Proportionality in customs penalties led to reduction of redemption fine and penalty for undeclared foreign currency

Confiscation of undeclared foreign currency was not in dispute, but the appellate authority examined whether the redemption fine and penalty were proportionate to the proven conduct. The noticee had failed to disclose the currency to customs and gave an untruthful initial response, so the omission was treated as wilful rather than a mere technical lapse. Even so, the surrounding circumstances justified appellate moderation, and the original monetary consequences were reduced because proportionality must guide the fixation of fine and penalty where confiscation is sustained.

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Issues: Whether the redemption fine and penalty imposed for attempted export of undeclared foreign currency were excessive and required reduction.

Analysis: The appeal did not dispute confiscability of the currency under the Customs Act and the Foreign Exchange Regulation Act; the dispute was confined to the quantum of redemption fine and penalty. The circumstances showed that the appellant had not disclosed the foreign currency to the customs officers and had answered the initial query untruthfully, unlike the co-noticee whose prompt disclosure and production of declaration forms were treated leniently. The omission was therefore treated as a wilful one rather than a mere procedural lapse, but the facts and circumstances still required moderation in the exercise of appellate discretion. Comparative reliance on an earlier case involving a technical lapse was found to be inapposite, though the principle of proportionality in fixing fine and penalty remained relevant.

Conclusion: The redemption fine and penalty were held to be excessive and were reduced to Rs. 10 lakhs and Rs. 1 lakh respectively, in favour of the appellant.

Final Conclusion: The confiscation liability remained intact, but the monetary consequences were substantially scaled down on appellate review.

Ratio Decidendi: Where confiscation is sustained, the quantum of redemption fine and penalty must still be fixed on a fair appreciation of the conduct of the noticee and the surrounding circumstances, and may be reduced where the original amounts are disproportionate to the proven lapse.

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