Government confiscates foreign currency & traveller cheques under Customs Act, overturning FEMA jurisdiction.

The Government upheld the confiscation of foreign currency and traveller cheques, along with penalties, under the Customs Act. The case involved the possession and attempted export of foreign currency and traveller cheques, leading to their seizure under the Customs Act. The jurisdiction of Customs authorities under the Customs Act was deemed applicable over FEMA. The Commissioner's decision to handle the case under FEMA was overturned, reinstating the original order for confiscation and penalties under the Customs Act. The revision applications were successful, affirming the legality of the adjudicating authority's decision.

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Issues Involved:
1. Legality of the possession and attempted export of foreign currency and traveller cheques.
2. Jurisdiction of Customs authorities under the Customs Act vs. FEMA.
3. Adjudication of penalties and confiscation under the Customs Act.

Detailed Analysis:

1. Legality of the Possession and Attempted Export of Foreign Currency and Traveller Cheques:

The case revolves around an individual intercepted at the IGI Airport with foreign currency and traveller cheques. The Customs Officers found GBP 5050 in cash, 50 Euros, and traveller cheques worth GBP 19800. The individual could not provide sufficient documentary evidence for the legal acquisition of the remaining traveller cheques worth GBP 3500 and the cash GBP 5050 and 50 Euros. Consequently, the foreign currency and traveller cheques were seized under Section 110 of the Customs Act on the grounds of an illegal attempt to export them, making them liable for confiscation under Section 113 of the Customs Act.

2. Jurisdiction of Customs Authorities Under the Customs Act vs. FEMA:

The Commissioner (Appeals) initially ruled that the case should be adjudicated under FEMA rather than the Customs Act, arguing that any violation by money changers should be dealt with under FEMA. However, the revision application challenged this, asserting that foreign currency qualifies as "goods" under Section 2(22) of the Customs Act, and its import or export is governed by the Customs Act. The Government observed that the offences under FEMA are prohibitions imposed by that Act and come within the ambit of "any other law for the time being in force" under Section 113(d) of the Customs Act. Therefore, the goods are liable for confiscation under Section 113(d) of the Customs Act.

3. Adjudication of Penalties and Confiscation Under the Customs Act:

The adjudicating authority initially confiscated the traveller cheques worth GBP 19800 and cash GBP 2296, giving an option to redeem the confiscated currencies upon payment of a redemption fine of Rs. 3,00,000/-. Personal penalties were also imposed on various individuals and entities involved. The Commissioner (Appeals) set aside this order, directing the case to be handled under FEMA. However, upon review, the Government found this direction legally incorrect. The Government upheld the adjudicating authority's decision, reinstating the order for confiscation and penalties under the Customs Act, emphasizing that violations of other laws, such as FEMA, simultaneously become violations under the Customs Act.

Conclusion:

The Government set aside the impugned orders-in-appeal and restored the order-in-original, confirming the confiscation of foreign currency and traveller cheques and the imposition of penalties under the Customs Act. The revision applications succeeded, and the adjudicating authority's decision was deemed legally correct and judicious.

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