Truthful export declarations and customs penalty exposure where undervaluation defeats the statutory export condition under foreign exchange law.

A truthful export declaration stating the full export value was required under the Foreign Exchange Regulation Act, 1947; deliberate undervaluation meant the statutory export condition was not met and customs penalty proceedings remained available. The commentary also states that the Central Government notification and the Foreign Exchange Regulation Rules, 1952 were within the rule-making and prohibitory power conferred by the statute, while Section 12(2) did not apply because the sale had already been completed before export. It further notes that later repeal of the Sea Customs Act, 1878 and amendment of the foreign exchange law did not extinguish liability for past contraventions or bar pending proceedings.

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Issues: (i) Whether export of goods on a false or undervalued declaration satisfied the requirement of Section 12(1) of the Foreign Exchange Regulation Act, 1947 and attracted proceedings under Section 167(8) of the Sea Customs Act, 1878; (ii) Whether the Central Government notification and the Foreign Exchange Regulation Rules, 1952 were ultra vires; (iii) Whether the transaction fell under Section 12(2) instead of Section 12(1) of the Foreign Exchange Regulation Act, 1947; (iv) Whether repeal of the Sea Customs Act, 1878 and amendment of Section 23A of the Foreign Exchange Regulation Act, 1947 barred continuation of proceedings.

Issue (i): Whether export of goods on a false or undervalued declaration satisfied the requirement of Section 12(1) of the Foreign Exchange Regulation Act, 1947 and attracted proceedings under Section 167(8) of the Sea Customs Act, 1878.

Analysis: Section 12(1) required not merely an undertaking to remit sale proceeds, but a declaration that the amount stated represented the full export value of the goods and that it would be paid in the prescribed manner. The prescribed form and supporting evidence under the Rules reinforced that the declaration had to be true as to full export value. A deliberate undervaluation meant that the statutory condition for export was not fulfilled and the goods remained prohibited for the purposes of customs enforcement.

Conclusion: The declaration did not comply with Section 12(1), and proceedings under Section 167(8) of the Sea Customs Act, 1878 were maintainable.

Issue (ii): Whether the Central Government notification and the Foreign Exchange Regulation Rules, 1952 were ultra vires.

Analysis: The statute authorised the Central Government to prohibit export of any goods or class of goods and to make rules prescribing forms and evidence. The notification prohibiting export of goods generally was within the width of the statutory power, and Rule 3 together with Rule 5 and Form GR 1 validly carried out the legislative scheme.

Conclusion: The notification and the Rules were intra vires.

Issue (iii): Whether the transaction fell under Section 12(2) instead of Section 12(1) of the Foreign Exchange Regulation Act, 1947.

Analysis: Section 12(2) applied to a different situation, namely where sale had not been completed and the consignor sought to regulate the manner or timing of payment. The goods here had already been sold and the export declaration was made after completion of sale, so the factual foundation for Section 12(2) was absent.

Conclusion: Section 12(2) had no application.

Issue (iv): Whether repeal of the Sea Customs Act, 1878 and amendment of Section 23A of the Foreign Exchange Regulation Act, 1947 barred continuation of proceedings.

Analysis: The alleged offences related to an earlier period, and Section 6(e) of the General Clauses Act, 1897 preserved pending or enforceable liabilities and proceedings unless a contrary intention appeared. The later repeal and amendment did not extinguish liability for past contraventions.

Conclusion: The proceedings were not barred by repeal or amendment.

Final Conclusion: The challenge to the show cause notices failed on every ground, and the writ petitions were liable to be dismissed with costs.

Ratio Decidendi: A declaration for export under Section 12(1) of the Foreign Exchange Regulation Act, 1947 must truly state the full export value of the goods, and a deliberate undervaluation leaves the export prohibited and actionable under the customs penalty regime; subsequent repeal or amendment does not erase liability for past contraventions.

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