Merits-based exoneration in customs adjudication can defeat a parallel criminal prosecution founded on the same facts.
Criminal prosecution under the Customs Act cannot be sustained where the same facts have already been examined in adjudication and the competent authority has exonerated the person on merits, with the seized foreign currency directed to be released. The Delhi High Court noted that a merits-based departmental finding removed the factual foundation for alleging the same contravention in criminal proceedings, so the complaint and consequential proceedings were quashed. It also reaffirmed that foreign currency is not automatically prohibited goods for absolute confiscation; where no special circumstance justifies such treatment, confiscation may be only subject to redemption or release in accordance with the adjudicatory findings.
Issues: (i) Whether criminal proceedings under Sections 132 and 135 of the Customs Act, 1962 could continue after the petitioner had been exonerated in adjudication proceedings on merits and the seized foreign currency was directed to be released. (ii) Whether foreign currency seized from the petitioner could be treated as prohibited goods warranting absolute confiscation, or only as goods liable to redemption on payment of fine.
Issue (i): Whether criminal proceedings under Sections 132 and 135 of the Customs Act, 1962 could continue after the petitioner had been exonerated in adjudication proceedings on merits and the seized foreign currency was directed to be released.
Analysis: The adjudicating authority and the appellate authority had examined the seizure and the source of the foreign currency and found that the petitioner stood exonerated to the extent material to the prosecution. The appellate order was treated as a decision on merits, not as a technical or doubt-based clearance. Where the departmental adjudication on the same facts records that the confiscated currency is not liable to absolute confiscation and is directed to be released, the foundation for a prosecution alleging the same contravention does not survive. The Court applied the principle that criminal proceedings should not continue when the competent authority has already reached a conclusive merits-based finding in favour of the accused on the same set of facts.
Conclusion: The prosecution under Sections 132 and 135 of the Customs Act, 1962 could not be continued and the complaint and all consequential proceedings were quashed.
Issue (ii): Whether foreign currency seized from the petitioner could be treated as prohibited goods warranting absolute confiscation, or only as goods liable to redemption on payment of fine.
Analysis: The appellate authority held that foreign currency was not declared as prohibited goods under the Customs Act, 1962 or FEMA and that confiscation could not be absolute in the absence of special circumstances. It relied on the currency regulations to hold that possession and export or import of currency are subject to regulatory permission, but the currency itself is not prohibited merely for that reason. On that basis, the absolute confiscation was set aside and redemption was directed in respect of the balance currency, while lawfully acquired currency was ordered to be released without fine.
Conclusion: Foreign currency was not to be treated as prohibited goods for the purpose of absolute confiscation, and the adjudicatory release order in favour of the petitioner was upheld.
Final Conclusion: The criminal complaint and all proceedings arising from it were terminated because the departmental adjudication on the same facts had already granted the petitioner relief on merits, leaving no sustainable basis for the prosecution to proceed.
Ratio Decidendi: When adjudication on the same facts results in a merits-based exoneration and a finding that the seized goods are not prohibited, the criminal prosecution founded on the same alleged contravention cannot be sustained.
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