Custom, Excise & Service Tax Tribunal
Shri Sanjay Kumar Agarwal vs Commissioner Of Customs (Airport), ... on 29 December, 2016
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
Appeal No.
C/511/05
(Arising out Order-in- Appeal No. COMMR/MCT/ADJN/ 04/2005 dated 28.02.2005 passed by the Commissioner of Customs (Airport), Mumbai)
For approval and signature:
Honble Shri M.V. Ravindran, Member (Judicial)
Honble Shri C.J. Mathew, Member (Technical)
1. Whether Press Reporters may be allowed to see No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the No CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy Yes
of the Order?
4. Whether Order is to be circulated to the Departmental Yes
authorities?
Shri Sanjay Kumar Agarwal
Appellant
Vs.
Commissioner of Customs (Airport), Mumbai
Respondent
Appearance:
Shri M.S. Murthy, Advocate for the appellant
Shri C. Singh, AC (AR) for the respondent
CORAM:
Honble Shri M.V. Ravindran, Member (Judicial)
Honble Shri C.J. Mathew, Member (Technical)
Date of hearing : 08-11-2016
Date of decision : 29.12.2016
O R D E R No: ..
Per: M.V. Ravindran
This appeal is directed against Order-in- Appeal No. COMMR/MCT/ADJN/ 04/2005 dated 28.02.2005.
2. The relevant facts in brief that arise for consideration is that on 14.02.2003 one passenger K. Asad travelling by AI-806 was frisked and it was noticed that the black zipper suitcase carried by him as hand baggage was containing Indian and foreign currency notes. On counting such currency notes, it was noticed that bag contained Indian currency of `47 lakhs and assorted foreign currency equivalent to Indian currency of `21 lakhs, totalling `68.65 lakhs. He was handed over to customs authorities for further investigation. The customs authorities after detaining the individual whose name subsequently turned out to be Abdulla carried out detail investigation recorded statement of Abdulla, Sanjay Agarwal and others. On completion of the investigation, department officers felt that the currency which was seized by them on 14.02.2003 was sought to be illegally exported by Abdulla in a way that he was to hand over the same to M.S. Kumar in the transit lounge who was to take it to Singapore; accordingly, issued a show-cause notice for confiscation of the said currency and also for imposition of penalty on Abdulla, M.S. Kumar and Sanjay Agarwal. Only Sanjay Agarwal, the current appellant cooperated with the adjudicating authority by filing reply and appearing through advocate for personal hearing. During the personal hearing and the reply to the show-cause notice, it was claimed by the appellant herein that the Indian currency as well as the foreign currency seized by the authorities are legitimate money, produced evidence in support of such claim and submitted that provisions of Section 113(d) and (h) of the Customs Act, 1962 is not applicable in this case. The adjudicating authority did not agree with the contentions raised and ordered for absolute confiscation of the Indian currency as well as foreign currency under the provisions of Section 113(d) and (h) of the Customs Act, 1962 and also imposed penalties on all the notices under Section 114(i) of the Customs Act, 1962. Against such order of confiscation and penalty imposed on him, the appellant is before the Tribunal.
3. Ld. counsel after giving us overview of the entire case submits that the impugned order as passed by the adjudicating authority is in violation of principles of natural justice. The confiscation of Indian and foreign currency is without authority of law inasmuch as the said currency was legally belonging to this appellant and has been claimed by him before the lower authorities; same was being carried by appellants employee to Hyderabad by domestic flight terminating at Hyderabad itself; seized Indian and foreign currency is not notified or specified goods hence the burden to prove that smuggling thereof squarely lies on the customs department which has not been discharged; seizure of Indian and foreign currency and subsequently confiscating the same from a domestic passenger carrying the same in person on domestic flight terminating at Hyderabad is illegal. It was also brought to our notice that provisions of Section 113(d) will apply only to goods admitted to be exported or brought within the customs area for the purpose of being exported contrary to any provisions imposed under the Customs Act, 1962 and in this case there was no attempt to commit any particular offence and there is no proximate cause to hold so. It is his submission that Section 113(h), during the relevant time, applied only to dutiable or prohibited goods if they are export goods and are not included in the baggage declaration under Section 77 of the Customs Act, 1962; the baggage declaration of Section 77 is only made for purposes of clearing the same out of customs charge and in the present case the seized currency is neither imported goods nor exported goods; assuming but not admitting that non-declaration of the currency by a domestic passenger on a flight operating only on domestic sector and terminating in India, is only a technical lapse, if any which is condonable and provisions of Section 113(h) cannot be pressed into service for confiscation of legally acquired currency carried by a domestic passenger on a domestic flight. It was also submitted that as per the definition of export of goods under Section 2(19) any goods which are to be taken out of India to a place outside India; in the case in hand currency under confiscation was kept in the hand baggage of Abdullah who has checked in for travelling in India. It is his submission that as regards the foreign currency seized the matter was referred by the customs department to the Directorate of Enforcement, Foreign Exchange Management Act. The Dy. Director of FEMA issued a charge sheet and the matter was adjudicated by the Dy. Director and vide order no. DD/19/BZ/BAN/04/(FEMA)/(VS)/996 dated 28.04.2005 has categorically held that the foreign currency which has been possessed and seized by the customs authorities, were legally acquired currency in respect of sale of jewellery items and said foreign currency was brought back from the United States. It is his submission that once the foreign currency is held as legally acquired by an authority under FEMA, the question of confiscation of the said currency does not arise. It is his prayer that confiscation be set aside and penalty imposed on this appellant also be set aside.
