AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (6) TMI 22
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....uspicion while she was proceeding for security check after completing immigration and Customs at the Chhatrapati Shivaji International Airport, Sahar, Mumbai. The said passenger was found carrying one off-white colour hand bag. On questioning, it came to light that her name was Ms. Farahjaan Sheikh, holder of Indian Passport No. F-1746383 issued at Mumbai on 10.12.2004 and she was going to board the Dubai bound Emirates flight number EK-501 of 19.10.2006. 2.1 In the presence of panchas, the said Customs Officers asked her whether she was carrying any contraband such as foreign/Indian currency, either in her baggage or on her person, to which she replied that she was engaged in the productions of films and that she was having Indian Currency of Rs. 10,000/- (Rupees Ten Thousand only) with her and travellers' cheques worth US $ 1,00,000/-. On asking about the contents of her off-white hand bag, she took out one white envelope from her hand bag. The said envelope was found having printing "7even Entertainment Limited, Flat No. 504, Pluto, Saibaba Galaxy, New Link Road, Goregaon (W), Mumbai-400 104, Tel: +91.22.56993875, Fax: +91.22.56993978", on it. The examination of the said enve....
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....n exchange. That for Business Visit the eligibility was US $ 25,000/- (US $ 23,000/- in travellers' cheques and US $ 2000/- in Currency) irrespective of number of days of travel (stay) and the format of the letter as prescribed by RBI on the Corporate/Company's Letter Head with the RBI Declaration incorporated in it; that the payment mode was company's cheque (from known Customers) or Pay Order; that their procedure for issuance of the Travellers' Cheques under the "Business Visit" to the passengers was to take a requisition letter on the prescribed R.B.I. format on company's letter head signed by the authorized signatory of the company along with the Passengers Application Form (PAF); that acknowledgement of the passenger was obtained on the Exchange Memo (Cash Memo) of receipt of foreign exchange to the passenger and also on the Sales Receipt prepared to this effect; that the Sales Receipts were duly filled by them (M/s T.T. Forex) and travellers' cheques numbers also mentioned therein. 2.4 Shri Anand Kulkarni, inter-alia, replied that the said 106 travellers' cheques were indeed issued by their company M/s TT Forex and in support of the same he had submitted the copies of Req....
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....as located at Goregaon; that the said travellers' cheques were received by one Mr. P. Iyer, Accountant of M/s Sohail Maklai. On being asked why the above mentioned travellers' cheques meant for different passengers were handed over to Shri P. Iyer, whereas as per RBI Guidelines travellers' cheques are to be issued only on personal application and identification, Shri Anand Kulkarni stated that as the passengers had left for home and since Mr. Iyer was a known person and in good faith the travellers' cheques were handed over to him as it would have not been possible to have delivered the travellers' cheques to each person personally. 3. It was noticed that traveller cheque being carried by Ms. Farahjaan Sheikh were issued in the following names: Wilkins Rahul (Employee), Syed Idrees Niyamat Ali (Employee), Ajay Saxena (Employee), Dey Gopal (Employee) and Sheikh Farahjaan (Employee). In the statement of Shri Gopal Dey, he stated that he was not aware of issuance of any travellers' cheques in his name. When it was shown requisition letter dated 18.08.2006 on the letterhead of M/s Sohail Maklai Entertainment Pvt. Ltd. for released of US $ 25,000/- in his name and this corresponding ....
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....argued that the appellant had trusted his client of M/s Sohail Maklai Entertainment Pvt. Ltd. and released the traveller's cheques. He argued that the proper documentation was done for the said purpose. He took us through the provisions of Foreign Exchange Management Act, 1999 and Foreign Exchange Management (Current Account Transaction) Rules, 2000. He argued that the transaction is a nature of serial number 8 of Schedule III of the said Regulation which reads as under:- 8. Release of foreign exchange, exceeding US $ 25,000 to a person, irrespective of period of stay, for business travel, or attending a Conference or specialised training or for maintenance expenses of a patient going abroad for medical treatment or check-up abroad, or for accompanying as attendant to a patient going abroad for medical treatment/check-up. He argued that there is no prohibition in respect of such transactions. The prohibitions are listed in Schedule I. He pointed out that no prior permission is required in terms of Rule 4 of the said Rules, as the transaction in the instant case are not in the nature of the transaction listed in Schedule II. He argued that this is a normal transaction of....
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....ted out that there was no attempt on the part of the appellant to hide the currency. He pointed out in para 2 of the show-cause notice, it has been clearly brought out that there was no attempt by the appellant to hide and effect the currency. 9. Learned AR argued that all the appellants have claimed that what has happened is only procedural lapse and no violation of law has been committed. In this regard she submitted that to understand the violation of law, provisions of the Customs Act has to be read with FEMA Act and FEMA regulations and RBI circulars. She pointed out to the following provisions. 9.1 Section 2(22)(d) of the Customs Act, 1962 which defines the goods to include currency and negotiable instruments. 9.2 Section 2(33) of the Customs Act, 1962 which defines Prohibited goods to mean any goods the import or export of which is subjected to any prohibition under this act or any other law for the time being in force. 9.3 Section 113(d) of the Customs Act which stipulate that 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 this act or any other....
