Customs, Excise and Gold Tribunal - Mumbai
Wall Street Finance Ltd. vs The Commissioner Of Customs (Prev.) on 15 September, 2006
Equivalent citations: 2007(209)ELT427(TRI-MUMBAI)
ORDER
Jyoti Balasundaram, Vice President
1. As per facts on records, which are relevant for the purposes of disposing of the present appeal, the appellant is a Full Fledged Money Changer (hereinafter referred to as FFMC). For the said purpose, they have a proper licence issued by the Reserve Bank of India from the year 1991-92, in terms of the provisions of Section 7 of the Foreign Exchange Regulations Act, 1973. The said licence stands renewed by the RBI from time to time. In terms of the said licence, the appellant is permitted to stock and sell VISA Brand Travellers' Cheque (hereinafter referred to TC's) of Arab Financial Services. They have the proper permission from RBI to sell said brand TCs to other FFMCs in India.
2. For the above purpose, they entered into an agreement with M/s. Time Travel & Cargo (hereinafter referred to as TTC), on 21/03/97, appointing them as their sub agent for stocking and selling TCs of VISA brand. The said M/s. TTC is duly licensed to operate as FFMC by RBI. In terms of the said agreement, blank stock of TCs were to be issued by the appellants to TTC at any given time within the overall limit agreed. The TCs so received by TTC were to be sold by them as per the terms and conditions of the licence granted to them as FFMC by RBI and as per the guidelines and instructions given in the memorandum of instructions issued by RBI from time to time. The appellants also informed the RBI about appointing of TTC as their sub agent and claimed that if the facilities by other FFMCs are miss-used by them, the appellants is not responsible for the same, inasmuch as the RBI is the only authority to monitor such use or misuse of the TCs. Various clauses in the agreement entered by the appellants with TTC also elaborated that TTC would sell such TCs to genuine passengers only against the purchase agreement forms (hereinafter referred to as PAF). The agreement also contained a clause containing caution about money laundering. The settlement between the appellants and TTC, as regards the consideration for the sold TCs was to be made by TTC an weekly basis daily settlement advice. It is also seen that before entering into the agreement, TTC furnished security of Rs. 55.5 lakhs to the appellants in terms of fixed deposit by one of the partners of TTC, Shri Riyaz Retiwala. Thereafter, the appellants started selling foreign currency in the shape of Travelers' Cheque to the said TTC.
3. During the month of May 97, to be precise on 26/05/97, the appellants sold TCs of VISA brand, totally amounting to US $ 1.90,000 to TTC for stock and sale. The said TCs were further sold by TTC on the same date itself and the sale proceeds thereof were deposited in cash in the bank account of TTC. Out of the said sale proceeds of TCs, two Pay Orders of Rs. 58 lakhs and Rs. 10 lakhs were procured by them in the name of the appellants and given to the appellants on 28/05/97. The said pay order was deposited by the appellants in their bank and at the relevant point of time of dispute was lying in the hands of the Bank.
4. The couse of action arose on 21/05/97, when the DRI and Coast Guard in a joint operation intercepted a Country Craft titled "Ya Hajipur". The rummaging of the craft resulted in the recovery of 140 Travelers' Cheques of foreign currency, totally valued at equivalent to Indian currency of Rs. 1.43 cores (approximately). Interrogation of the Captain of the vessel revealed that the bag containing the foreign exchange and TCs were given to him by one Shri Azim, who would have taken the delivery of the same in Dubai. Examination of the Travelers' Cheques revealed that they were sold by TTC in terms of the arrangements detailed earlier in the preceding paragraphs. The search of business premises of TTC resulted in recovery of 877 Indian passports along with other incriminating documents. Further investigations into the matter and recording of statements of various persons during the course of such investigations resulted in de-earthing of a racket being operated by TTC. It was revealed that the said TTC, which was a partnership firm with Riyaz Retiwala being active and Managing Partner was indulging in unauthorized sale of the purchased TCs to persons other than the bonafide persons. The said TCs issued by TTC in the name of bogus passengers, using their passports was being sold by him to two persons, Shri Mohmmed Iqbal Kapadia and Salim Bail, who were further selling the said TCs so obtained by them from TTC to one Shri Zahoor. In terms of the statements of Kapadia, Zahoor used to give him the cash, which cash he would pay on to Riyaz Retiwala and would obtain TCs from TTC, in the name of non-existent and unidentified passenger. Shri Zahoor was further reported to have sent the said TCs to Dubai, through carriers. It was revealed by these persons that they purchased TCs from Riyaz Retiwala on 23, 24, 26/05/97, which were being sent to Dubai, on board the vessel, which was intercepted by the DRI on 29/05/97. It was also revealed during such investigations that TTC had paid Rs. 68 lakhs to WSFL, as a consideration of the TCs obtained by the TTC on the said date, which stands recovered and seized by the DRI, the said payment was made by two pay orders drawn on two banks viz., Union Bank of India and Syndicate Bank. The said pay orders stands deposited by the appellants in their account for encashment. On entertaining a bonafide belief that the said currency in the shape of two pay orders amounting to Rs. 68 lakhs was the sale proceeds of the smuggled goods, DRI approached the Bank and issued seizure memo dated 29/05/97, directing the banks, not to clear the said pay orders. In terms of the said seizure memo dated 29/05/97, the appellants under the cover of their letter dated 17/09/97 surrendered the said two pay orders with the department.
