2017 (1) TMI 1064 - AT - Customs

Tribunal overturns currency confiscation under Customs Act, ruling in favor of appellant Sanjay Agarwal

The Tribunal ruled in favor of the appellant, Sanjay Agarwal, in a case concerning the confiscation of Indian and foreign currency under the Customs Act. ... Absolute confiscation - applicability of Section 113(d) and (h) of the Customs Act, 1962 - penalty - baggage rules - attempt of illegal export - Indian currency of ₹ 47 lakhs - assorted foreign currency equivalent to Indian currency ₹ 21 lakhs - confiscation on the ground that there was an intention to hand over the currency to a foreign going passenger - whether the Indian and foreign currency totalling to approx. 68.65 lakhs is liable for confiscation under Section 113(b) and (h) of Customs Act, 1962 read with FEMA and rules thereof and whether Sanjay Agarwal appellant the appellant herein is to be penalised under provisions of 114(i) by the Customs Act, 1962. Held that: - u/s 113(d) and (h), the goods are liable for confiscation if attempted to be improperly exported or if they are attempted to be exported or brought within the limits of any customs area for the purpose of being exported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force; is not applicable in the case hand as it is undisputed that Abdullah employee of Sanjay Agarwal, appellant herein was travelling in flight Al 806 which was flying between Mumbai and Hyderabad as a domestic sector flight. If it is so, then the goods i.e. foreign currency and Indian currency was never sought to be exported. Another fault in investigation is that Abdullah from whom the foreign currency and Indian currency was recovered was to hand it over to M.S. Kumar for carrying it to Singapore. It is found from the entire records that M.S. Kumar was never apprehended nor his statement recorded; despite that it was the case to hand foreign currency and Indian currency through M.S. Kumar for taking out of country. In the absence of any statement M.S. Kumar to corroborate the theory of the revenue we find the case of confiscation of the foreign currency and Indian currency falls down. Confiscation and penalty set aside - appeal allowed - decided in favor of appellant. Issues Involved:1. Whether the Indian and foreign currency totaling approximately Rs. 68.65 lakhs is liable for confiscation under Section 113(d) and (h) of the Customs Act, 1962 read with FEMA and rules thereof.2. Whether the appellant, Sanjay Agarwal, is to be penalized under the provisions of Section 114(i) of the Customs Act, 1962.Detailed Analysis:Confiscation of Currency:The primary issue revolves around the confiscation of Indian and foreign currency seized from Abdullah, an employee of Sanjay Agarwal, who was traveling on a domestic flight from Mumbai to Hyderabad. The adjudicating authority ordered the absolute confiscation of the currency under the provisions of Section 113(d) and (h) of the Customs Act, 1962, based on the belief that the currency was intended to be handed over to M.S. Kumar for illegal export to Singapore.The Tribunal found the reasoning of the adjudicating authority flawed. The Indian currency was intended for domestic transport from Mumbai to Hyderabad, and there was no evidence to suggest it was meant to be exported. The Tribunal emphasized that the definition of 'export' under Section 2(19) of the Customs Act, 1962, requires goods to be taken out of India, which was not the case here. Additionally, the Indian currency was recorded in the books of accounts and acknowledged by the Income Tax Department, negating the claim of illegality.Regarding the foreign currency, the Tribunal noted that the Directorate of FEMA had already adjudicated the matter, concluding that the currency was legally acquired from the sale of jewelry and brought back from the United States. Therefore, the confiscation of the foreign currency was also deemed incorrect.Applicability of Section 113(d) and (h):The Tribunal clarified that Section 113(d) and (h) of the Customs Act, 1962, pertains to goods attempted to be exported or brought within the customs area for export, which was not applicable in this case as the passenger was on a domestic flight. The absence of any statement from M.S. Kumar, who was allegedly to receive the currency, further weakened the case for confiscation.Penalty on Sanjay Agarwal:Since the confiscation of the currency was set aside, the penalty imposed on Sanjay Agarwal under Section 114(i) of the Customs Act, 1962, was also deemed unjustified and subsequently set aside.Conclusion:The Tribunal concluded that the confiscation of the Indian and foreign currency under Section 113(d) and (h) of the Customs Act, 1962, was incorrect and set aside the order. Consequently, the penalty imposed on Sanjay Agarwal was also annulled. The appeal was disposed of in favor of the appellant.