Foreign currency seizure case: absolute confiscation set aside, redemption allowed with Rs. 10 lakh fine under Section 113(d)

CESTAT Hyderabad set aside absolute confiscation of foreign currency seized from appellant intercepted by CISF outside customs area. Court found appellant had not entered customs area nor failed to make required declaration under Section 77 of Customs Act. Provisions of Section 113(e) and (h) not attracted as only intention to export existed, not actual attempt. Foreign currency remained liable for confiscation under Section 113(d) but allowed redemption on payment of Rs. 10 lakh fine. Penalty under Section 114 reduced to Rs. 1 lakh and FEMA penalty set aside. Appeal allowed in part.

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Issues Involved:
1. Justification of absolute confiscation of foreign currency u/s 113(d), (e), and (h) of the Customs Act.
2. Imposition of penalty u/s 114 of the Customs Act and Section 13(1) of FEMA 1999.

Summary:

Issue 1: Justification of Absolute Confiscation of Foreign Currency u/s 113(d), (e), and (h) of the Customs Act

The Appellant was intercepted at Rajeev Gandhi International Airport, Hyderabad, carrying foreign currency without authorization from the Reserve Bank of India. The Customs Officers seized the currency on the belief that it was attempted to be smuggled out of India, thus violating the Customs Act and FEMA regulations. The Appellant admitted to receiving the currency from a friend of his brother-in-law to be handed over in UAE.

The show cause notice alleged that the foreign currency, equivalent to Rs. 1,13,28,795/-, concealed in sweet packets, was liable for confiscation u/s 113(d), (e), and (h) of the Customs Act, read with FEMA regulations. The adjudication resulted in the absolute confiscation of the currency and penalties under Section 114 of the Customs Act and Section 13(1) of FEMA.

The Appellant argued that the Customs Officers had no jurisdiction as he was intercepted outside the customs area and had not obtained a boarding pass, thus no declaration was required u/s 77 of the Customs Act. The Tribunal found that the Appellant had not entered the customs area, and there was no failure to make a declaration u/s 77. Thus, Sections 113(e) and (h) were not applicable. The Tribunal held that while the foreign currency was liable for confiscation u/s 113(d), the absolute confiscation was not justified.

Issue 2: Imposition of Penalty u/s 114 of the Customs Act and Section 13(1) of FEMA 1999

The Tribunal noted that the foreign currency was prohibited goods and liable for confiscation. However, it disagreed with the absolute confiscation and held that the currency could be redeemed on payment of a redemption fine of Rs. 10 lakhs. The penalty u/s 114 of the Customs Act was reduced to Rs. 1 lakh, and the penalty u/s 13(1) of FEMA was set aside.

Conclusion:

The appeal was allowed in part. The order of absolute confiscation was set aside, and the foreign currency could be redeemed on payment of Rs. 10 lakhs. The penalty u/s 114 of the Customs Act was reduced to Rs. 1 lakh, and the penalty u/s 13(1) of FEMA was set aside.

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