Export declaration affirmation requirement under foreign exchange law can trigger customs confiscation and penalty for non-compliance.

An export declaration under amended Section 12(1) of the Foreign Exchange Regulation Act was required to contain not only a true statement in material particulars but also the prescribed affirmation that the full export value would be received in the manner required by law. Absence of that affirmation constituted non-compliance with the statutory condition for export. Where export was attempted in breach of that prohibition, the Customs Act treated the goods as liable to confiscation and the person concerned as liable to penalty through the cross-reference in the foreign exchange law. The discussion also notes that penalty may be moderated where the circumstances justify reduction.

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Issues: (i) Whether failure to make the statutory affirmation in the export declaration under Section 12(1) of the Foreign Exchange Regulation Act, 1947 amounted to contravention of that provision. (ii) Whether, on the facts, the goods were liable to confiscation and the exporter liable to penalty under the Customs Act, 1962. (iii) Whether the penalty imposed required reduction.

Issue (i): Whether failure to make the statutory affirmation in the export declaration under Section 12(1) of the Foreign Exchange Regulation Act, 1947 amounted to contravention of that provision.

Analysis: Section 12(1), as amended, required not only a declaration in the prescribed form true in all material particulars, but also an affirmation that the full export value would be paid in the prescribed manner. The declaration in this case did not include a valid affirmation consistent with the prescribed mode of payment for export to Italy. Even though the stated rupee receipt was not shown to be false in the narrow sense, the absence of the required affirmation meant non-compliance with the statutory condition governing export.

Conclusion: The requirement of Section 12(1) was violated.

Issue (ii): Whether, on the facts, the goods were liable to confiscation and the exporter liable to penalty under the Customs Act, 1962.

Analysis: By virtue of Section 23A of the Foreign Exchange Regulation Act, 1947, the prohibition under Section 12(1) operated as a prohibition under Section 11 of the Customs Act, 1962. Goods attempted to be exported contrary to that prohibition were liable to confiscation under Section 113(d), and the person concerned was liable to penalty under Section 114. The export attempt therefore attracted the customs consequences upheld by the High Court.

Conclusion: Confiscation and penalty were sustainable.

Issue (iii): Whether the penalty imposed required reduction.

Analysis: Although the contravention was upheld, the Court treated the statutory position as having been unclear in its practical application and considered the original penalty excessive in the circumstances. The confiscation redemption amount was left undisturbed, but the monetary penalty was reduced.

Conclusion: The penalty was reduced from Rs. 25,000 to Rs. 15,000.

Final Conclusion: The appeal failed in substance, but the punishment was moderated by reducing the penalty while maintaining the confiscation-related direction.

Ratio Decidendi: Under the amended Section 12(1) of the Foreign Exchange Regulation Act, 1947, an export declaration is valid only if it contains the required affirmation that the export value will be paid in the prescribed manner; absence of that affirmation constitutes contravention attracting customs confiscation and penalty consequences.

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