2018 (11) TMI 534 - CGOVT - Customs

Government raises fines for illegal currency export to uphold customs regulations.

The Government increased the redemption fine to Rs. 7 lakhs and the personal penalty to Rs. 5 lakhs for a respondent who illegally procured and attempted ... Revision application - absolute confiscation of Foreign currency - the revision application has been filed mainly on the ground that the Commissioner (Appeals) has erred by allowing the redemption of the absolutely confiscated foreign currency which are prohibited goods. Held that:- The Commissioner (Appeals) has noted in his order that the foreign currencies in this case had been arranged by the respondent by selling his two properties in Delhi. But this fact alone cannot attenuate the gravity of the offence committed by the respondent by not only procuring the foreign currencies from illegal resources in brazen violation of FEMA and various other laws in force but also by attempting to export the foreign currencies to a foreign country in contravention of Section 77 of the Customs Act, 1962. The Commissioner (Appeals) has overlooked these relevant facts while imposing redemption fine and reducing the penalty from ₹ 13 Lakhs to ₹ 2 Lakhs. The government considers that it would be just and proper if the confiscated foreign currencies are allowed to the respondent on payment of redemption fine of ₹ 7 Lakhs and personal penalty of ₹ 5 Lakhs - the revision application filed by the revenue is allowed. Issues: Revision of order regarding confiscation of foreign currency and imposition of penalty.Analysis:1. Confiscation of Foreign Currency and Imposition of Penalty: The revision application was filed against the Commissioner (Appeals)’s order modifying the confiscation of foreign currency equivalent to Rs. 65,02,815 and imposing a penalty of Rs. 13 lakhs on the respondent. The Commissioner (Appeals) allowed redemption of the confiscated foreign currency on payment of a redemption fine of Rs. 2 lakhs and reduced the penalty to Rs. 2 lakhs. The respondent admitted to procuring foreign currency from illegal sources and attempting to export it, pleading ignorance of the law. The Commissioner (Appeals) exercised discretion under Section 125 of the Customs Act, 1962, allowing redemption of prohibited goods based on past cases and laws. However, the Government found the redemption fine of Rs. 2 lakhs inadequate given the gravity of the offense. The respondent's act of procuring and attempting to export foreign currency illegally warranted a higher redemption fine and penalty. The Government accepted the revenue’s objection, increasing the redemption fine to Rs. 7 lakhs and the personal penalty to Rs. 5 lakhs, considering the seriousness of the offense committed.2. Personal Hearing and Commissioner's Oversight: A personal hearing was held where the respondent defended the Commissioner (Appeals)’s decision, citing lack of knowledge about foreign currencies and his intention to start a business in Dubai. Notably, no one appeared for the applicant during the hearing, indicating a lack of interest in availing a hearing. The Government, upon examination, noted that the Commissioner (Appeals) erred in imposing a nominal redemption fine and reducing the penalty without sufficient justification. The Commissioner (Appeals) failed to consider the gravity of the offense committed by the respondent, who obtained foreign currency illegally and attempted to export it in violation of customs laws. The Government emphasized the need for an appropriate redemption fine and penalty based on the seriousness of the offense, ultimately increasing the redemption fine to Rs. 7 lakhs and the personal penalty to Rs. 5 lakhs. The Government's decision highlighted the importance of imposing suitable penalties to deter such illegal activities and uphold customs regulations effectively.3. Legal Provisions and Discretionary Powers: The Commissioner (Appeals) allowed redemption of the confiscated foreign currency by exercising discretionary power under Section 125 of the Customs Act, 1962, despite the goods being prohibited. The Government acknowledged the precedent of allowing redemption of prohibited goods in certain cases but emphasized the necessity of imposing adequate fines and penalties based on the offense's severity. While the Commissioner (Appeals) cited case laws to support the redemption decision, the Government found the redemption fine of Rs. 2 lakhs insufficient given the value of the confiscated foreign currency and the nature of the offense. The Government's decision to increase the redemption fine and penalty aimed to ensure that appropriate consequences were imposed for violating customs laws and attempting to export prohibited goods illegally.