Customs, Excise and Gold Tribunal - Tamil Nadu
K. Baluchamy vs Commissioner Of Customs on 22 January, 2007
Equivalent citations: 2007(116)ECC216, 2007ECR216(TRI.-CHENNAI)
ORDER P.G. Chacko, Member (J)
1. The Customs authorities had seized 50 foreign-marked gold bars weighing 5.832 kgs. from the person of the appellant and US$ 5600 from his baggage upon his arrival from Dubai at Trichy airport on 10.02.1999. In a statement given to the authorities under Section 108 of the Customs Act, the appellant stated that he was carrying the gold bars belonging to a person by name 'Kili' of Trichy who was in Dubai. He stated that he agreed to carry the contraband to India against a promise by Kili to pay his airfare. As regards the foreign currency, the appellant stated that he had himself earned the same abroad for the purpose of payment of duty on the gold bars. The gold bars along with the material used for its packaging and the currency were seized under a mahazar. The department booked a case of non-declaration and concealment of gold and foreign currency against the appellant and accordingly issued a show-cause notice to him proposing to (i) confiscate the bars and foreign currency under Section 111 of the Customs Act (ii) impose penalty under Section 112 of the Act. These proposals were contested adjudication of the dispute, learned Commissioner of Customs passed the following order:
I order absolute confiscation of the 50 foreign marking gold bars, weighing 5.832 kgs. valued at Rs. 26,24,625/- under Section 111(i), 111(1) and 111(m) of the Customs Act, 1962.
I further order that the USD 5600, equivalent to Indian Rs. 2,35,200/- be absolutely confiscated under Section 63(1) of FERA, read with Section 111(i), 111(1) and 111(m) of the Customs Act, 1962.
I order absolute confiscation of kada cloth and Air mail envelope under Section 119 of the Customs Act.
I impose the penalty of Rs. 10 lakhs (Rupees Ten lakhs only) on Shri K. Baluchamy under Section 112(a) and 112(b) of the Customs Act, 1962.
The appeal is against the above order. It is submitted by learned Counsel for the appellant that he is entitled to an opportunity for redeeming the gold bars and the currency under Section 125 of the Customs Act. This opportunity was not given by the Commissioner who ordered absolute confiscation of both the items. Learned Counsel submits that, in similar cases, this Tribunal has allowed option for redemption in respect of gold bars/biscuits. As regards the foreign currency, /reliance is placed on a regulation under the Foreign Exchange Regulation Act, 1973 (FERA), which was in force on the date of import and exempted foreign currency upto prescribed limits from the requirement of declaration. According to learned Counsel, the appellant was entitled to import the above foreign currency without declaration and, therefore, its confiscation is not sustainable. Learned Counsel also relies on the Tribunal's decision in V.P. Hameed v. Collector of Customs, Bombay , wherein US$ 6500 imported by V.P. Hameed and US$ 7800 imported by another person were held to be within permitted limits and hence exempted from the requirement of declaration and accordingly the currencies were held not liable for confiscation under Section 111(d) of the Customs Act. The appellant has also a grievance, reiterated today by his Counsel, that excessive penalty was imposed on him by the Commissioner.
2. We shall first deal with the foreign currency. The regulation cited by learned Counsel reads as under:
Importer of Foreign Exchange into India:
A person may -
(a) send into India without limit foreign exchange in any form other than currency notes, bank notes and travellers cheques;
(b) bring into India from any place outside India without limit foreign exchange (other than unissued notes):
Provided that bringing of foreign exchange into India under clause (b) shall be subject to the condition that such person makes, on arrival in India, a declaration to the Custom authorities in Currency Declaration Form (CDF).
Provided further that it shall not be necessary to make such declaration where the aggregate value of the foreign exchange in the form of currency notes, bank notes or travellers cheques brought in by such person at any one time does not exceed US$ 10,000 (US Dollars ten thousands) or its equivalent and/or the aggregate value of foreign currency notes brought in by such person at any one time does not exceed US$ 5,000/- (US Dollars five thousands) or its equivalent.
