Government confirms customs penalties for undeclared foreign currency, reduces fines, and upholds order-in-appeal

The government upheld the confiscation of undeclared foreign currency under the Customs Act and FEMA regulations, imposing penalties under the Customs Act. The penalties were reduced to a Redemption Fine of Rs. 50,000/- and a penalty of Rs. 25,000/-. The order-in-appeal was affirmed with these adjustments, and the Revision Application was disposed of accordingly.

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Issues Involved:
1. Legality of the seizure of foreign currency.
2. Justification of the penalties imposed.
3. Compliance with Customs and FEMA regulations.

Detailed Analysis:

1. Legality of the Seizure of Foreign Currency:
The appellant was intercepted at Kolkata Airport while leaving for London and was found with undeclared foreign currency valued at Rs. 3,73,609/-. The appellant failed to produce any licit document supporting the legal acquisition, possession, or exportation of the currency. Consequently, the currency was seized under the reasonable belief that it was being smuggled out of the country in violation of the Customs Act, 1962, and FEMA, 1999, rendering it liable for confiscation under Section 113(d) and (l) of the Customs Act, 1962.

2. Justification of the Penalties Imposed:
The seized currency was initially confiscated with an option to redeem it upon payment of a Redemption Fine of Rs. 1,50,000/- and a penalty of Rs. 75,000/- under Section 114(i) of the Customs Act. The Commissioner of Customs (Appeals) upheld the confiscation but reduced the Redemption Fine to Rs. 1 lakh and the penalty to Rs. 50,000/-. The appellant argued that the Commissioner failed to consider that the foreign currency was part of the currency drawn from an RBI-authorized money exchanger and that the penalties should be waived.

3. Compliance with Customs and FEMA Regulations:
The government reviewed the case and noted that the appellant did not deny the factual recovery of the foreign currencies. The appellant's main defense was that the currency was part of the money brought back from his visit to Malaysia. However, the appellant failed to make a declaration in the Currency Declaration Form (CDF) required under Regulation 6 of the Foreign Exchange Management (Export and Import of Currency) Regulations, 2000, for amounts exceeding US $5,000 or its equivalent. The lack of a CDF rendered the appellant's claim unverifiable, leading the government to conclude that the appellant intentionally attempted to export the currency illegally.

Conclusion:
The government upheld the confiscation of the foreign currency under Section 113(d)(l) of the Customs Act, 1962, read with FEMA regulations, and the imposition of penalties under Section 114(i) of the Customs Act. However, considering the overall circumstances, the government found the penalties harsh and reduced the Redemption Fine to Rs. 50,000/- and the penalty to Rs. 25,000/-. The order-in-appeal was upheld with these modifications, and the Revision Application was disposed of accordingly.

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