4. Ld. Departmental Representative after taking us through the brief facts of the case and also various statements recorded of Abdullah submits that Abdullah from whom the Indian and foreign currency was recovered and seized, categorically stated that he was an employee of Sanjay Agarwal and his father and on their instructions only he was carrying the Indian and foreign currency to be handed over to one M.S. Kumar who was to travel to Singapore. It is his submission that the revenue has made an enquiry with the travel agents and also got the call records of the cell number of Sanjay Agarwal and Abdullah and M.S. Kumar noticed that they were continuously in touch on the day when Abdullah was intercepted. It is his submission that Sanjay Agarwal planned to use Abdullah for successfully bypassing the customs barrier so that the currency can be handed over to M.S. Kumar in transit lounge. This can be ascertained from the fact that Abdullah was last person to be coerced to board the flight going to Hyderabad. It is his submission that Abdullah was in no hurry despite the fact the flight was ready for departure. It is his submission that the fact that Abdullah travelling in the name of Asad on a ticket and forged photocopy of Asads passport indicates that Sanjay Agarwal was the mastermind behind all operation of trying to export the Indian and foreign currency; domestic declaration form submitted by Abdullah alias Asad had no declaration of any items; that Sanjay Agarwal did not respond to summons by customs hence non-bailable warrant was required to be issued and subsequently he was apprehended in September 2003 and produced before customs authorities. It is his submission that it is therefore clear that Indian currency of `47 lakhs and foreign currency equivalent to `21.65 lakhs were being attempted to be smuggled out of India in contravention of provision of Customs Act, 1962 read with FEMA 1999 and the Rules and Regulations therein. Accordingly, the confiscation ordered by the adjudicating authority of the said currency is correct and penalty imposed on Sanjay Agarwal is also correct.
5. We have considered the submissions made at length by both sides and perused the records.
6. The issue that falls for consideration is whether the Indian and foreign currency totalling to approx. 68.65 lakhs is liable for confiscation under Section 113(b) and (h) of Customs Act, 1962 read with FEMA and rules thereof and whether Sanjay Agarwal the appellant herein is to be penalised under provisions of 114(i) by the Customs Act, 1962.
7. Before we record our observations, undisputed facts in this are the currency in question was recovered from one of the passengers namely Abdullah travelling as Asad, when he was having a valid boarding pass for travelling from Mumbai to Hyderabad in Air India AI 806. The said flight AI 806 is undisputedly flight originating in Mumbai and terminating at Hyderabad as a domestic sector flight. It is also undisputed that Abdullah is an employee of Sanjay Agarwal and is working in the jewellery shop of Sanjay Agarwal in Hyderabad. One M.S. Kumar to whom Abdullah was to hand over the currency notes was not apprehended despite the fact that he had checked in for Boarding to Singapore, got himself offloaded due to personal reasons; that the currency notes which was seized and confiscated were belonging to Sanjay Agarwal and his father Bal Krishna Agarwal and were sale proceeds of the export goods (part amount).
8. We find from the records that the adjudicating authority has ordered for absolute confiscation of the foreign currency and Indian currency seized from Abdullah on the ground that there was a intention to hand over the currency to a foreign going passenger and is well established from the statements and hence intention of illegal importation of the currency is established (para 72 of the Order-in-Original). It is also the finding that Abdullah did not declare the foreign currency and Indian currency in the customs declaration form, that he was required to do so and his declaration was accepted and he was not subject to examination hence he was successful in carrying the currency in the transit to hand it over to M.S. Kumar and Sanjay Agarwal, being a knowledgeable of these arrangement has tried to use Abdullah for undertaking such activity.
