Prohibited goods and absolute confiscation apply to Indian currency exported beyond the permitted limit without RBI permission.

Indian currency sought to be exported beyond the RBI-permitted limit without prior permission was treated as prohibited goods under the Customs Act and liable to confiscation under Sections 113(d) and 113(e), with absolute confiscation available under Section 125(1). The article also notes that while the illegal export attempt justified penalty, the penalty was found excessive on the facts and was reduced substantially. The currency confiscation was sustained, but the monetary penalty was moderated in favour of the appellant.

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Issues: (i) Whether Indian currency intended to be exported in excess of the permitted limit was prohibited goods liable to absolute confiscation; (ii) Whether the penalty imposed required reduction.

Issue (i): Whether Indian currency intended to be exported in excess of the permitted limit was prohibited goods liable to absolute confiscation.

Analysis: The permitted export limit under the RBI notification issued under the Foreign Exchange Management Act, 1999 was limited to Indian currency notes up to Rs. 5,000. The currency sought to be sent out of India exceeded that limit and no permission from the Reserve Bank of India was obtained. In view of the statutory prohibition, the goods fell within the definition of prohibited goods under the Customs Act, 1962 and were liable to confiscation under Section 113(d) and Section 113(e). For prohibited goods, Section 125(1) permitted absolute confiscation.

Conclusion: The absolute confiscation of the Indian currency was upheld and the finding was against the appellant.

Issue (ii): Whether the penalty imposed required reduction.

Analysis: Although the illegal export attempt justified penal action, the amount originally imposed was considered excessive in the circumstances after the currency itself stood absolutely confiscated. The penalty was therefore moderated.

Conclusion: The penalty was reduced from Rs. 10 lakhs to Rs. 1 lakh, in favour of the appellant.

Final Conclusion: The confiscation of the currency was sustained, but the monetary penalty was substantially reduced, resulting in only a partial relief to the appellant.

Ratio Decidendi: Currency sought to be exported beyond the statutory and regulatory limit without permission constitutes prohibited goods under the Customs Act and may be absolutely confiscated, while penalty may be reduced if found excessive on the facts.

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