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Issues: (i) Whether the foreign exchange seized from the baggage was acquired by Jatin Jhaveri in contravention of Section 8(1) of the Foreign Exchange Regulation Act, 1973 so as to justify confiscation under that Act. (ii) Whether the currency declaration forms and the Customs proceedings displaced the need to establish compliance with the permission requirement under Section 8(1) of the Foreign Exchange Regulation Act, 1973.
Issue (i): Whether the foreign exchange seized from the baggage was acquired by Jatin Jhaveri in contravention of Section 8(1) of the Foreign Exchange Regulation Act, 1973 so as to justify confiscation under that Act.
Analysis: The decisive enquiry under Section 8(1) was not merely whether the currency had been brought into India, but whether it had been acquired with the previous general or special permission of the Reserve Bank of India. The first statement made by Jatin Jhaveri disowned the currency, and the later reliance on currency declaration forms was treated as suspicious. The Court also found that the materials relied upon to show receipt of foreign exchange were self-serving and did not satisfactorily establish the factual foundation asserted by him. Most importantly, no RBI permission was produced or even claimed to have been obtained.
Conclusion: The foreign exchange was held to have been acquired in violation of Section 8(1) of the Foreign Exchange Regulation Act, 1973, and confiscation was upheld.
Issue (ii): Whether the currency declaration forms and the Customs proceedings displaced the need to establish compliance with the permission requirement under Section 8(1) of the Foreign Exchange Regulation Act, 1973.
Analysis: The Court held that the Customs law question of attempted export was distinct from the FERA question of acquisition of foreign exchange. Even if the bringing of currency into India were assumed, that circumstance did not answer the separate statutory requirement under FERA. The notification relied upon by the appellant was found to relate to Section 13 of FERA and not to Section 8(1), and in any event it did not dispense with the need for RBI permission for acquisition. Findings in the Customs proceedings therefore did not control the FERA adjudication.
Conclusion: The currency declaration forms and the Customs proceedings did not avail the appellant, and the FERA contravention remained established.
Final Conclusion: The orders of the Tribunal and the High Court were set aside, the confiscation and penalty order under FERA was restored, and the refund already received was directed to be returned with interest.
Ratio Decidendi: Under Section 8(1) of the Foreign Exchange Regulation Act, 1973, acquisition of foreign exchange is unlawful unless supported by prior general or special permission of the Reserve Bank of India, and this requirement is independent of any Customs finding or declaration regarding import of the currency.
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