Actual consumption must be declared under the Duty Exemption Scheme; norm-based shipping bill entries can sustain confiscation and penalties.

Under the Duty Exemption Scheme, exporters must declare the actual duty-exempt material used in the resultant products; policy norms for advance licence clearance cannot substitute for true consumption figures. A declaration based on estimated or norm-based quantities, where laboratory evidence showed substantially lower actual use, was treated as incorrect and sufficient to sustain confiscation. The same non-disclosure of actual consumption, coupled with an unacceptable explanation for treating different units as equivalent, justified redemption fine and personal penalty. The appellate challenge therefore failed, and the confiscation and monetary consequences remained undisturbed.

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Issues: (i) Whether the appellants' declaration of laminated polyurethane foam in the shipping bills, based on policy norms rather than actual consumption, amounted to misdeclaration attracting confiscation; (ii) whether the redemption fine and personal penalty were justified on the facts.

Issue (i): Whether the appellants' declaration of laminated polyurethane foam in the shipping bills, based on policy norms rather than actual consumption, amounted to misdeclaration attracting confiscation.

Analysis: Under the Duty Exemption Scheme, the exporter was required to utilise exempt materials for the manufacture of the resultant products and declare the actual duty-exempt material used in the shipping bills. The norms in the policy were meant for clearing advance licence applications and could not replace the actual declaration of consumption for export. The evidence, including the laboratory test, showed that the quantity actually used was substantially less than the quantity declared. The appellants' reliance on past practice and on the policy norm of 13 pairs to 4 sq. metres did not excuse the wrong declaration. The plea regarding wastage was not supported by proof and was inconsistent with the application stating a net-to-net basis.

Conclusion: The declaration was incorrect and the confiscation of the goods was sustained.

Issue (ii): Whether the redemption fine and personal penalty were justified on the facts.

Analysis: The appellants did not disclose the actual quantity of material used and instead adopted a declared quantity based on policy norms, despite the obligation to state actual consumption. The explanation offered for treating square metres and metres as the same was found unacceptable. In these circumstances, the conduct was held to be deliberate enough to justify penal consequences. Even on the appellants' own working, the duty exposure remained substantial, and the amounts imposed were not treated as excessive in the context of the case.

Conclusion: The redemption fine and personal penalty were upheld.

Final Conclusion: The appeal failed in full, and the order of confiscation along with the monetary consequences remained undisturbed.

Ratio Decidendi: In proceedings under the Duty Exemption Scheme, the exporter must declare the actual duty-exempt material used in the resultant products, and policy norms used for advance licence clearance cannot justify a false or estimated declaration in the shipping bills.

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