Customs jurisdiction over foreign currency seized in India failed where the contravention fell under foreign exchange law, not customs prohibition.

Customs authorities lacked jurisdiction to confiscate foreign currency or impose penalty where the factual finding was that the currency was purchased and sold within India and the contravention fell under the Foreign Exchange Regulation Act, 1973. Section 8(1) was treated as the governing provision, but it was not read as a prohibition extended through section 11 of the Customs Act, 1962, so Customs could not proceed on that footing. The Revenue authorities' relied-upon cases were distinguished, and the earlier view that Customs had no jurisdiction absent illicit import was applied, leaving the setting aside of confiscation and penalty undisturbed.

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Issues: Whether Customs authorities had jurisdiction to confiscate foreign currency and impose penalty where the foreign exchange was purchased and sold within India and the alleged contravention fell under the Foreign Exchange Regulation Act, 1973.

Analysis: The foreign currency was recovered from the appellant's business premises and the factual finding was that the currency had been purchased and sold within the country. On that basis, the contravention was held to fall within section 8(1) of the Foreign Exchange Regulation Act, 1973. Section 8 was not treated as a prohibition extended under section 11 of the Customs Act, 1962, and therefore Customs could not invoke its powers on that footing. The cases relied upon by Revenue were distinguished, while the earlier decision holding that Customs lacked jurisdiction in the absence of illicit import was treated as applicable.

Conclusion: Customs authorities had no jurisdiction to proceed on the facts found, and the order setting aside confiscation and penalty was upheld.

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