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....er, the above circular also lays down conditions for sale of foreign currency to eligible travellers for private visits and business visits. As per the first condition, the sale of foreign currency should be made only on personal application and identification and while issuing traveller's cheques, the condition for issue stipulated by the issuing company should be scrupulously observed and acknowledgement for receipt of travellers' cheque duty obtained. 9.11 In the circular A.P. (DIR Series) Circular no. 25 dated 6.3.2006, RBI had categorised Authorised Persons as defined under Section 10(1) of the Foreign Exchange Management Act, 1999. In the circular, the RBI has specifically classified Authorised persons into Authorised Dealer (AD) and Full Fledged Money Changers (FFMC). Further Authorised Dealers have been further classified as AD category I, AD category II and AD Category III. And as per the circular releasing foreign exchange for film shooting comes under the enhanced activities permitted to ADs- Category II. 9.12 She argued that the combined effect of above provisions is that import and export of Foreign Exchange is prohibited but for the general or special permission....
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....rpose of being exported, contrary to any prohibition imposed by or under this act or any other law for the time being in force shall be liable to confiscation. In view of the above, the foreign currency issued illegally by M/s TT and obtained by deceit by M/s SMEPL is liable to confiscation under section 113(d) of the Customs Act, 1962 for violation of FEMA, 1999 and Foreign Exchange Management (Export and Import of Currency) Regulations, 2000. 9.14 Reliance was placed on the judgement of V. S. Ubhayakar vs. Special Director, Directorate of Enforcement reported in 2012 (282) ELT. 209 (Bom.), wherein the Hon'ble Bombay High Court had held in a case involving similar situation that issuing travellers' cheque without verifying documents, passport and ticket amounts to violation of provisions of FERA and held the employee and the FFMC liable to penalty. 9.15 Reliance was also placed on the judgement of Hon'ble High Court of Calcutta in the case of Euresian Equipment and Chemicals Ltd. and Others vs. Collector of Customs and Others reported in 1980 (6) ELT. 38 (Cal) wherein, it was held that any untrue declaration in all material particulars will amount to violation of FERA and wi....
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.... 9.21 She further argued that as far as confiscation of goods under section 113 of the Customs Act, is concerned the only requirement is to see is whether the goods were attempted to be exported or exported contrary to any prohibition imposed by or under the Customs Act, 1962 or any other law for the time being in force. Further mensrea is also not relevant for liability to confiscation under Section 113. Once the goods are liable for confiscation under section 113, penalty under Section 114 is attracted. 9.22 She submitted that Currency obtained in similar manner and exported by Jayesh Vyas and Shemsher Mehmood Khan is also liable for confiscation because admittedly these blank travellers cheque were also issued and obtained in similar manner as explained above. The Hon'ble High Court of Calcutta in its judgement in the case of Euresian Equipment and Chemicals Ltd. and Others vs. Collector of Customs and Others reported in 1980 (6) ELT. 38 (Cal) had held that the attempt to export necessarily precedes actual export and even if the goods are not available for confiscation, penalty can be imposed under section 114 of the Customs Act, 1962. Reliance is also placed on the judgemen....
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....thorised to issue foreign exchange for shooting of film abroad and hence they issued the foreign exchange in the name of different people who were not even aware that the currency was issued in their name. Further it was not a case of single lapse but was being practiced for a long time till the day Ms Farahjaan Sheikh was caught at the airport. It is highly impossible that M/s TT would not have known what was happening. If M/s TT were not consciously involved in issuing foreign exchange in a manner not allowed by law, it certainly would have put an end to such affairs in the beginning itself by cautioning or taking drastic actions against its employees and initiating instantaneous damage control exercise. None of such measures apparently were resorted to and the facts involved gives rise to belief that the firm itself has landed support to issuance of foreign exchange in this illegal manner. The Travellers' Cheque were issued knowing fully well that they are being taken out of the country through representatives of M/s SMEPL therefore, M/s TT have aided in the act of export of Travellers' Cheque obtained through illegal way, hence liable for penalty under section 114 of the custom....
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....knowledge of both buyer and seller of currency. The appellants have relied on the decision of Tribunal in the case of Trade Wings Ltd. Vs. Commissioner of Customs - 2009 (243) ELT 439. The facts in the case were practically identical and are reproduced below:- "2. We have heard both sides. We find that Travel Club had frequent commercial transactions with the appellants who issued foreign exchange to several passengers travelling abroad at the instance of Travel Club. Smt. Laxmi Reddy, Front Office Executive of the appellants released the Traveller Cheques to five passengers going abroad at the instance of Travel Club and sent the same through her attendant Shri Rajesh to the office of Travel Club wherein they were received by Srinivas of Travel Club. The Traveller cheques were found in the possession of Shri Ravindranath who was intercepted when he was to board the Air India flight from Mumbai to Hong Kong. As regards the appellants, there is no evidence to show that they were aware that the foreign exchange released by them would form part of an attempt of unauthorized export. The Commissioner has held that if the appellants had functioned with due care and diligence, th....
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....that he asked Anand Kulkarni as to why he had sent Travellers' Cheques in different names when only Mr. Sohail was travelling to which Anand Kulkarni told him that now the RBI rules were changed and they could not use issue Travellers' Cheques in one person's name for more than US $ 25,000/-. From the statements of Shri Feroz Khan, it is apparent that he and Shri Anand Kulkarni were fully aware that the currency being issued is in violation of FEMA norms and also intended for exports. The Order-in-Original in para 46 records as follows:- "Shri Feroz Khan stated that when the representative of M/s T.T. Forex came with all the Travellers' Cheques he waited for Mr. Sohail Maklai in the office to take his signature; that after waiting for couple of hours the representative told him to talk to Mr. Kulkarni because he had to leave; that the representative made a call to Mr. Kulkarni and made him speak to Mr. Kulkarni; that Mr. Kulkarni told him to sign all the papers on behalf of Mr. Sohail Maklai after going through all the papers; that he again called Mr. Kulkarni and asked him why he had sent the Travellers' Cheques in different names when only Mr. Sohail was travelling; that....