False export valuation can trigger customs scrutiny and confiscation where the declaration is found to be a colourable device.

False or inflated export declarations can be examined by customs authorities where the declared export value is not truthful. Section 14(1) of the Customs Act was treated as empowering valuation of export goods independently of whether the goods were dutiable, and the Customs Act operated alongside the foreign exchange law to permit scrutiny of the declaration. On the evidence, the inflated pricing was treated as a colourable device to channel money into India clandestinely. Confiscation and penalty were upheld, and the exporter's challenge failed.

---

---

Issues: Whether customs authorities could determine the value of export goods and order confiscation and penalty where the exporter allegedly inflated the export value, notwithstanding that the goods were not prohibited and the shipping bills disclosed a stated export value.

Analysis: The declaration of full export value under the foreign exchange regime was held to require truthful disclosure of the material particulars and real value of the goods. The power under Section 14(1) of the Customs Act, 1962 to determine value was treated as independent of whether the goods were themselves chargeable to duty. The customs authorities were held competent to investigate the correctness of the export declaration by virtue of the interplay between the Foreign Exchange Regulation Act and the Customs Act. On the evidence, the inflated pricing was found to be a device to bring money into India clandestinely, and such a colourable arrangement could not receive judicial approval.

Conclusion: The confiscation of the goods and the penalty were upheld; the challenge by the exporter failed.

Ratio Decidendi: Customs authorities may ascertain the real value of export goods and act upon a false or inflated export declaration under the Customs Act and the foreign exchange law, even if the goods are not prohibited and no duty liability is shown.

---