Decided on October 09,1974

Additional Collector Of Customs And Excise Cochin Appellant
South Indian Coils Mills Respondents


V.BALAKRISHNA ERADI,J. - (1.) WRIT Appeal No.142 of 1972 is an appeal against the judgment of our learned brother Poti,J.allowing O.P.No.2840 of 1971 and quashing an order Ext.P -6 dated 6th July,1971 passed against the writ peti­tioner by the Additional Collector of Customs and Central Excise,Cochin confiscating 150 bales of coir yarn under section 113(d)and(i)of the Customs Act,1962 and impos­ing a penalty of Rs.25,000 on the writ petitioner firm on the ground that they had deliberately attempted to export goods against payment in currency other than the currency in which the payment ought to be received as per the rules governing the subject.The appeal has been filed by the Additional Collector of Customs and Central Excise.The writ petitioner "Messrs South Indian Coil Mills "is the 1st respondent in the appeal.
(2.) THE parties will be hereinafter referred to with reference to the position that they occupied in the writ petition,the Additional Collector being referred to as the 1st respondent and the petitioner in the writ petition as the writ petitioner. The writ petitioner is a firm dealing in coir yarn and in the course of,its business it has been exporting coir yarn to foreign buyers.The proceedings impugned in the writ petition relate to a transaction of attempted export of 150 bales of coir yarn as per a shipping bill dated 24th March 1971.The facts as found by the learned Single Judge are that although the shipping bill as well as the declaration filed by the writ petitioner lender section 12(1)of the Foreign Exchange Regulation Act,1947(hereinafter referred to as the Act)made it appear that the consignee was one Messrs Ferocloktro in Sarajevo,Yugoslavia,in truth,the consignment was going to Italy and the purchaser was Messrs Tobia Giecominigia Casimiro and Co .,Spresiano,Treviso,Italy.The name of Ferocloktro,Yugoslavia had been mentioned in the con­tract only for the purpose of giving the transaction the cloak of a sale to a party in Yugoslavia for the purpose of enabling the payment to be made by the buyer,in Indian rupee currency.Though the petitioner's counsel made a feeble attempt to challenge the correctness of the aforesaid finding entered by the learned Single Judge we do not see any merit at all in the said argument.The evidence on record fully supports the said finding.
(3.) ACTION was taken against the petitioner under the impugned order Ext.P -6 on the ground that the petitioner had attempted to export goods without complying with the requirements laid down in section 12(1)of the Act and thereby become liable for penal action under sections 113 and 114 of the Customs Act read with section 23A of the Act.Section 12(1)of the Act as amended by Act 40 of 1969 reads: ( 1)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 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 in all material particulars which,among others,shall include the amount representing " (i)the full export value of the goods;or (ii)if the full export value of the goods is not ascertainable at the time of export,the value which the exporter,having regard to,the prevailing market conditions,expects to receive on the sale of the goods in the course of international trade and affirms in the said declaration that the full export value of the goods(whether ascertainable at the time of export or not)has been,or will,within the prescribed period,be paid in the prescribed manner. Under the aforesaid provision all exporter has to file a declaration containing true particulars relating to the country of destination,the full export value of the goods,etc and affirming that such full export value has been or will,with in the prescribed period,be paid in the prescribed manner.Rule 7 of the Foreign Exchange Regulation Rules,1952 prescribes the manner of payment of the export value of goods.It is laid down therein that the amount representing the full value of goods exported to the countries specified in the Second Schedule to the Rules should be paid through an authorised dealer in the manner specified in the said Schedule.In respect of exports made to convertible account countries ;,within which description is included Italy,the approved methods of payment specified in the Second Schedule are(a)currency of any country in sub -group(i)mentioned in the Schedule amongst the convertible account countries ;, (b)sterling from an external account as defined under the U.K.Exchange Control Regulations and (c)rupees from the account of a bank in any country in the convertible account group. ;

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