Export overvaluation alone does not justify confiscation or penalty absent a prohibited export or valid restriction breach.

Export goods covered by a value-based advance licence and supported by bank realisation could not be treated as overvalued merely because the declared FOB value exceeded domestic processing cost. The goods were not shown to be prohibited under the EXIM Policy or the applicable export-control regime, and the earlier control order relied on for confiscation had been repealed and superseded. On those facts, over-invoicing in shipping bills did not by itself establish contravention attracting confiscation or penalty. The description of the goods also fell within the licence coverage, so no misdeclaration warranting confiscation was made out.

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Issues: Whether the exported goods were liable to confiscation on the grounds of alleged overvaluation and misdeclaration, and whether penalty under the Customs Act could be sustained.

Analysis: The export was made pursuant to a value-based advance licence issued by the competent authority, and the declared FOB value was supported by bank realisation. The declared export value could not be disbelieved merely on a comparison with domestic processing cost. The goods were not shown to be prohibited under the EXIM Policy or the relevant export-control framework. The order invoking Section 113(d) of the Customs Act, 1962 read with para 3(3) of the Export (Control) Order, 1988 could not be sustained after repeal and supersession of the earlier control order. Following the settled law on over-invoicing and foreign exchange provisions, overvaluation in the shipping bills did not, by itself, establish a contravention attracting confiscation or a deemed violation under the Customs Act. The description of the goods was also found to fall within the class of items permitted to be exported against the licence, and no misdeclaration warranting confiscation under Section 113(i) was made out.

Conclusion: The goods were not liable to confiscation under Sections 113(d), 113(l) or 113(i) of the Customs Act, 1962, and penalty under Section 114 was not sustainable.

Ratio Decidendi: Overvaluation or difference in description in export documents does not justify confiscation or penalty unless the goods are shown to be prohibited, dutiable, or otherwise contravening a valid restriction applicable to the export.

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