2017 (4) TMI 139 - HC - Customs

Currency - whether the seized goods being currency, can be allowed to be released on payment of a fine - Held that - When the power of redemption is exercised, what the law postulates is that there is an option to pay fine in lieu of confiscation. Section 125(1) of the CA, 1962 provides that whenever confiscation of any goods is authorised by this Act, the officer adjudicating it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods or where such owner is not known, the person from whose possession or custody such goods have been seized, an option to pay, in lieu of confiscation, such fine as the said officer thinks fit - we do not find that there was any error or lack of power - appeal dismissed - decided against Revenue.

Summary

Issues:
- Confiscation of foreign currency under the Customs Act, 1962
- Redemption of confiscated currency by paying a fine
- Legality of Tribunal's decision regarding redemption and penalty reduction

Confiscation of Foreign Currency:
The case involved two individuals apprehended at the airport with foreign currency and mobile phones. The Revenue issued a show cause notice alleging contravention of foreign exchange laws. The order-in-original directed confiscation of the currency and imposed penalties. The individuals appealed to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), which allowed the appeal, leading to the Revenue's grievance.

Redemption of Confiscated Currency:
The main contention was whether seized currency, considered as goods under Section 2(22)(d), should have been released upon payment of a fine. The Tribunal, citing a Delhi High Court judgment and its own order, concluded that redemption was permissible under the Customs Act, 1962. Section 125(1) allows for the option to pay a fine in lieu of confiscation for prohibited goods. The Tribunal's decision to redeem the currency and reduce the penalty was upheld as legally sound.

Legality of Tribunal's Decision:
The High Court found no merit in the argument that the Tribunal erred in allowing redemption of the currency. It affirmed that the Tribunal acted within its powers under the Customs Act, 1962. The decision to release the currency upon payment of a fine was deemed justified, leading to a reduction in the penalty. The Court dismissed the appeal, stating the Tribunal's decision was based on factual considerations and upheld the legality of the redemption process.