Common-parlance classification defeats penalty where exported goods matched the approved commodity and no mens rea was shown.

Penalty for exporting medallions instead of approved pendants under a Letter of Approval was found unsustainable where the goods answered to the approved commodity in common parlance, the Customs clarification and earlier understanding treated medallions and pendants as having the same meaning and use, and there was no statutory distinction between them. The Court noted continued export without objection and compliance with the prescribed value addition, and held that handbook norms could not override the absence of deliberate misrepresentation or mens rea. The penalty order was therefore set aside.

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Issues: Whether the penalty imposed for exporting medallions instead of the approved pendants under the Letter of Approval was sustainable in law.

Analysis: The approval and the export description were examined in the light of the trade meaning of the products, the Customs Department's clarification, and the earlier finding that medallion and pendant have the same meaning and usage in common parlance. The Court also noted that the petitioner had exported the goods for several years without objection, had achieved the prescribed value addition, and that the reliance on handbook norms could not override the absence of any statutory distinction between the two items. In the absence of any material showing deliberate misrepresentation or mens rea, the basis for penalty was held to be unsustainable.

Conclusion: The penalty order was not legally sustainable and was set aside.

Ratio Decidendi: Where the exported article answers to the approved commodity in common parlance and there is no proved deliberate violation or mens rea, penalty for alleged breach of the approval conditions cannot be sustained merely on a technical or nomenclatural distinction.

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