Jurisdiction over cross-border currency and travel card confiscation Customs lacked statutory empowerment, confiscation and penalties set aside

The text examines whether Customs Act powers could be invoked to confiscate foreign currency embedded in travel cards, concluding that statutory empowerment arises only from deeming prohibitions in foreign exchange legislation and not from the Customs Act alone. It explains that historical deeming provisions enabled Customs action, but FEMA did not carry forward analogous deeming; consequently Customs officers lacked competence to enforce RBI instructions or to treat travel cards as subject to Customs prohibitions. Reliance on section 113(d) and consequential penalties under section 114 of the Customs Act is characterised as extra-legal where no cross-statute prohibition exists, and confiscation and penalties were set aside.

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Issues: Whether the Customs Act, 1962 empowered customs authorities to confiscate foreign currency and impose penalties under section 113(d) and section 114 in respect of cross-border currency dealings governed by the Foreign Exchange Management Act, 1999 (FEMA), or whether such proceedings were beyond the competence of customs authorities absent statutory deeming or valid delegation under FEMA.

Analysis: The Tribunal analysed the historical and statutory evolution of foreign exchange regulation and customs law, including prior deeming provisions in earlier foreign exchange statutes that had enabled customs enforcement. The Court examined the text and scheme of Customs Act, 1962 (including section 2(22) and section 113(d)), the repeal of earlier deeming provisions when FEMA, 1999 was enacted, and the absence of any provision in the Customs Act that now deems prohibitions under FEMA to be prohibitions under the Customs Act. The Tribunal considered administrative instruments and standing orders purporting to delegate FEMA powers to customs officers, the government's archival correspondence about authorising customs officers under FEMA, and precedents relied upon by the parties. Applying principles of statutory interpretation on the relationship between later special legislation (FEMA) and earlier general legislation (Customs Act), the Tribunal concluded that in the absence of express statutory deeming or proper delegation under FEMA, customs authorities lack competence to invoke Customs Act confiscatory and penalty provisions based on RBI/FEMA prohibitions; proceedings purporting to do so amount to extra-legal exercise beyond the Customs Act's empowerment.

Conclusion: The confiscation of foreign currency and the imposition of penalties under the Customs Act, 1962 insofar as they rested on prohibitions or instructions under FEMA, 1999 were beyond the competence of the customs authorities. The confiscation and penalties affirmed in the impugned order were set aside and the appeals were allowed in favour of the appellants.

Ratio Decidendi: Absent an express deeming provision in the Customs Act or valid statutory delegation under FEMA, customs authorities cannot invoke confiscation or penalty provisions of the Customs Act on the basis of prohibitions created by FEMA; the later, special statutory scheme (FEMA) governs foreign-exchange regulation and displaces the earlier general enforcement route through customs for such prohibitions.

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