Export declaration compliance turns on true value disclosure; rupee payment routing alone does not invalidate the declaration.

Section 12(1) of the Foreign Exchange Regulation Act, 1947 required an export declaration to be true in all material particulars, including the full export value and affirmation that payment would be received in the prescribed manner. A rupee-based payment arrangement did not by itself make the declaration false or -compliant where the exporter disclosed the true agreed value and there was no underinvoicing or suppression. On the facts found, no contravention of Section 12(1) was established, so confiscation under the Customs Act and the related penalty were unjustified and the customs order was quashed.

---

---

Issues: Whether the exporter's declaration under Section 12(1) of the Foreign Exchange Regulation Act, 1947 was false or otherwise not in compliance because the goods were destined for a foreign buyer but payment was arranged through a rupee-based channel, and whether such conduct attracted confiscation and penalty under the Customs Act, 1962.

Analysis: Section 23-A of the Foreign Exchange Regulation Act, 1947 deems contravention of Section 12(1) to be a prohibition under Section 11 of the Customs Act, 1962, so that breach may attract confiscation under Section 113 and penalty under Section 114. After the 1969 amendment, Section 12(1) required a declaration in the prescribed form, supported by prescribed evidence, true in all material particulars, including the full export value of the goods, and an affirmation that the full export value would be paid in the prescribed manner. The declaration filed by the exporter disclosed the value actually agreed between the parties, and there was no case of underinvoicing or suppression of the export value. The mere fact that the transaction was structured so that payment would be received in rupees, in accordance with the contract and the commercial arrangement adopted, did not establish falsity in the declaration or non-compliance with Section 12(1). The requirement of affirmation in the prescribed manner was satisfied by the declaration itself, and no contravention of Section 12(1) could be inferred on the facts found.

Conclusion: The declaration was held not to be in breach of Section 12(1) of the Foreign Exchange Regulation Act, 1947, and the confiscation fine and penalty were unjustified.

Final Conclusion: The impugned customs order was quashed and the petitioner obtained relief against both confiscation-related monetary liability and penalty.

Ratio Decidendi: A declaration under Section 12(1) of the Foreign Exchange Regulation Act, 1947 is not invalid merely because the export proceeds are arranged through a rupee-payment mechanism, so long as the declaration states the true export value and the statutory affirmation is made in the prescribed manner.

---