Tribunal dismisses Revenue's appeal for lack of proof on illegal currency import/export

The Tribunal upheld the Commissioner (Appeals)'s order, ruling that the Revenue failed to prove illegal import or attempt to export the foreign currency. It was found that customs officers lacked jurisdiction under FEMA, and procedural requirements for adjudication were not met. Consequently, the appeal by the Revenue was dismissed.

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Issues Involved:
1. Legality of the seizure of foreign currency.
2. Confiscation of the foreign currency under sections 111(d) and 113(d) of the Customs Act, 1962.
3. Jurisdiction and authority of customs officers under FEMA.
4. Admissibility and evidentiary value of the respondent's statement.
5. Procedural compliance under FEMA for adjudication.

Detailed Analysis:

1. Legality of the Seizure of Foreign Currency:
The customs officers seized assorted foreign currencies equivalent to Rs.10,03,922/- from the respondent, suspecting them to be illicitly imported and intended for smuggling out of India. The seizure was based on the respondent's statement admitting to buying the currencies through brokers and intending to hand them over to traders in Burma Bazaar, Chennai, for smuggling to Singapore. The Commissioner (Appeals) found that the lower authority solely relied on the respondent's statement without corroborative evidence, leading to the conclusion that the foreign currencies were illicitly imported and intended for export.

2. Confiscation of Foreign Currency Under Sections 111(d) and 113(d) of the Customs Act, 1962:
The Revenue argued that the respondent violated sections 111(d) and 113(d) of the Customs Act, which deal with the confiscation of goods imported or attempted to be exported contrary to any prohibition. The Commissioner (Appeals) held that the respondent's statement did not establish that the goods were smuggled into India or that there was an attempt to export them. The Tribunal agreed, noting that the seizure was not near a customs barrier, and there was no circumstantial evidence of smuggling. The goods were not notified under section 123 of the Customs Act, and the explanation in section 3 of FEMA did not create a presumption of smuggling but rather a presumption of acquisition other than through an authorized person. Therefore, the initial burden to prove smuggling was on the Revenue, which was not met.

3. Jurisdiction and Authority of Customs Officers Under FEMA:
The Revenue argued that section 3 and 4 of FEMA restrict dealing in foreign exchange without RBI's permission and that customs officers had jurisdiction to investigate and adjudicate such matters under Notification No.1156 (E) dated 26.12.2000. The respondent contended that the investigation and adjudication should follow the procedure prescribed under FEMA, which was not done. The Tribunal noted that the notification empowered officers not below the rank of Deputy Commissioner to investigate, but in this case, the seizure and statements were made by a Superintendent, rendering the actions invalid.

4. Admissibility and Evidentiary Value of the Respondent's Statement:
The respondent's statement admitted to buying foreign currencies from brokers and intending to hand them over to traders for smuggling. However, the Commissioner (Appeals) and the Tribunal found that the statement did not provide direct evidence of smuggling or attempt to export, as it referred to actions of unknown persons. The Tribunal held that statements about acts of unknown persons could not be admitted as evidence, and the initial burden of proof was on the Revenue.

5. Procedural Compliance Under FEMA for Adjudication:
The respondent argued that the procedure under section 16 of FEMA, which requires a complaint in writing by an authorized officer for adjudication, was not followed. The Tribunal agreed, noting that the adjudication should follow the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000, which was not done in this case. The Tribunal also noted that the Indian currency equivalent to the seized foreign currency had already been released to the respondent, ensuring no unauthorized possession of foreign currency.

Conclusion:
The Tribunal upheld the Commissioner (Appeals)'s order, finding that the Revenue failed to prove illegal import or attempt to export the foreign currency. The customs officers did not have the jurisdiction to investigate under FEMA, and the procedural requirements for adjudication were not followed. The appeal filed by the Revenue was dismissed.

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