5. As a result of the above developments, proceedings were initiated against all the concerned persons, including the appellants herein, by way of issuance of show cause notice dated 04/11/97. Apart from proposing confiscation of the seized foreign currency, including TCs and the vessel and proposing imposition of personal penalty upon the various persons, notice proposed confiscation of the amount of Rs. 58 lakhs and Rs. 10 lakhs lying in the pay order account of TTC, when pay orders stands deposited by the appellants in their bank account. The notice also proposed confiscation of an amount of Rs. 23 lakhs adjusted by the appellants out of the security of Rs. 54 lakhs given by TTC in terms of the contract entered into between the two. The said show cause notice was responded to by the appellants raising various contentions and submitting that since the amount of Rs. 68 lakhs was received by them by way of pay order in the normal course of their business with TTC, it was not open to the revenue to seize and confiscate the same as sale proceeds of smuggled TCs. It was contended that the appellant is a bonafide FFMC in terms of the licence issued by the RBI and entered into business relation with TTC, with the due knowledge and consent of RBI. All the precautions required to be taken by FFMC were incorporated in the agreement and the TCs were sold to TTC in terms and conditions of the agreement, the appellants has neither any control nor any check of further transactions of TCs by TTC. Inasmuch as there is neither any allegation, much less any evidence against the said appellants, as regards their involvement in the further fraudulent sales of TCs, the consideration of the genuine sale made by them cannot be confiscated.
6. Upon adjudication, the Commissioner of Customs (Prev.) vide his order dated 26/03/98, inter-alia, confiscated the said amount of Rs. 68 lakhs as also the amount of Rs. 23 lakhs, adjusted by the appellants out of the security amount of Rs. 54 lakhs given by the TTC. He also imposed personal penalty of Rs. 20 lakhs upon the appellants. Inasmuch as we are concerned only with the proceedings against the present appellants, the details of the orders passed against other appellants are being avoided.
7. Being aggrieved with the above order of the Commissioner, the appellant's challenge the same before the CESTAT. It is seen that vide order dated 03/02/2000, the appeal was rejected by the Division Bench. However, Member (Judicial) rejected the appeal on the ground that the appellants has no locus standi to file the same. This view was not agreed upon by Member (Technical, who discussed the merits of the case but did not find favour with the same and rejected the appeal on merits. As such, the net result, though on different grounds, was rejection of the appeal filed by the appellants.
8. The said order of the Tribunal was challenged by the appellants before the Hon'ble High Court of Mumbai by way of Writ Petition No. 493/00 and stands disposed of by the Hon'ble High Court vide its order dated 25/04/06. After taking into account the overall facts and circumstances, the Hon'ble High Court observed that - "in so far as the present case is concerned, we have no hesitation in holding, for the reasons that we have indicated above, that the present petitioner had locus standi to maintain the appeal before the Tribunal against the order-in-original dated 23/06/98". Accordingly, the Tribunal's order dated 03/02/2000 was set aside and the matter remanded to the Tribunal for fresh hearing in accordance with the law in terms of the said order. The matter was heard on merits.
9. We have heard Shri. Nankani, Ld. Advocate, appearing for the appellants and Shri. Pramod Kumar, Ld. DR appearing for the revenue.
