Customs, Excise and Gold Tribunal - Tamil Nadu
Sh. T. Soundrarajan vs Commissioner Of Customs on 19 April, 2007
Equivalent citations: 2007(119)ECC276, 2007ECR276(TRI.-CHENNAI), 2008(221)ELT258(TRI-CHENNAI)
ORDER P. Karthikeyan, Member (T)
1. On 22.11.2005, Shri T. Soundararajan, a passenger bound for Singapore by Indian Airlines Flight No. IC-555 had been intercepted at the International Airport, Chennai by the officers of Customs. The passenger, on enquiry as to whether he possessed any foreign currency in his baggage, had replied in the negative. On the examination of the baggage of the passenger, the officers recovered foreign currency of value Rs. 24,54,580/-and Indian currency value of Rs. 32,500/-. These were seized as the passenger had not declared them and had concealed them in his baggage. In the statement recorded from him immediately after seizure, Shri T. Soundararajan deposed that he had made three visits to Vietnam in 2004 and 2005 and had not brought back any foreign currency. He had bought 53,000 US $ from various persons in and around his native town and had decided to carry the currency to partfinance purchase of used excavators with unaccounted money as desired by their foreign suppliers. He had raised the required funds to buy foreign currency by taking loan from M/s. Jayapria Financiers, Neyveli. He did not have any documents to prove the licit acquisition of foreign and Indian currencies. The appellant was arrested. An Advocate representing the appellant wrote to the Commissioner retracting the above deposition by Shri T. Soundararajan and stated that the currencies had been obtained through legal channels; that they were unspent foreign currencies he (Soundararjan) had acquired during his visits abroad for services rendered there. He also stated that his client was entitled to carry upto US$35,000 and as a business man on his journey abroad. Shri T. Soundararajan did not have any bad antecedents and initial statement given was not voluntary. Article 7(2) of Foreign Exchange Management (Export & Import of Currency) Regulations, 2000 did not prescribe a maximum amount to be exported by a person resident in India. There was no limit provided for export of foreign currencies. The Commissioner replied to the Advocate citing the details from the voluntary deposition obtained from Shri T. Soundararajan confessing that he had been trying to smuggle out currency for purchase of impending imports of used excavators. On 13.2.06 Shri T. Soundararajan appeared before the Superintendent of Customs and gave further statement wherein he reiterated his initial deposition. In reply to the Show Cause Notice the version given by the appellant's the Advocate Shri A. Ganesh was reiterated. Adjudicating the Show Cause Notice issued in the wake of seizure of Indian/foreign currencies which had been kept concealed in the baggage of Shri T. Soundararjan and not declared to the customs authorities, the Commissioner found that Shri T. Soundararajan had attempted to smuggle out Indian currency and foreign currencies concealing the same in his baggage in contravention of Sections 77 & 79 of the Customs Act and provisions of Foreign Trade Policy 2004 - 09, Foreign Trade (Development and Regulations) Act, 1992 and Foreign Exchange Management Act, 1990. Shri T. Soundararajan had acquired foreign currencies illegally. Following the above findings the Commissioner ordered absolute confiscation of foreign currency of US $ 53,500 equivalent to of Rs. 24,54,580/- and Indian currency of Rs. 32,500/- under Section 113(d), (h) and (i) of the Customs Act, 1962 and confiscated the articles found to have been used to conceal the currencies under Section 119 of the Custom Act. He also imposed a penalty of Rs. 2,50,000/- on Shri T. Soundararajan under Section 114 of the Act.
2. In this appeal, the appellant Shri T. Soundararajan has challenged the above order of confiscation of foreign currency and Indian currency and the penalty of Rs. 2,50,000/- imposed on him. In the appeal the appellant has endeavoured to explain that export of foreign exchange is permissible and not prohibited as per Regulations 7(2) and 7(3) of Foreign Exchange Management (Import and Export of Currency) Regulations, 2000. As per Regulations 7(2) (supra) there was no limit for export of foreign currency. Circular A.P. (F.L. Series) Circular No. 1 dated June 1, 2000 permitted authorized agents to release foreign exchange not exceeding US $ 5000 or its equivalent per person, in one calendar year for one or more private visits and not exceeding US $ 25,000/- or its equivalent for business travel to countries other than Nepal and Bhutan. As per the said Circular it was not mandatory for authorized persons to endorse the amount of foreign exchange sold for the purpose on the passport of the passenger. Absence of any endorsement on the appellant's passport did not mean that he had not obtained foreign currency from an authorized dealer. The appellant was on his way to a foreign country for business purpose i.e. purchase of earthmovers. The lower authority ought not have confiscated the currencies absolutely for non-declaration, as foreign currencies were not prohibited goods. It was also submitted that the currencies were not concealed and that the confiscated currencies should have been allowed to be redeemed. Several case laws were cited in support of his plea that it was mandatory for the adjudicating authority to allow the impugned goods to be redeemed on payment of fine.
