The Hyderabad bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) observed that an intention to smuggle prohibited goods cannot be equated with an attempt to export prohibited goods and set aside absolute confiscation of foreign currency.
Mohammed Mustafa, the Appellant was intercepted at Rajeev Gandhi International Airport, Hyderabad by CIF officials on the plea of carrying foreign currency. After the interception, the CISF officials informed the Customs Officers and handed over the Appellant with foreign currency to the Customs Officers for further proceedings.
The AIU officials verified the total quantity of foreign currency in the presence of the Appellant and panchas and the same was found to match the quantity mentioned by the CISF officials.
On being questioned by the Officers as to whether the Appellant had obtained any authorisation/permission from the Reserve Bank of India to carry the foreign currency and whether he had obtained the same from any Authorised exchange dealer, in answer, the Appellant replied in the negative.
The Customs Officers (AIU) seized the foreign currency on the reasonable belief that the same was attempted to be smuggled out of India in contravention of the provisions of the Customs Act read with the Foreign Exchange Management Act, 1999 and the RBI guidelines issued in pursuance of the said Act, and thus is liable for confiscation.
Statement of the Appellant was recorded on the same date, wherein, he stated that he had received the subject foreign currency from one Mr. Abu Baker, who is a friend of his brother-in-law Md. Bin Jabeer, with direction to hand over to Md. Bin Jabir at UAE, who was a UAE national. He further stated that he did not have any documents about the currency.
After investigation, a show cause notice was issued alleging that the foreign currency seized equivalent to Rs. 1,13,28,795/-, which was found concealed in sweet packets in the baggage, seized from the Appellant, is liable for confiscation under Section 113(d),(e) and (h) of the Customs Act,1961 read with the provisions of Foreign Exchange Management (Export and Import of currency) Regulations 2015, as amended.
Further alleged that the Appellant did not declare the foreign currency and knowingly concealed it by carrying and dealing in foreign currency, which is liable for confiscation under Section 113 of the Act and liable for penalty under Section 114 of the Act.
The Appellant in his attempt to smuggle foreign currency has done violation of Sections 3, 4, 6 and 7 of the Foreign Exchange Management Act 1999 and Regulations 5 and 7 of Foreign Exchange Management (Export and Import of currency) Regulations 2015 and Foreign Exchange Management (Possession and Retention of foreign currency) Regulations 2015, has rendered liable for imposition of penalty under Section 13(1) of FEMA 1999.
The SCN was adjudicated and the foreign currency in question was confiscated absolutely under Section 113(d), (e) & (h) of the Customs Act read with the provisions of Foreign Exchange Management (Export and Import of currency) Regulations 2015 made under the FEM Act 1999. A further penalty was imposed of Rs.11,33,000/- each under Section 114 of the Customs Act and Section 13(1) of the FEM Act 1999.
The Appellant preferred an appeal before the Commissioner (Appeals) interalia because there was no ground for confiscation of foreign currency under the Customs Act, when in fact the Appellant had admittedly not entered into the Customs area.
The Appellant was intercepted by the CISF Officers before he could enter the airport and approach the airline counter for a boarding pass. The Commissioner (Appeals) dismissed the appeal.
It was submitted that the allegation that foreign currency was concealed in sweet boxes in the baggage, is also a bald allegation as the Appellant had not even entered the customs area. Merely because the foreign currency was kept in sweet boxes it cannot be considered as concealment.
The Appellant further urges that since he did not enter the customs area, the question of treating the said foreign currency in question as ‘prohibited goods’ under Section 2(33) of the Customs Act, is wholly irrelevant and misplaced.
As required under Section 113 (d) of the Act, confiscation is attracted of any goods attempted to be improperly exported or brought within the limits of any customs area to be exported, contrary to any provision under the Customs Act or any other law for the time being in force.
It was evident that there is no scope to contend that the goods were attempted to be exported, as admittedly the appellant had not entered the customs area and not reached the stage to file the declaration as required under Section 77.
A two-member bench of Mr Anil Choudhary, Member (Judicial) and Mr A K Jyotishi, Member (Technical) agree with the conclusion of the Adjudicating Authority that foreign exchange or currency is prohibited goods and therefore liable for confiscation. It was observed that an intention to smuggle prohibited goods cannot be equated with attempt to export prohibited goods.
The CESTAT held that there is only a venial breach of the provisions of Section 113(d) of the Act. The Tribunal set aside the Order of absolute confiscation under Section 113(e) and (h) of the Act and held that the foreign currency in question is liable for confiscation under Section 113(d) of the Act.
The CESTAT held that the seized foreign currency can be redeemed by the Appellant from whose possession it was recovered, on payment of a redemption fine of Rs. 10 lakhs and set aside the penalty imposed under Section 114 of the Act is also reduced to Rs. 1 lakh.
R Narasimha Murthy appeared for the Appellant and P Amaresh, Authorised Representative appeared for the Respondent.
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