10. Shri Nankani, Ld. Advocate appearing on behalf of the appellants strongly contested the confiscation of consideration of the TCs sold by the appellants to TTC in terms of the provisions of Section 121 of the Customs Act. Elaborating his arguments he submits that the said TCs were sold by the appellants, a FFMC, under the scheme "Basic Travel Quota" (BTQ). In terms of the said scheme TCs which sold to bonafide passenger for travel against photocopy of the passport, airline ticket and application from the passenger. In case the amount of foreign exchange equivalent to Indian rupees is more than Rs. 50,000/-, FFMC is required to receive the payment against pay order/demand draft and not in cash. The appellants had sold TCs to TTC, against which the said TTC had made payment to the company as per the agreement in respect of the TCs supplied on 21 & 22/05/97, cheque of Rs. 68,11750/- dated 26/05/97 was issued by the TTC. Inasmuch as the same were dishonoured on 27/05/97, two pay orders dated 28/05/97 were drawn by TTC, given to the appellants, who deposited the same with their banks and sent for dealing, when on account of instructions from DRI, payment was not made to the company. Ld. Advocate submits that the confiscation of the said amount in terms of provisions of Section 121 was not justified, inasmuch as the said Indian Currency cannot be termed to be sale proceeds of smuggled TCs inasmuch as the amounts were received by the appellants before the TCs were smuggled out and encashing of TCs after smuggling out of India through an act posterior to the act of sale of TCs by the appellants and receipt of consideration of the same. Drawing our attention to the provisions of Section 121, Ld. Advocate submits that the said Section provides for confiscation of the sale proceeds of the smuggled goods, by a person having knowledge with the goods are smuggled and such proceeds are liable to confiscation in the hands of the person, who has sold the smuggled goods. Inasmuch as admittedly in the present case, the paying and selling of TCs was a bonafide business and preceeded the subsequent smuggling out of the said bought TCs, consideration of the sale by the appellants to TTC cannot be held to be tainted being sale proceeds of the smuggled goods. The act of smuggling must precede the sale of the goods. Drawing our attention to the statements of various persons, Ld. Advocate submits that appreciation of the same leads to inevitable conclusion that the amount of Rs. 68 lakhs and 23 lakhs were sale proceeds of the local transaction, which happened in India and for which the payments were made in advance. Sale proceeds of the TCs would be the amount received by the holder of the TCs when he encashes the same and inasmuch as admittedly the TCs were encashed abroad, the amounts in dispute cannot be held to be sale proceeds of the smuggled goods. In any case, since the amounts were given in advance, they cannot acquire the characteristic of sale proceeds of the smuggled goods. The same had already been deposited in the company bank account and was the property of the appellants. Reliance was placed upon the Tribunal's decision in the case of B.P. Nayak v. Commissioner of Customs (Prev.), Mumbai 2001 (136) ELT 605 (Tri) and LKP Merchant Financing Ltd. v. Commissioner of Customs (P), Mumbai . As regards the penalty, Shri Nankani submits that there being no violation on the part of the appellants, invocation of penal provisions was not justified. He also drew our attention to another adjudication order dated 25/05/2003 by the Commissioner, dropping penal charges against the appellants, by taking note of the affidavit dated 02/05/2000 given by the financial authorities.
11. Contesting the above arguments, Shri. Pramod Kumar, Ld. JDR appearing for the revenue submitted that the pay order dated 25/09/97 for an amount of Rs. 58 lakhs and for Rs. 10 lakhs was issued by M/s. Time Travels from their bank i.e. Union Bank of India, Versova Branch, Mumbai. Investigations made by the DRI have disclosed that such pay order was obtained by M/s. Time Travels from payment received through smuggling of foreign exchange. Inasmuch as the said amount was still lying in the hands of the bank account of TTC, before the same was credited to Wall Street and represented the sale proceeds of the smuggled TC, the same has been rightly seized and confiscated. It was also contested that Wall Street has no locus standi to maintain the appeal and question the confiscation. If they are aggrieved with the seizure and confiscation, they are at liberty to take action either against the bank or against the TTC. The only aggrieved persons could be the bank from whose custody the money has been seized or TTC from whose accounts the money has been used for preparation of bank draft. Reference in this regard has been made to the Larger Bench's decision of the Tribunal in the case of Weizzman v. Commissioner of Customs, Mumbai . As regards the merits of the case, it was contended that the provisions of Section 121 and Section 120 was introduced in the Customs Act, 1962 as a fresh provisions and the object was to effectively deal with menace of the smuggling and confiscate the smuggled goods not withstanding any change in form, etc. Accordingly, it was submitted that it is a fit case where the Tribunal should invoke the application of "mischief rule", which states - "that for the sure and true interpretation of all statutes in general (be they penal or beneficial, restrictive or enlarging of the common law) four things are to be discerned and considered: (i) What was the common law before the making of the Act. (ii) What was the mischief and defect for which the common law did not provide. (iii) What remedy the Parliament hath resolved and appointed to cure the disease of the commonwealth, and (iv) the True reason of the remedy; and then the office of all the judges is always to make such construction as shall suppress the mischief, and advance the remedy, and to suppress subile inventions and evasions for continuance of the mischief, and pro private commodo and to add force and life to the cure and remedy, according to the true intent of the makers of the Act, pro bono publico". As such, it was contended that since the Parliament enacted Section 120 & 121 in the new Customs Act, 1962 as a remedy to rule the sale proceeds of the smuggled goods, the same should be made liable to confiscation, irrespective of the fact in whose hands the same are seized.
