Per G.R. Sharma :

In the impugned order the Ld. Commissioner of Customs held :

"In the light of above discussion I find that the contention of the unit that over valuation in exports is not an offence under FERA or Customs Act is untenable. A case of over-valuation has clearly been made out against the unit inasmuch as huge sums through two related persons are sought to be transacted by the channel of software export. I am also not convinced of the view that ERDCI is not competent to value software. As discussed, there is a violation of Section 18 (1) (a) read with Section 67 of FERA. It is mandatory for the unit to furnish correct declaration under FERA before attempting any export and Section 48 of FERA requires that every declaration under FERA must be a correct declaration. A false declaration has contravened Section 18 (1) (a) and hence attracts the provision of Customs Act. Goods in this case i.e. one CD containing software sought to be exported have become prohibited goods in terms of FERA, which prohibition is deemed have been imposed under Customs Act, 1962. Thus goods are liable to confiscation under Section 113 (d) of Customs Act and unit liable to action under Section 114 (1) of Customs Act, 1962.

I have carefully considered the facts. There is certainly a contravention of provisions of Section 113 (d) as the goods have been attempted to be exported in violation of conditions/restrictions imposed under Customs Act, 1962 as the goods valued at Rs. 8,67,856/- have been invoiced for Rs. 38,05,350/- (FOB). I order confiscation of goods under Section 113 (d) of Customs Act. However, having regard to facts and circumstances of the case, I allow the goods to be exported as per invoice, on payment of redemption fine of Rs. 1,00,000/- (Rupees one lakh) since 80% of the invoice value has already been realised. I also impose upon M/s. MVT International a penalty of Rs. 50,000/- (Rupees Fifty thousand) under Section 114 of the Customs Act".

2. The facts of the case in brief are on 30.9.88, the appellants filed a Shipping Bill for export of Computer Software. During the processing of the Shipping Bill some doubts arose about the value of the software described as Software System for Resume Data Bank on Oracle Platform. The matter was referred to the Director, Deptt. of Electronics who in turn referred the same to Electronic Research and Development Centre of India who opined that the valuation of the software in question comes to Rs. 8,67,856/- as against the declared value of Rs. 38,05,350/-. A SCN was issued to the appellants asking them to explain as to why the compact disc containing computer software should not be confiscated under Section 113 of Customs Act read with Section 18 of FERA and why penalty should not be imposed under Section 114 of the Customs Act for over-valuation of the goods. The appellants in reply to the SCN submitted that over-valuation of goods meant for export is not in offence under Section 113 of the Customs Act read with Section 18 and 67 of FERA; that the unit has signed a correct declaration; that the software was neither dutiable nor prohibited; that punishment cannot be inflicted under Section 113 by the Customs Authorities; that under Section 18 of FERA only realisation of full export value is relevant; that in cases where value declared is more, Section 18 (1) of FERA shall not be attracted; that FERA is concerned with regulation of foreign exchange and not with export of any goods; that there was no offence prescribed under FERA for overinvoicing of exports; that Section 67 of FERA cannot be pressed into service to stop exports; that Section 18 (1) (a) is not violated, therefore, the restriction imposed under Section 18 (1) (a) cannot be deemed to have been meant under Section 11 of Customs Act; that the goods were neither dutiable nor prohibited and therefore, the same cannot be confiscated under Section 113 or its sub-sections and hence penalty cannot be imposed under Section 114. In supp