2010 (9) TMI 820 - CGOVT - Customs

Confiscation - penalty - offenses under the FEMA will be prohibition imposed by that Act and will by definition come within the ambit of the phrase or any other law for the time being in force in Section 113(d) of the Customs Act, 1962 and thus the goods will be liable to confiscation under Section 113(d) of Customs Act, 1962. Government further notes as per Section 3(33) of Foreign Trade (Development & Regulation) Act, 1992 read with Rule 2(c) of the Foreign Trade (Exemption from Application of rules in certain cases) Order, 1993, the Central Government is empowered to make provision relating to import and export of goods. Section 11 of Customs Act confers powers on Central Govt. to prohibit importation or exportation of goods for purposes specified therein. As per Section 113(d) of Customs Act, 1962, the goods attempted to be exported or brought within the limit of any customs area for this purpose of being exported contrary to any prohibition imposed by or under this Act or any other law for the time being in force are liable to confiscation, and provisions of Section 114 of Customs Act, 1962 w.r.t. imposition of penalty are also attracted as soon as the goods incur the liability to confiscation under Section 113. In view of this, the order for confiscation of currencies under Section 113 of Customs Act, 1962 and imposition of penalties under Section 114 of Customs Act, 1962 is legally correct, no denial to the violation of the Regulation 5 of the Foreign Exchange Management (Export and Import of Currency) Regulation, 2000, and there is a non-declaration of currency and for that declaration is required under Section 77 of the Customs Act, 1962, the adjudicating authority had decided the case rightly and judiciously, Government sets aside the impugned orders-in-appeal and restore the impugned order-in-original, revision application s succeed - decided in favor of revenue.

Summary

Issues Involved:
1. Legality of the possession and attempted export of foreign currency and traveller cheques.
2. Jurisdiction of Customs authorities under the Customs Act vs. FEMA.
3. Adjudication of penalties and confiscation under the Customs Act.

Detailed Analysis:

1. Legality of the Possession and Attempted Export of Foreign Currency and Traveller Cheques:

The case revolves around an individual intercepted at the IGI Airport with foreign currency and traveller cheques. The Customs Officers found GBP 5050 in cash, 50 Euros, and traveller cheques worth GBP 19800. The individual could not provide sufficient documentary evidence for the legal acquisition of the remaining traveller cheques worth GBP 3500 and the cash GBP 5050 and 50 Euros. Consequently, the foreign currency and traveller cheques were seized under Section 110 of the Customs Act on the grounds of an illegal attempt to export them, making them liable for confiscation under Section 113 of the Customs Act.

2. Jurisdiction of Customs Authorities Under the Customs Act vs. FEMA:

The Commissioner (Appeals) initially ruled that the case should be adjudicated under FEMA rather than the Customs Act, arguing that any violation by money changers should be dealt with under FEMA. However, the revision application challenged this, asserting that foreign currency qualifies as "goods" under Section 2(22) of the Customs Act, and its import or export is governed by the Customs Act. The Government observed that the offences under FEMA are prohibitions imposed by that Act and come within the ambit of "any other law for the time being in force" under Section 113(d) of the Customs Act. Therefore, the goods are liable for confiscation under Section 113(d) of the Customs Act.

3. Adjudication of Penalties and Confiscation Under the Customs Act:

The adjudicating authority initially confiscated the traveller cheques worth GBP 19800 and cash GBP 2296, giving an option to redeem the confiscated currencies upon payment of a redemption fine of Rs. 3,00,000/-. Personal penalties were also imposed on various individuals and entities involved. The Commissioner (Appeals) set aside this order, directing the case to be handled under FEMA. However, upon review, the Government found this direction legally incorrect. The Government upheld the adjudicating authority's decision, reinstating the order for confiscation and penalties under the Customs Act, emphasizing that violations of other laws, such as FEMA, simultaneously become violations under the Customs Act.

Conclusion:

The Government set aside the impugned orders-in-appeal and restored the order-in-original, confirming the confiscation of foreign currency and traveller cheques and the imposition of penalties under the Customs Act. The revision applications succeeded, and the adjudicating authority's decision was deemed legally correct and judicious.