Foreign Currency Different From Baggage, Tribunal Can Entertain Appeal: CESTAT Orders Release of Seized Currency, Directs to Reduce Penalties on Family Members [Read Order]
Since currency is defined as "goods" distinct from baggage, it has jurisdiction to entertain the appeal.
The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ), Ahmedabad Bench, related to the seizure of foreign currency carried by family members, directed that the confiscated currency be released on payment of redemption fine and that penalties imposed on accompanying relatives be suitably reduced.
Foreign currency exceeding permissible limits was detected in possession of members of the Bhavika Pala family while traveling abroad. The customs authorities treated the case as an attempted illegal export and ordered absolute confiscation along with penalties.
On appeal, the Tribunal first addressed the preliminary objection regarding its jurisdiction to decide such matters. Referring to the Principal Bench’s decision in Pawan Munjal vs Commissioner of Customs, New Delhi, 2024, the Tribunal clarified that the term “currency” under the Baggage Rules, when read with the definition of “goods” under the Customs Act, 1962, excludes foreign currency. Accordingly, CESTAT held that it had the jurisdiction to adjudicate disputes involving foreign currency seizures.
In the case of Rajesh Kumar Ishwar Parikh vs. C.C. Ahmedabad, it was ruled that since currency is defined as "goods" distinct from baggage, it has jurisdiction to entertain the appeal.
The appellants’ counsel, P. D. Rachchh, Advocate, argued that the seized currency was collectively owned by multiple family members, and not solely by the one or two individuals physically carrying it. They relied on the decision of the Madras High Court in Rayavarapu Sri Devi vs Principal Commissioner of Customs (Adjudication-Air), Chennai, 2025, which held that foreign currency, being a restricted but not prohibited item, should not be subjected to absolute confiscation but could instead be released on payment of redemption fine with proportionate penalties.
The bench of Somesh Arora, disposed of the appeal stating that while confiscation may be justified for regulatory violations, absolute confiscation of currency is disproportionate since it is not contraband. It directed that the seized currency be released on payment of redemption fine, with the fine amount linked to the potential profit margin, generally limited to commissions charged by authorized dealers, rather than speculative gains.
Furthermore, the Tribunal recognized the limited or peripheral role of other family members and ordered a corresponding reduction in penalties imposed on them.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
