2014 (12) TMI 1076 - AT - Customs

Penalty u/s 114(i) - Aiding and abetting for smuggling of foreign currency - Held that - In the case of M/s. Wall Street Finance Ltd. the guidelines of RBI were not issued during the relevant time therefore, in that case the contention of the learned AR that for travellers cheques were issued without the issue of application and passport is not sustainable as there is no guidelines during the impugned period. Further, I find that as the statement shows that this travellers cheques were issued to the broker/agent to whom he has handed over his passport. When the appellant had issued currency after verifying the particulars of the passport. Therefore, it cannot be denied that this traveller cheques has not been issued in the name of the persons who is denying the statement and I also find that in this case the currency have been detected after 2 years of issuance of travellers cheques which has passed various hands before the interception. In these circumstances, I hold merely on the ground that the appellant was not due diligence at the time of issuance of the travellers cheques which may be used in smuggling of foreign currency, the allegation is not sustainable. Therefore, following the decision of the Trade Wings Ltd. (2008 (10) TMI 524 - CESTAT, MUMBAI), I set aside the penalty imposed on the appellants. With regard to the penalty imposed on M/s. Rose Travels, I find that the appellant has produced the application form and passport of the persons to whom the travellers cheques were issued. In fact the address of a person is to be verified by the concerned police station. In these circumstances, the allegation of aiding and abetting smuggling of travellers cheques is not sustainable merely saying that the persons are not available on the given address in the absence of any cogent evidence that these passports are fake. Further, in one of the case it is no doubt the travellers cheque has been issued in the name of the passport holder, in the show cause notice there is no allegation that the signature of the said person is not the same as in the application and the in the passport. Further, no statement of such person has been placed on record. In these circumstances, merely saying that he is not the same person cannot be the ground for the allegation in show cause notice. In these circumstances, I hold that the penalty on M/s. Rose Travels is not imposable. - Decided in favour of assessee.

Summary

Issues:
- Imposition of penalty under Section 114(i) of the Customs Act, 1962 for aiding and abetting smuggling of foreign currency.

Analysis:
- The appellants, Money Exchangers, were penalized for issuing travellers cheques found in possession of a person intercepted by authorities. Notices were issued to show cause why penalties should not be imposed for aiding smuggling. The appellants argued they had verified details of travellers and supplied documents during issuance, hence unaware of subsequent possession by a third party. They contended that the passports of travellers were genuine and no evidence proved otherwise. The penalty was challenged on grounds of lack of evidence and due diligence in issuance.

- The Advocate for M/s. Wall Street Finance Ltd. argued that the cheques were issued before RBI guidelines applied, hence no requirement for document verification. Recovery after a significant period and from a third party should not implicate them in aiding smuggling. Reference was made to a Tribunal decision highlighting that lack of care and diligence in duty performance should not lead to aiding and abetting charges. The opposing view emphasized the issuance of cheques without adhering to RBI guidelines, implying involvement in smuggling.

- Upon considering submissions, it was noted that RBI guidelines were not applicable during the cheque issuance period, rendering the lack of document verification permissible. The cheques were issued to a broker/agent who had the passport, and the currency was detected after a considerable time and multiple exchanges. The judgment cited a previous case to support the decision that lack of due diligence at issuance should not sustain aiding and abetting allegations. Consequently, the penalty on M/s. Wall Street Finance Ltd. was set aside.

- Regarding M/s. Rose Travels, it was found that they had produced application forms and passports of travellers, with addresses matching those in passports. The contention that addresses were unavailable was dismissed, as passports were considered authentic documents. The absence of concrete evidence proving passports as fake led to the penalty being deemed unsustainable. Lack of allegations regarding signature discrepancies or statements from involved persons further weakened the case. Consequently, the penalty on M/s. Rose Travels was also deemed not imposable.

- In conclusion, the penalties on both appellants were set aside, and the appeals were allowed, emphasizing the insufficiency of evidence and lack of due diligence as key factors in the judgment.