As regards the amount of Rs. 23 lakhs adjusted by Wall Street from the security deposit made by Shri Riyaz Retiwala, the revenue contended that no appeal in respect of the stands filed by the appellants and there is no clear ground for contesting confiscation of the same. In any case, the security deposit represented sale proceeds of TCs smuggled and the same has been correctly confiscated by the adjudicating authority. Ld. DR also supported imposition of the penalty upon the appellants on the ground that there is enough material on record to show that the appellants was aware of the activity of Shri Riyaz Retiwala and actively connived with him for illegal smuggling out of the TCs and sale of the same.
12. We have considered the submissions made by both sides. It may be clarified here that there is no challenge to the confiscation of the TCs seized from the vessel or of the vessel or the other part of the impugned order vide which penalties have been imposed upon various persons. The challenge in the present appeal is only by M/s. Wall Street Finance Ltd., against the confiscation of an amount of Rs. 68 lakhs received by them in the shape of two bank drafts from M/s.TTC as consideration towards the sale of TCs, in the normal course of their business as also to an amount of Rs. 23 lakhs encashed by the said appellants out of the security deposit given by M/s. TTC. It has been strongly contended before us that money in the hands of the appellants in the shape of bank drafts issued by TTC cannot be considered as sale proceeds of smuggled goods, inasmuch the Travellers' Cheques, in question, even according to the evidence produced by the revenue were yet to be smuggled out of the country. It is seen that the said Indian Currency has been confiscated in terms of the provisions of Section 121 of the Customs Act, which reads as under:
Section 121 - Confiscation of sale proceeds of smuggled goods: "Where any smuggled goods are sold by a person having knowledge or reason to belief that the goods are smuggled goods, the sale proceeds thereof shall be liable to confiscation.
A reading of the above section leads to one inevitable conclusion that the Act of smuggling of the goods is to precede the sale proceeds i.e., the act of smuggling, be it import or export of goods contrary to any prohibition under the said act or any other law for the time being in force is the main ingredients for confiscating the sale proceeds of such act. In the instant case, as per the evidence on record the Travellers' Cheques were sold by the appellants to TTC, which unquestionably is a legal transaction. Shri Riyaz Retiwala of TTC sold the said Travellers' cheques to Shri Kapadia, in violation of provisions of Foreign Exchange Regulations Act. Such sale of TCs by Riyaz Retiwala to Kapadia also does not constitute smuggling as defined in terms of the provisions of Section 2(39) of the said Act. Shri Kapadia, in turn gave these cheques to one Shri Zahoor, who further smuggled the same out of the country through his carriers Babu, Shakeel and Munna. Such TCs were encashed abroad, and it is at that point of time, that the money received by the act of encashing the TCs can be considered to be sale proceeds of smuggled goods. Revenue has not brought any evidence on record that such sale proceeds were brought back to Mumbai and handed over to Kapadia, who in turn handed the same to Riyaz Retiwala, who used the same for payments to WSFL, the appellants herein. The statements dated 30/05/97 of Shri Kapadia supports the appellant's case that Shri Zahoor agreed to make arrangements for payments against the Travellers' Cheques in Indian Rupees at Bombay in advance, (emphasize supplied). In fact Shri Kapadia has deposed in his statements that he was delivering cash to Shri Riyaz Retiwala in the evening, who would supply the Travellers' Cheques at his residence or office next day morning. As such, it becomes clear that Shri Kapadia received the amount in Indian Rupees in advance, from Shri Zahoor and paid the same to Shri Riyaz Retiwala, who bought the cheques from the appellants and delivered demand drafts towards such buying. As such, when the Travellers' cheques were being bought and sold in India and after a long chain of persons, were to be smuggled out of the country ultimately, the consideration received by the appellants towards first point selling of the TCs to TTC cannot be held to be the sale proceeds of smuggled TCs. Similarly, encashment of an amount of Rs. 23 lakhs by the appellants from the security deposit given by TTC at the time of entering into an agreement cannot be said to be the sale proceeds of smuggled goods, so as to attract the provisions of Section 121 of the Act. As such, we are of the view that the said Indian currency received by the appellants as a consideration of sale of TCs to another FFMC, in accordance with the provisions of law, cannot be held to be the sale proceeds of smuggled TCs.