3. The first proviso made it obligatory for an importer of foreign exchange to declare the same to the Customs authorities. In the present case, the appellant admittedly did not declare the currency brought by him into India. The appellant is claiming the benefit of the second proviso to the above regulation. It appears to us from the text of the second proviso that, where the foreign exchange imported into India comprised only foreign currency notes as in the present case, it should not exceed US$ 5,000/- or its equivalent. Where the foreign exchange imported into India comprised foreign currency notes, bank notes, or travellers cheques, the total value must not exceed US$ 10,000/- or its equivalent and the value of foreign currency alone should not exceed US$ 5,000 or its equivalent, for the purpose of exemption from declaration to Customs authorities. In the present case, admittedly, foreign currency exceeding the limit of USD 5,000 was imported by the appellant without declaration to the Customs. Hence the appellant violated the above regulation. The finding of non-declaration of currency and its consequential confiscation under Section 111 cannot be violated. We have also considered the cited decision in the case of V.P. Hameed (supra). The relevant para of the Tribunal's order is reproduced below:
As regards the foreign currency, we find that there is no dispute that upto 10,000 US$, no declaration is called for. Hence there is no legal requirement for declaring the presence of foreign currency in the hands of the appellants. Even if these foreign currency might have been given by Mr. Kutty, a declaration is called for only in respect of dutiable and prohibited items contained in the baggage. When there is no legal requirements in respect of foreign currency upto US$ 10,000, it cannot be held that non-declaration of these foreign currency would render the currency Habile for confiscation under Section 111(d) of the Customs Act. In this view of the matter, we order release of the foreign currency seized, to both the appellants.
It appears from the above order that, in the case of V.P. Hameed, it was not in dispute that, upto US$ 10,000, no declaration was required. The Tribunal appears to have proceeded on the basis of such consensus. The present case is different inasmuch as learned SDR has contested the appellant's claim and successfully too. We have also noticed that, in the Tribunals order cited by learned Counsel, the aforesaid regulation under FERA was not considered by the Bench. In the result, the order of confiscation of the foreign currency has to be sustained.
4. As regards gold bars also, we find that the goods were rightly held liable for confiscation under Section 111 of the Customs Act inasmuch as they have also been attempted to be cleared at Customs without declaration and no proof of lawful acquisition of the goods was produced by the importer. Learned Commissioner appears to have accepted the statement of the appellant that he was only carrying the gold bars belonging to Kili as is evident from the finding that the appellant had abetted smuggling of gold. There is no finding that the appellant himself smuggled the gold bars. But smuggling of gold and abetment of this offence are treated alike by the law. Hence confiscation of the gold bars is in order.
5. However, the grievance of the appellant that the opportunity to redeem the goods was denied to him is genuine. under Section 125 of the Customs Act, it was open to the Commissioner to give an option to the appellant to redeem the goods. There is no provision in the Customs Act which made it mandatory for the Commissioner to order absolute confiscation of the gold bars and currency in the circumstances found by him. This Tribunal has held to this effect in numerous similar cases in the past. In the case of V.P. Hameed (supra), the Collector's order of absolute confiscation of gold was set aside and the appellant was allowed to redeem the goods under Section 125 against payment of a fine. Learned Counsel has urged that this precedent be followed. In the case of K. Kuttiyandi v. Commissioner of Customs, Chennai (Appeal No. C/29/2000), this Bench set aside the Commissioner's order of absolute confiscation of gold biscuits and he was directed to determine a fine to be paid by the party for redeeming the goods under Section 125. We are inclined to follow our own precedent rather than the view taken by the West Zonal Bench in V.P. Hameed's case.
6. Accordingly, the impugned order is set aside and learned Commissioner is directed to determine reasonable amounts of fine to be paid by the appellant for redeeming the goods (including the currency) under Section 125 of the Act. In the facts and circumstances of the case, the quantum of penalty imposed on the appellant by the Commissioner appears to be excessive and we vacate the same with a direction to the Commissioner to redetermine reasonable penalty. It is made clear that the appellant be given a reasonable opportunity of being heard by the Commissioner before passing the final order.
7. The appeal stands allowed by way of remand.
(Dictated and pronounced in open court)