2014 (4) TMI 196 - AT - Customs

Court Reduces Penalties in Currency Confiscation Case

Shri Khima Nand Sharma and Shri Hari Singh Versus Commissioner of Customs & CE, Meerut II

The judge set aside the absolute confiscation of Indian currency under the Foreign Exchange Management Act and allowed redemption upon payment of a ... Smuggling - Absolute confiscation of Indian currency – Whether confiscation should be absolute one or should be converted into an option for redeeming – Imposition of penalty - Held that:- Judgment in Nitu Bhojwani vs. CC Ahmedabad [2009 (4) TMI 623 - CESTAT, AHMEDABAD] followed - It is found that offence of smuggling is not being challenged by the appellants - However, they pray that instead of absolute confiscating the Indian currency, the same should be converted into an option for redeeming the same on payment of redemption fine - In the absence of any malafide, the absolute confiscation of IC is not warranted – Given the bona fide of appellants, absolute confiscation of IC is set aside and redemption of the same allowed on payment of redemption fine of Rs.50,000/- - The redemption fine imposed by the Tribunal in all the above cases ranges from 10% to 20% - Penalty imposed upon Shri Khima Nand Sharma is reduced from Rs.50,000/- to Rs. 20,000/- - As regards penalty on Shri Hari Singh, a labourer working on behest of his master, his penalty is reduced from Rs.10,000/- to Rs.1,000/- Decided partly in favour of appellants. Issues:1. Absolute confiscation of Indian currency under Foreign Exchange Management Act.2. Imposition of penalties on the appellants for violation of currency export regulations.Analysis:1. Absolute Confiscation of Indian Currency:The judgment revolves around the absolute confiscation of Indian currency amounting to Rs.2,73,000/- under the provisions of the Foreign Exchange Management Act. The case involved two appellants, Shri Hari Singh and Shri Khima Nand Sharma, who were found carrying Indian currency notes of denominations Rs.500/- and Rs.1000/- while crossing the Indian-Nepal border, which is prohibited under the law. The authorities below had confiscated the currency and imposed penalties on both appellants based on their admission of the offense.2. Imposition of Penalties:The appellants argued that the confiscation was procedural/technical in nature, and they had no malafide intentions. They contended that they were unaware of the prohibition on exporting Rs.500/- and Rs.1000/- denomination currency notes to Nepal. The advocate for the appellants cited precedents where absolute confiscation was not warranted in the absence of malafide intentions. The appellants requested the conversion of absolute confiscation into an option for redeeming the currency upon payment of a redemption fine.3. Judicial Precedents and Decision:The presiding judge, Ms. Archana Wadhwa, considered various precedents where absolute confiscation was not upheld in cases of technical violations without malafide intent. Referring to past judgments, the judge highlighted cases where Indian currency was allowed to be redeemed on payment of redemption fines ranging from 10% to 20% of the confiscated amount. The judge modified the impugned order and allowed the redemption of the Indian currency of Rs. 7 lakhs on payment of a redemption fine of Rs. 1.50 lakhs. The personal penalty imposed on the appellants was also reduced accordingly.4. Final Decision:Ultimately, the judge set aside the absolute confiscation of the Indian currency and allowed redemption on payment of a redemption fine. The penalty imposed on Shri Khima Nand Sharma was reduced from Rs.50,000/- to Rs.20,000/-, considering the circumstances. For Shri Hari Singh, who was a laborer acting under instructions, the penalty was further reduced from Rs.10,000/- to Rs.1,000/-. The judge concluded by disposing of both appeals in the manner described in the judgment, emphasizing the technical nature of the violation and the lack of malafide intentions on the part of the appellants.