TaxTMI 
TaxTMI 
2013 (12) TMI 1459
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....ar admitted that he bought these foreign currencies through brokers. He also stated that he knew that seized foreign currency was illicitly imported into India. He also stated that he was taking the currency for giving to traders in Burma Bazaar in Chennai for a commission for smuggling it to Singapore. Based on such statement, customs officials made out a case that the currencies were liable for confiscation under Section 111(d) and under Section 113(d) of the Customs Act, 1962. On adjudication, the seized currency was absolutely confiscated. The vehicle was confiscated under Section 115 of the Customs Act and ordered to be released on payment of redemption fine of Rs. 1000/-. Further penalty of Rs. 40,000/- under Section 112 and Rs. 10,000/- under Section 114 of the Customs Act, 1962 were imposed. Aggrieved by the order, the respondent filed an appeal with Commissioner (Appeals). The Commissioner (Appeals) held that lower authority solely relied upon the statement of the respondent and arrived at the conclusion that foreign currencies were illicitly imported into India and attempted to be illicitly exported out of India and the said statement was neither corroborated by any other....
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....sections are not strictly applicable the currency could not be returned to the respondent. On this point he relies on the decision of Commissioner of Customs (Preventive) v. Amit Kumar Saha - 2004 (174) E.L.T. 158 (Cal.). He particularly relies on para 32 of the order which is reproduced below :- "32. Admittedly, Shri Saha was found to be only a carrier in the proceedings commenced under the Foreign Exchange Regulation Act, 1973, and neither had any attempt been made by the person or persons who had entrusted the seized currency to Shri Saha nor has the person to whom it was to be delivered come forward to establish that the same had been lawfully acquired and was entitled to return of the same. In such a scenario, the direction to return the seized currency to Shri Saha, who was not lawfully entitled to possess the same, would defeat the very raison d'etre for Sections 111 and 113 of the Customs Act, 1962, and Section 8(1) of the Foreign Exchange Regulation Act, 1973. Technically speaking, Shri Saha's action of being in possession of foreign currency may not attract the provisions of either Sections 111 or 113 of the Customs Act, but that, in our view, would not render the o....
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.... be deemed to have been imposed u/s 11 of the Customs Act and all the provisions of the Customs Act should have effect accordingly. It is not in dispute that such restriction on export of goods would amount to a 'prohibition' for the purposes of Section 113 of the Customs Act. Any goods attempted to be exported or brought within the limits of any customs area for the purpose of being exported, contrary to any prohibition imposed by or under the Customs Act or any other law for the time being in force, shall be liable to confiscation u/s 113(d) of the Customs Act. If it is found that the foreign currency in question was attempted to be exported contrary to the prohibition imposed by or under Section 11 of the Customs Act or Section 13(2) of the FERA, 1973 by any or both of the appellants, the currency would certainly attract Section 113(d) of the Customs Act and accordingly it would be liable to confiscation. That Section 111(d) of the Customs Act was invoked instead of Section 113(d) of the Act in the show cause notice and in the impugned order will not, in our view, be fatal to the Revenue inasmuch as the cause of action for the Customs Department to confiscate the currency was cl....
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....ked, nor has their counsel argued to this effect." 5. He also relies on CC (Air), Chennai v. Samynathan Murugesan - 2009 (247) E.L.T. 21 (Mad.) to argue that prohibited goods could not be allowed to be redeemed on payment of redemption fine. He relies on the decision of Hon. Supreme Court in Om Prakash Bhatia v. CC, Delhi - 2003 (155) E.L.T. 423 (S.C.) to interpret the meaning of "prohibited goods". He further relies on Notification No. 1156 (E), dated 26-12-2000 issued under sub-section (1) of Section 38 of the FEMA, 1999 under which the officers of Central Excise not below the rank of Deputy Commissioner are given powers to investigate matters referred to in clause (g) of sub-section (3) of section (6) in the matter of export, import or holding of currency or currency notes. He therefore submits that Central Excise officers had the jurisdiction to investigate and adjudicate the case. 6. Opposing the prayer ld. Senior Advocate for the respondent submits that confiscation was ordered only under Section 111(d) and under section 113(d) of the Customs Act, 1962. There is no reference to the provisions of the FEMA in final part of the order though there is discussion about ....
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..... According to him, the only contravention is that of Section 4 and Section 6(3)(g) of FEMA imposing prohibition on holding of foreign currency and currency notes dealing with any foreign exchange. He argues that customs authorities concerned did not have jurisdiction to investigate such matter and even if they had power to investigate, the procedure prescribed for investigation and adjudication were not followed as per law. At any rate, he points out that finding portion is not with reference to any provision under FEMA and it is only with reference to Section 111(d) and Section 113(d) of Customs Act, 1962. He further relies on the same decision as relied upon by ld. AR for Revenue in the case of Amit Kumar Saha in which Hon. Calcutta High Court pointed out that in the case of town seizure of currency as in the present case, Section 111 or Section 113 of the Customs Act were not applicable. Therefore, the confiscation was not legally maintainable. He points out that in the said case, ld. High Court ordered that release of the goods to the respondent in that case was not proper for the reason as recorded in paras 30 & 31 which are reproduced below :- "30 As will be seen from ....
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....fficer who is empowered to do a job cannot do every action in an investigation himself and he has to necessarily take the help of his subordinates. He further submits that complaint mentioned in Section 16(3) of FEMA is to be read as SCN issued by the Joint Commissioner itself. 11. I have considered submissions on both sides. I note that the goods were seized under "the Customs Act and FEMA". The statements were recorded as per the provisions of Section 108 of the Customs Act and the confiscation was ordered under Section 111(d) and 113(d) of the Customs Act. 12. In the matter of illegal import of the currency the only evidence relied upon by Revenue is the statement of the appellant. This statement does not state that the goods were smuggled into India by the appellant. The statement is about the action of persons who were brought to him by brokers and hence not known to him. Such statements about acts of persons not known to the person making the statement cannot be admitted as evidence. The seizure is not anywhere near a customs barrier. So there is no circumstantial evidence of smuggling of currency into India. The goods are not notified under Section 123 of the Cus....
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....ohibition on import [prohibition on export in the case of Section 113(d)]. The prohibition in FEMA on trading and possession of foreign currency will not come within the scope of Section 111(d) because this section deals with import and prohibitions on import and no other prohibition. The decisions in the case of S. Faisal Khan (supra) and Sidhharth Shankar Roy (supra) deal with seizure of foreign currencies in customs area when it was being illegally imported or exported. In such a situation the customs does have jurisdiction to seize the currency because there is clearly an attempt to import or export foreign exchange illegally and there is a prohibition on such import or export as per Regulation 5 of Foreign Exchange Management (Export and Import of Currency) Regulations, 2000, issued in exercise of powers under Section 6(3)(g) of FEMA. But the situation in this case is quite different inasmuch as seizure was not when the attempt to illegally import or export was taking place. The proof of illegal import or export in this case is not reliable as already explained. Then it is only a case of contravening prohibition on dealing in foreign currency and holding such currencies which ....