Export confiscation requires express statutory basis; mismatch in supporting manufacturer and alleged overvaluation were insufficient here.

Export goods were held not liable to confiscation or penalty merely because they were not manufactured by the supporting manufacturer, since the DEEC book did not name that manufacturer and no express policy or statutory requirement was shown. Alleged overvaluation of the export goods also did not, by itself, establish contravention of foreign exchange law or make the export prohibited under the Customs Act; the consequent confiscation provision therefore did not apply. The appeal was allowed and the confiscation and penalty orders were set aside with consequential relief.

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Issues: (i) whether export goods were liable to confiscation and penalty on the ground that they were not manufactured by the supporting manufacturer, and (ii) whether alleged overvaluation of the export goods attracted contravention of the Foreign Exchange Regulation Act so as to render the export prohibited under the Customs Act.

Issue (i): whether export goods were liable to confiscation and penalty on the ground that they were not manufactured by the supporting manufacturer.

Analysis: The DEEC book did not specify the name of the supporting manufacturer, and no specific policy requirement was shown that the exported goods must in fact be manufactured by the supporting manufacturer. In the absence of an express provision making such goods liable to confiscation, the alleged mismatch in manufacture could at most affect availability of the advance licence benefit.

Conclusion: The goods were not liable to confiscation or penalty on this ground.

Issue (ii): whether alleged overvaluation of the export goods attracted contravention of the Foreign Exchange Regulation Act so as to render the export prohibited under the Customs Act.

Analysis: Following the Larger Bench ruling that overdeclaration of value, by itself, does not establish contravention of Section 18(1) of the Foreign Exchange Regulation Act, 1973, the declared value could not be treated as creating a prohibited export under Section 11 of the Customs Act, 1962. The consequence under Section 113(d) therefore did not arise.

Conclusion: The export was not rendered prohibited and confiscation and penalty were not sustainable on this ground.

Final Conclusion: The appeal succeeded and the orders of confiscation and penalty were set aside, with consequential relief.

Ratio Decidendi: In the absence of a specific statutory prohibition, export goods cannot be confiscated merely because they were not manufactured by the supporting manufacturer, and overvaluation of export goods does not by itself amount to contravention of foreign exchange law so as to attract confiscation under the Customs Act.

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