13. Though, we have already held that the said Indian Currency was not the sale proceeds of smuggled TCs, having been received by the appellants for sale in India and for the TCs, which were yet to be smuggled out, we would also like to deal with the other aspects of the currency being presumably the sale proceeds of smuggled gold and the confiscability of the same under Section 121, only for the academic reasons. The question, which are arises is that even if the said currency was the sale proceeds of the TCs, which might have travelled back to the appellants, can it be confiscated under Section 121 of the Customs Act. As argued by the revenue, the provisions of Section 121 were introduced, for the first time, in the Customs Act, 1962, when the same replaced the earlier Sea Customs Act, which did not contain an identical clause. Statements of objects and reasons while enacting Section 121 of the said Act, read as under:
Clause 121 is a new provision to the effect that where any smuggled goods are sold by a person having knowledge or reason to believe that the goods are smuggled goods, the sale proceeds thereof shall also be liable to confiscation. The intention is that when a raid is made and it is found that the smuggled goods have already been sold, the sale proceeds in the hands of the smuggler or his accomplices may be seized and confiscated.
As is clear from the above, the sale proceeds of smuggled goods are liable to confiscation either in the hands of the smuggler or his accomplices. It indicates that once the sale proceeds mingled with and becomes a part of the Indian Currency otherwise available in the country, the same cannot be held liable to confiscation on account of the same being unidentifiable. - The words "in the hands of the smuggler or his accomplices" appearing in the above statements of objects and reasons are important asserts and it cannot be held that even when the money is used as a consideration for some other legal sale, the same would still retain its character of sale proceeds of smuggled goods. Considering an hypothetical situation where the said amount is used by the person, who received the sale proceeds of smuggled goods, for buying a flat, or a house, can it be said that the money in the hands of the builder or owner of the said house would still be liable to be considered as sale proceeds of the smuggled goods, when admittedly the same would represent the sale proceeds of the flat or the house in the hands of the owner/seller. There is no evidence that M/s.WSFL was a party to the deeper conspiracy hatched by the TTC in the ultimate smuggling of the TCs being purchased by them from the appellants. As a simple proposition, if some goldsmith or jeweler sells legally acquired out-of-stock gold to somebody against consideration, who instead of using the same in the domestic market, takes steps to smuggle out the same, can the consideration received by the seller of such gold be considered as sale proceeds of gold, which might be in the process of being smuggled out and caught and seized by the enforcement agencies.
14. We find that an identical issue was dealt by the Tribunal in the case of B.P. Nayak v. Commissioner of Customs (Prev.), Mumbai 2001 (136) ELT 604 (Tri.-Mumbai), while dealing with the issue of confiscability of the sale proceeds of smuggled gold, in the hands of the money changer. The Tribunal held that when the pay order issued to the appellant's money changer was presented to the bank, pending payments against pay order, it kept the money in a separate account. The money also acquired the character of the proceeds of sale of foreign exchange. That foreign exchange, as noted, was not smuggled goods, when it was issued by the money changer. It acquired this character only later when it was smuggled out. The money changer therefore could not obviously have any knowledge that the foreign exchange was going to be smuggled out. Therefore, as proceeds of sale of that foreign exchange, the money is not liable to confiscation under Section 121. The relevant paragraph 27 and 28 of the said judgment, which dealt with the crux of the issue are being re-produced by us, for better appreciation:
Section 120 of the Act provides that smuggled goods may be confiscated notwithstanding any change in their form. It further provides whether that smuggled goods are mixed with other goods in such manner that the smuggled goods cannot be separated from such other goods, the whole of the goods shall be liable for confiscation. There is an exception. Where the owner of such mixed goods proves that he has no knowledge or reason to believe that it included any smuggled goods, only that part of the goods the value of which is equal to the value of the smuggled goods shall be liable to confiscation. There is no such provision governing confiscation of sale proceeds. Section 121 of the Act does not contain any comparable provision. Money which was originally sale proceeds of smuggled goods when it was passed on as consideration for other goods or services. Thus, money paid out of such proceeds for purchase of a car represents at the hands of the seller of the car the proceeds of the sale of his car, to whom it is not the proceeds of the smuggled goods. He might be, totally unaware that it is the proceeds of sale of such goods. There is a change in the form or character of the money. Therefore, in the absence of any provision permitting such confiscation in such circumstances the money in question is not liable to confiscation.
