Foreign currency export restrictions justified independent customs confiscation, with unreliable retractions and sale note failing to prove lawful possession.

Foreign currency sought to be exported in breach of the restriction deemed under the Customs Act by section 67 of the Foreign Exchange Regulation Act remained liable to independent customs adjudication, because the foreign exchange proceeding and the customs confiscation proceeding operated under different statutory fields. The tribunal also rejected the appellants' retracted statements and alleged sale note as unreliable, finding the coercion complaint unconvincing and the document insufficient to prove lawful acquisition or entitlement. On the accepted evidence, the currency was treated as intended for unauthorised export, so confiscation and penalty were sustained, including absolute confiscation.

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Issues: (i) whether the order passed by the enforcement authority under the foreign exchange law bound the customs authorities in the confiscation proceedings; (ii) whether the appellants' statements recorded under section 108 of the Customs Act, 1962 and the alleged sale note were reliable; (iii) whether the seized foreign currency was liable to confiscation and penalty under the Customs Act, 1962 read with the Foreign Exchange Regulation Act, 1973.

Issue (i): whether the order passed by the enforcement authority under the foreign exchange law bound the customs authorities in the confiscation proceedings.

Analysis: The customs proceedings and the foreign exchange proceedings were founded on different statutory provisions and served different purposes. The former concerned attempted export of foreign currency in breach of the restriction under section 13(2) of the Foreign Exchange Regulation Act, 1973 read with section 11 of the Customs Act, 1962, whereas the latter concerned a different alleged contravention under section 8(1) of the Foreign Exchange Regulation Act, 1973. The two adjudications operated in mutually exclusive fields, and the customs authorities were not bound by the enforcement order.

Conclusion: The enforcement order did not preclude independent customs adjudication, and this issue was decided against the appellants.

Issue (ii): whether the appellants' statements recorded under section 108 of the Customs Act, 1962 and the alleged sale note were reliable.

Analysis: The retractions were not found to be valid or convincing. The complaints of coercion and assault were inconsistent, unsupported by the medical material, and not addressed to the officer who recorded the statements. The alleged sale note was not satisfactorily linked to the appellant, was not shown to have been produced at the relevant time, and did not inspire confidence as proof of lawful acquisition of the foreign currency. The burden lay on the appellants to establish lawful acquisition and import, which they failed to discharge.

Conclusion: The statements and the sale note were rejected, and this issue was decided against the appellants.

Issue (iii): whether the seized foreign currency was liable to confiscation and penalty under the Customs Act, 1962 read with the Foreign Exchange Regulation Act, 1973.

Analysis: On the accepted evidence, the foreign currency was being handled in the customs area with the object of facilitating its later export without the permission of the Reserve Bank of India. Such conduct attracted the prohibition under section 13(2) of the Foreign Exchange Regulation Act, 1973, which by section 67 was deemed to be a prohibition under section 11 of the Customs Act, 1962. The attempted export therefore rendered the currency liable to confiscation, and the appellants became liable to penalty. The appellate tribunal also found no reason to interfere with absolute confiscation.

Conclusion: Confiscation and penalty were upheld, and this issue was decided against the appellants.

Final Conclusion: The appeals failed in full, and the customs order of absolute confiscation with penalties was sustained in law.

Ratio Decidendi: Where foreign currency is sought to be exported in breach of the restriction deemed under the Customs Act by section 67 of the Foreign Exchange Regulation Act, 1973, the customs authorities may adjudicate independently, and unsubstantiated retractions or an unproved sale note do not displace the burden on the possessor to show lawful acquisition and entitlement to export.

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