9. We do not find any merit in the arguments put forth by the ld. Departmental Representative that the impugned order which confiscated the foreign currency and Indian currency needs to be upheld as also the penalty imposed on Sanjay Agarwal for more than one reason. Firstly, as regards the Indian currency it is undisputed fact that Sanjay Agarwal is a proprietor and partner in one of the jewellery shops situated in Hyderabad. It is to be noted that Sanjay Agarwal had categorically stated that he had brought the said amount of Indian currency for purchase of gold which he could not do so since his employee Abdullah was in the city in Mumbai, he ordered him to take the amount back to Hyderabad by domestic flight originating in Mumbai and terminating in Hyderabad. We find that there is also no dispute that AI 806 was originating in Mumbai and terminating in Hyderabad flying domestic sector. We are unable to understand the logic to seize Indian currency which was to be taken by Abdullah from Mumbai to Hyderabad in a domestic sector flight holding to be an amount sought to be exported. We find that the reasoning adopted by the adjudicating authority to hold that this currency was sought to be exported is totally incorrect, inasmuch as per provisions of 2(19) of Customs Act, 1962 export of goods has been defined means any goods which are to be taken out of India to a place outside India and export has been defined under Section 2(18) means with its grammatical variation taking out of India to a place outside India. As has been seen from the definition of export and export goods most important aspect is that goods needs to have been taken out of India and to a place out of India, which in the case in hand is totally absent, inasmuch as Abdullah was to travel from Mumbai to Hyderabad carrying the Indian currency. In order to imaginarily consider that Indian currency which is sought to be confiscated has been smuggled out, is also not in consonance with law as stated in Customs Act, 1962 as the entire seizure of Indian currency by the adjudicating authority is on premise and surmise as has been noticed by the fact that it is the finding there is an intention to smuggle the Indian currency by handing it over to M.S. Kumar. A plain intention to do so cannot be held against anyone fastening the charge of smuggling of the goods. Further, we find that the appellant Sanjay Agarwal has been claiming that this amount of Indian currency which has been seized by the authorities were in fact an amount which has been recorded in their books of accounts and informed to the taxing authority i.e. IT department. He would submit that very same amount of `47 lakhs was adjudicated by the Dy. Commissioner of Income Tax by an assessment order dated 25.02.2005, it was held that this amount was not to be considered as undisclosed income declared in the block return, which would mean that the said amount has been properly recorded in the books of accounts. If that be so, the charge of department and the said currency cannot be considered as legal amount in the hands of Abdullah, falls flat.
10. As regards the assorted foreign currency amount of `21.6 lakhs it is the finding of the adjudicating authority that this amount is in respect of illicit sale proceeds. We find that even this charge of the adjudicating authority is wrong as the department referred the recovery of foreign currency to the Directorate of FEMA, Bangalore as the appellants unit in Hyderabad falls within the jurisdiction of the Bangalore zone. The Dy. Director of FEMA after issuing notice to Bal Krishna Agarwal, Sanjay Agarwal, Abdullah by an adjudication order dated 28.04.2005, came to a conclusion that the foreign currency which was seized by the customs department from Abdullah on 14.02.2003 is licit currency which was brought into India by Bal Krishna Agarwal, the father of Sanjay Agarwal, appellant herein. The adjudicating authority of FEMA has not confiscated the said currency as illicit currency and has only penalised Bal Krishna Agarwal and Sanjay Agarwal on procedural aspect of not seeking permission for handing over the same to Abdullah. In our considered view, once an authority functioning under FEMA has come to a conclusion that foreign currency which was seized on 14.02.2003 by the customs department and subsequently confiscated is licit amount for the sale of jewellery, confiscation of the said amount does not arise.
11. The adjudicating authority has confiscated the Indian currency and foreign currency under the provisions of Section 113(d) and (h) which we reproduce:-
113. Confiscation of goods attempted to be improperly exported, etc.
The following export goods shall be liable to confiscation:
...
...
(d) any goods attempted to be exported or brought within the limits of any customs area for the purpose of being exported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force;
...
(h) any goods which are not included or are in excess of those included in the entry made under this Act, or in the case of baggage in the declaration made under section 77.
12. It can be seen from the above reproduced sections the goods are liable for confiscation if attempted to be improperly exported or if they are attempted to be exported or brought within the limits of any customs area for the purpose of being exported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force; is not applicable in the case in hand as it is undisputed that Abdullah employee of Sanjay Agarwal, appellant herein was travelling in flight AI 806 which was flying between Mumbai and Hyderabad as a domestic sector flight. If it is so, then the goods i.e. foreign currency and Indian currency was never sought to be exported. It is also seen that provisions of Section 113(h) are also not applicable for the simple reason that the goods i.e. foreign currency and Indian currency were never for the purpose of export as the passenger was travelling on a domestic sector. Another fault in investigation which we have noticed in the entire case of the department is that Abdullah from whom the foreign currency and Indian currency was recovered was to hand it over to M.S. Kumar for carrying it to Singapore. We find from the entire records that M.S. Kumar was never apprehended nor his statement recorded; despite that it was the case to hand foreign currency and Indian currency through M.S. Kumar for taking out of country. In the absence of any statement of M.S. Kumar to corroborate the theory of the revenue, we find the case of confiscation of the foreign currency and Indian currency falls down.
13. In view of the foregoing, the facts and circumstances of this case, we hold that the confiscation of foreign currency and Indian currency of `68.69 lakhs under Section 113(d) and (h) of Customs Act, 1962 is incorrect and is liable to be set aside and we do so. We hold that the confiscation ordered by the adjudicating authority of the foreign currency and Indian currency is set aside.
14. Since we have set aside the confiscation the question of imposing any penalty on the appellant herein Sanjay Agarwal under Section 114(i) of Customs Act, 1962. Accordingly, penalty is also set aside.
15. The appeal is disposed of as indicated hereinabove.
(Pronounced in Court on ..............................) (C.J. Mathew) Member (Technical) (M.V. Ravindran) Member (Judicial) //SR
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