We must also note that holding to the contrary would lead absurd results. Let us consider an example. A person may buy, before it is cleared from customs, an imported car, paying for it out of the proceeds of the smuggled goods that he has sold. The importer of the car who receives part of the payment for it in advance, pays the customs duty payable on the car out of this money. The customs duty in turn goes to the Consolidated funds of India from where it is used to pay the salary of a civil servant. By following the line of reasoning contrary to what we have expressed, the salary of that officer would be liable to confiscation as sale proceeds of smuggled goods. By following the well known principles of financial accounting such as first in first out or first in last out, the identity between the sale proceeds and the salary can be established. This is only one example. There will be many such examples. Surely, it is not the intention of the legislature while enacting Section 121 to provide for such a state of affairs. In the absence of any specific provision as for example that contemplated in the provision relating to money laundering we are of the view confiscation of the sale proceeds cannot be made once the goods lose their character or identity as sale proceeds of smuggled goods.
At this stage, we also take note of the another decision of the Tribunal in the case of LKP Merchant Financing Ltd., v. Commissioner of Customs (P), Mumbai , wherein by following B.P. Nayak judgment, the Tribunal held that consideration received for sale of foreign currency, in accordance with the RBI regulations and lying in the bank account of FFMC, cannot be held to be the sale proceeds of smuggled foreign currency and cannot be made liable to confiscation under Section 121 of the Customs Act. The said section cannot be stretched to be applied to the sale proceeds when changed in form and the same can only be applied to the immediate sale proceeds for the goods smuggled.
15. The above two decisions of the Tribunal have not been reported to be either appealed against by the revenue or upset by any higher appellate forum. The revenue has also not shown us any other decision contrary to the above two judgments.
16. However, reference has been made to Larger Bench decision in the case of Weizmann Ltd. v. Commissioner of Customs (P), Mumbai . On going through the said decision, we find that the said Larger Bench was constituted to decide the referred question as to whether the appellants have any locus standi to claim the impugned currency seized from the bank, as is clear from the first paragraph of the judgment. In para 8, the LB answered the reference against the appellants by holding that they do not have any locus standi to claim the impugned currency seized from the bank. However, in the present case the matter has been specifically remanded by the Hon'ble High Court after holding that the appellants have locus standi to file the present appeal and as such, we find that the ratio of the Larger Bench is not applicable and by implication, is deemed to have been over ruled.
17. We may also here to deal with the revenue's submissions, as regards invocation and application of "mischief rule". No doubt by applying the said rule, we find that the basic purpose of introduction of the provisions of Section 121 was to enact a remedy for confiscating the sale proceeds of smuggled goods. We find that the said rule cannot be stretched to an extent that where the Indian Currency is not in the hands of the culprits or his accomplices and is lying in the pocket of law abiding citizen, in the shape of his hard earned money, the same can still be confiscated from his pocket, if in a given case, the revenue is able to prove that such money, though in his hands is legitimate but was originally the sale proceeds of some smuggled goods. We are sure that this cannot be the purpose of the enactors of the said section.
18. In view of our foregoing discussions, we hold that the Indian currency of Rs. 68 lakhs in the shape of two pay orders and of Rs. 23 lakhs out of the security deposit, are not liable to confiscation. Accordingly, the appellants are also not liable to penalty. We also draw some supports for setting aside the penalty, from another order of the department, being order No. ADJ/310-V/SDE/AKV/2003 dated 25/07/2003, wherein, while dealing with identical matter of the same appellants, penalty was dropped, by observing as under:
From the foregoing discussions and also from the evidence available on record, it is obvious that WSFL, an FFMC license holders, while selling the impugned foreign exchange to M/s.Time Travel & Cargo, Mumbai, another FFMC in the instant case, had, scrupulously followed the procedures required to be followed for that purpose and hence have not violated any of the provisions of FERA 1973 or rules framed there under or instructions contained in the ECM issued by the RBI, particularly, the Memorandum FLM being instructions of FFMCs. Accordingly, the charges leveled against WSFL Mumbai, in the impugned SCN would not sustain and are hereby dropped.
19. In view of the foregoing, we set aside the impugned order and allow the appeal with consequential relief to the appellants.
(Pronounced in Court on 15/9/06)