3. Heard both sides. We have considered grounds raised in the appeal against the impugned order and the oral submissions made by both sides. In the statement recorded immediately after seizure of the impugned currencies, the appellant had admitted that the currencies had not been acquired through legal means; that he had intended to pay the same to the supplier of excavators he intended to purchase without showing part of the value in the invoice. This account was repeated in the subsequent statement recorded from him by the officers. These statements recorded under Section 108 of the Customs Act have evidentiary value. The fact of seizure of currencies from the baggage is not disputed. The mahazar shows that the currencies had been concealed. Therefore, the finding of the Commissioner that the impugned currencies are liable for confiscation under Section 113(d), (h) and (i) of the Customs Act deserve to be sustained.
4. We find that in a catena of decisions, this Tribunal and the Government of India in its orders in revision have directed that confiscated currencies have to be allowed to be redeemed on payment of appropriate fines by the persons from whom they were seized and confiscated. We have perused the case laws cited by the appellants. In all these decisions either redemption fine ordered by the appellate authority has been reduced or the order of absolute confiscation modified by offering option to redeem the goods or the case remanded with direction for making such a decision.
5. Vide Final Order No. 172/02 dated 22.2.02 in Appeal No. C/453/98 in the case of Halithu Ibrahim v. CC (Airport), the Chennai Bench of the Tribunal made the following observations:
...The undeclared foreign currency is no doubt liable to be confiscated, but since the import of the currency by a passenger especially by a NRI, is not prohibited, the adjudicating authority has no discretion but to allow the goods to be released on payment of Redemption Fine. This was also the view of the Co-ordinate Mumbai bench in the case of Felix Dores Fernandes v. CC, ACC, Mumbai (supra) wherein it has been held that undeclared foreign currency found with appellant on his departure to Dubai, although its confiscation is sustainable but the same is required to be released on payment of fine in terms of Section 125 of the Customs Act, 1962.
The Tribunal in that case remanded the case to the Commissioner for re-consideration of the pleas raised by the appellants and for considering release of the seized foreign currency on payment of redemption fine. In Felix Dores Fernandes v. CC, ACC, Mumbai (supra) the Tribunal made the following observations:
7. Shri Kantawala relies upon a number of judgments given by the Government of India in which the currency in similar circumstances was permitted to be redeemed. We have seen the judgments. In all cases of smuggling in baggage where the original adjudication is by the officers subordinate to the Commissioner, the second appeal lies to the Government of India.
8. Shri Deepak Kumar submits that the currency which is not lawfully acquired would become prohibited goods and therefore there is no need for offering a redemption. He however fairly concedes that to his knowledge these orders of the Government of India have not been challenged further. Shri Kantawala refers to order No. 298/97, dated 14-3-1997. In this case undeclared currency on arrival was held to be liable to confiscation but was released on payment of fine of about 35%. Although the Government of India's orders do not have a binding effect on the Tribunal, as we have observed above, a radically different point of view taken by the Tribunal on the issue of redemption of foreign exchange would create an awkward situation where for lesser amounts, redemption is offered by the Government and for larger amounts, it would be denied by the Tribunal. We therefore, while upholding the orders of confiscation, permit redemption of the foreign exchange on payment of fine in lieu of confiscation of Rs. 4,00,000/-. No reduction is warranted in the quantum of penalty. On redemption the appellants would be required to follow the requirements of law in possessing and/or dealing with or disposing off the currency.
The above judicial authorities amply establish that the appellant is entitled to redeem the confiscated currencies on payment of appropriate fine. Accordingly, we remand the matter to the original authority to adjudicate the contraventions afresh offering an option to the appellant to redeem the confiscated goods on payment of a reasonable fine to be determined by him. He will also decide the penalty amount to be imposed on the appellant afresh. Needless to say that the appellant shall be given a reasonable opportunity of being heard in person.
6. Appeal stands allowed by way of remand.
(Operative part pronounced in open court on 19.4.07)