Deemed customs restrictions under FERA sustained confiscation, but abetment penalty failed without proof of conscious participation.

Restrictions under Section 13 of the Foreign Exchange Regulation Act, 1973 were deemed to be restrictions under Section 11 of the Customs Act, 1962 by virtue of Section 67, so a separate notification was not required and the Customs authorities could proceed with confiscation and penalty. On the evidence, concealment of foreign currency in the first appellant's briefcase and the surrounding contradictions were sufficient to sustain the penalty against him. For the second appellant, there was no independent proof of conscious participation, possession, or knowledge, so suspicion and association were insufficient to sustain abetment liability under the Customs Act; the penalty against him was set aside.

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Issues: (i) Whether, in the absence of a notification under Section 11 of the Customs Act, 1962, the Customs authorities could proceed against the appellants for attempted export of foreign currency on the basis of Section 67 of the Foreign Exchange Regulation Act, 1973 and impose confiscation and penalty under the Customs Act; (ii) Whether the evidence justified sustaining the penalty against the first appellant and the second appellant.

Issue (i): Whether, in the absence of a notification under Section 11 of the Customs Act, 1962, the Customs authorities could proceed against the appellants for attempted export of foreign currency on the basis of Section 67 of the Foreign Exchange Regulation Act, 1973 and impose confiscation and penalty under the Customs Act.

Analysis: Section 67 of the Foreign Exchange Regulation Act, 1973 provides that restrictions imposed by or under Section 13, Section 18(1)(a) and Section 19(1)(a) are deemed to have been imposed under Section 11 of the Customs Act, 1962, and the provisions of the Customs Act then apply accordingly. On that basis, the absence of a separate notification under Section 11 did not deprive the Customs authorities of jurisdiction. The export of foreign currency without the requisite authority was therefore treated as a contravention attracting the Customs provisions.

Conclusion: The challenge to the legality of the proceedings failed, and the Customs authorities were held competent to act under the Customs Act.

Issue (ii): Whether the evidence justified sustaining the penalty against the first appellant and the second appellant.

Analysis: The concealment of a large quantity of foreign currency in the briefcase recovered from the first appellant, together with the surrounding circumstances, contradictions in his explanation, and corroborative material, was treated as sufficient to sustain confiscation and penalty against him. As regards the second appellant, the record did not disclose independent evidence of direct knowledge, possession, custody, or conscious participation in the concealment or attempted export. Mere suspicion, association, or uncorroborated allegations were held insufficient to establish abetment or liability under Section 114 of the Customs Act, 1962.

Conclusion: The penalty on the first appellant was sustained, while the penalty on the second appellant was set aside.

Final Conclusion: The decision upheld the confiscation and penalty so far as the first appellant was concerned, but granted relief to the second appellant by deleting the penalty imposed on him.

Ratio Decidendi: Restrictions under Section 13 of the Foreign Exchange Regulation Act, 1973 are deemed to be restrictions under Section 11 of the Customs Act, 1962 by virtue of Section 67, and Customs authorities may proceed under the Customs Act on that basis; however, penalty for abetment cannot be sustained without independent evidence of conscious participation, and suspicion cannot replace proof.

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