S. Kalyanam, Member (J)

1. The appeals are directed against the order of the Collector of Customs, Cochin, referred to supra, imposing a redemption fine of Rs. 25,000/- under Section 125 in lieu of confiscation of rosewood veneers and also a penalty of Rs. 5,000/- under Section 114 of the Customs Act, 1962, hereinafter referred to as the Act.

2. A consignment of 10 crates of rosewood veneers stacked in Ernakulam wharf for export under shipping bill No. 1699 dated 22.6.84 were seized by the authorities in pursuance of a search conducted in the business premises of M/s. United Veneers (P) Ltd., hereinafter referred to as 'appellants' on a reasonable belief that there was violation of the provisions of the Customs Act and Foreign Exchange Regulation Act. In a statement given before the Superintendent of Customs (Intelligence) on 10.8.1984, John Philipose, Chairman and acting Managing Director of the company (appellant in 98/85) stated that the quality of the veneers was not mentioned either in the contract or in other shipping documents, such as shipping bill, invoice etc. and the consignment was to be exported to one Takahashi Sholai of Japan for purposes of sale there. Since the appellants have not indicated in the shipping bill and other connected relevant documents the value, specification, quality and description of the goods which were sought to be exported, as per the provisions of the Export Control Order 1977 and the provisions of the Foreign Exchange Regulation Act, proceedings were instituted against the appellants by issue of a show cause notice which ultimately culminated in the impugned order now appealed against.

3. The learned counsel for the appellants submitted inter alia :-

(1) Since the description of the goods is in identical terms in the shipping bills and the relevant invoices also indicate the same, there cannot be any mistaken identity about the goods in question and therefore, the change of misdeclaration is not legally tenable.

(2) The goods in question are not prohibited either under the Export Control Order or any other orders and since no statutory definition has been given, confiscation of the goods on grounds of misdeclaration or under-invoicing is contrary to law.

(3) The finding of the adjudicating authority under the impugned order that value of the goods was higher in the market than what was indicated in the invoices is based on enquiries, the particulars of which were not finished too the appellants, and since the finding itself is on the basis of a conjecture, the same is not legally sustainable. When the Reserve Bank of India and Excise authorities have not questioned or disputed the appellants' valuation. Customs authorities cannot question it.

(4) Comparison of the market prices and the invoice price of the appellants has no legal sanctity since "market enquiries have no significance".

(5) The adjudicating authority failed to note that there is no need for an exporter to under-value the goods since Indian exporter can only sustain himself if the goods are sold at high cost and the incoming money is essential for running the firm and its activities. A regular exporter like the appellants obtaining cash assistance and export incentive need not and would not resort to undervaluation. The reliance placed by the adjudicating authority on a letter No. Sl(d) 285 dated 11.10.1983 addressed by the appellants to M/s. Shingu Shoko Ltd., Tokyo, on a prior occasion has no correlation with the exports in question and could not be relied upon as an adverse circumstance against the appellants.

(6) The adjudicating authority has failed to prove mens rea and this would vitiate the impugned order. At any rate, the redemption fine and penalty are excessive and harsh.

4. The learned counsel for the appellants cited a number of authorities which I shall advert to at the relevant place.

5. The learned DR, repelling the contentions of the appellants, submitted that the relevant particulars relating to specification, q