department for necessary test. Since the respondent-writ petitioner was always aware that Excise Authorities would take samples and these would be tested by the Customs Authorities, it could not have deliberately mentioned stainless steel rods in the Customs document while despatching non-stainless rods. 6. The Customs Authorities upon testing the samples found that the goods were of non-stainless steel variety. The Customs Author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk accounts." 9. It was stated that no proceedings had been initiated against the respondent-writ petitioner or against any of its Directors in respect of the aforesaid export till then. 10. On 25th September, 1992 the order dated 24th September, 1992 was clarified as follows :- "Let the order dated 24-9-1992 be modified in the manner following :- In the sixth paragraph after the word 'proceeding or proceedings' the following be added:' 'in respect of the subject consignment.' Let this be incorporated in the order dated 24-9-1992. Department and all parties are to act on a signed copy of the minutes of this order on the usual undertaking." 11. Since the learned Judge of the Court of the first instance did not accede to the other prayers made in the writ petition, to the effect that no coercive action should be taken against the first writ petitioner and its directors, an appeal was preferred by the respondent-writ petitioner against the said orders dated 24th September, 1992 and 25th September, 1992. In that appeal a stay application was moved on 26th September 1992 which was heard by this Bench and an order was passed permitting the presence of a learned lawyer at th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hort) and therefore by virtue of Section 67 of the FERA there is a deemed violation of Section 11 of the Customs Act and as there is a deemed violation of Section 11 of the Customs Act, the goods are liable to be confiscated under Section 113(a) of the Customs Act. 17. FERA was enacted for the conservation of foreign exchange resources of the country and the proper utilisation thereof in the interest of the economic development of the country. This is the preamble to the FERA. All the sections of the said Act including Section 18(l)(a) have to be read with this preamble in mind. 18. Section 18(l)(a) of the Foreign Exchange Regulation Act, 1973 reads as follows :- "S. 18. Payment of Exported Goods. (1)(a) The Central Government may, by notification in the Official Gazette, prohibit the taking or sending out by land, sea or air (hereafter in this Section referred to as export) of all goods or of any goods or class of goods specified in the notification from India directly or indirectly to any place so specified unless the exporter furnishes to the prescribed authority a declaration in the prescribed form supported by such evidence as may be prescribed or so specified and true ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aration an exporter mentions Rs. 110/- per metric ton, then what is mentioned is not less than "full export value of goods" and Section 18(l)(a) will not be attracted. 20. As indicated, in the instant case, the goods inside the containers were non-stainless steel rods. The goods which were actually being exported were non-stainless steel rods. The value of non-stainless steel rods is less than the value of stainless steel rods. In the Customs documents the respondent-writ petitioner mentioned the price of stainless steel rods. Thus, more than "full export value of the goods" which were being exported was mentioned in the documents and the declaration filed by the respondent-writ petitioner. The relevance of correct mentioning of the goods is only from the point of view of its value as otherwise the return of the goods sought to be exported is the concern of FERA Authority. FERA is concerned with the regulation of foreign exchange and not of any goods. It is not a case where a declaration was filed by the respondent-writ petitioner where the full export value of the goods had not been mentioned. It is best a case of over-invoicing and not a case of under-invoicing. Therefore, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter clearance) as may be specified in the notification, the import or export of goods of any specified description." 25. There is no notification issued by the Central Government in the instant case under Section 11 of the Customs Act, 1962. It is only by virtue of Section 67 of the FERA that there is a deemed violation of Section 11 of the Customs Act. Therefore, the restriction under Section 11 of the Customs Act, 1962 in the instant case would also be deemed to be the same, namely, that unless full export value is mentioned, goods will not be allowed to be exported. A necessary corollary is that once full export value is mentioned goods would be allowed to be exported. Section 11 of the Customs Act, 1962 does not provide for any total prohibition for export of goods once there is a violation of Section 18(l)(a) of the Foreign Exchange Regulation Act. None of the other clauses of Section 11 of the Customs Act, 1962 is applicable in the instant case for which the Customs Authorities can prohibit exports of the goods in question. 26. The next question is whether Section 113(d) of the Customs Act, 1962 has any application on the facts and in the circumstances of this case. Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o confiscation :- (i) any dutiable or prohibited goods which do not correspond in any material particulars with the entry made under this Act." 31. It is due to this reason that the Customs authorities in the Appeal Court in this case did not urge that in the instant case there has been a violation of Section 113(1) of the Customs Act, 1962 authorising them to confiscate the goods. 32. Section 18(l)(a) of the FERA does not prescribe any particular form in which a declaration is required to be given by that section. No such form or declaration was produced by the authorities at the time of hearing. Such forms, if any, are prescribed by Rules and Regulations. Section 67 of the FERA only makes the restrictions imposed by the Act as deemed to have been imposed under Section 11 of the Customs Act, 1962 and not the restrictions imposed by any Rules or Regulations imposed under the Act. Therefore, even by application of Section 67 of the FERA in the instant case the restrictions imposed under Section 11 of the Customs Act, 1962 cannot be introduced. In Jute Investment Co. (supra) it has been held by the Division Bench that a declaration which is in contravention of the Rules or form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s competitive. 34. As per the scheme, two requirements are to be satisfied, namely, (i) the Indian manufacturer should use one or other of the iron/steel specified in paragraphs (ii) and (iii) of the scheme in the manufacture of export products; and (ii) thereafter must actually export the finished products to foreign countries. In support of that, he must produce proof that he purchased the raw materials mentioned in paragraphs (ii) and (iii) in the local market, by producing invoices. He must also produce a Chartered Engineer's Certificate to show that those raw materials were used in the manufacture of the products. 35. A perusal of the booklet containing the said Scheme as published by the REPC will show that before an exporter becomes eligible for reimbursement, he has to fulfil a number of conditions. Conditions (a), (b) and (c) are as follows :- (a) Exporters produce test certificate of Export Inspection Agency or other approved testing agency certifying use of alloy/non-alloy steel. (b) Export orders, copies of tender documents etc. indicate use of alloy/non-alloy steel. (c) Exports are made at or above floor prices notified by the EEPC. EEPC will fix floor prices ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess steel rods when in fact they were not stainless steel rods. There is no basis for contending that the respondent-writ petitioner deliberately made incorrect statement in the Customs document for the purpose of getting benefit under the IPRS. 37. Besides, while obtaining the payment under the IPRS, an exporter has to give an undertaking and to produce a bond in which he had to undertake, amongst others, that in the event of being found ineligible for the claim, the exporter would refund to EEPC the entire reimbursement amount along with 18% penal interest within 15 days of the demand and agree to the recovery at the discretion of the authorities concerned, of the excess payment made to the exporter on account of IFRS on such shipments from his other IPRS claims and also from other export entitlements including CCS, if found necessary. 38. For the reasons aforesaid, we are unable to persuade ourselves to accept the contentions urged on behalf of the customs authorities. In the result, the appeal fails and is dismissed without any order as to costs. All interim orders are vacated. The customs authorities shall allow the respondent-writ petitioner to export the goods in questio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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