2019 (12) TMI 298 - HC - Customs

Imposition of penalty - failure to make declaration of currency - Applicability of provisions of Customs Act, 1962 or provisions of Foreign Exchange Management Act, 1999? - the Appellant had pleaded that he was advised by the Bank of England that there was absolutely no restriction to carry currency into India - HELD THAT - The Appellant, in the present case, had carried currency of about 8,000 GBP in cash and an amount of GBP 60,000 by way of traverller's cheques. From this, it is clear that the bulk of the amount which the Appellant attempted to be imported, was in the form of traveller's cheques. The reason as to why the Appellant required such an amount is not so relevant. The Appellant has stated that he wished to purchase some immovable property in India - This is a case of default on the part of the Appellant in not declaring this in the CDF. However, there is nothing on record to conclude that the action of the Appellant was ex facie mala fide or intended to deliberately evade the legal provisions which were attracted. However, the redemption fine and the penalty imposed upon the Appellant is excessive - Rather than remanding the matter at this stage to the Appropriate Authorities for redetermination of the redemption fine and the penalty, upon taking into consideration the facts and circumstances cumulatively, we find that the redemption fine of ₹ 2,00,000/- and the penalty of ₹ 1,00,000/- would be appropriate in this matter. Quantum of redemption fine and penalty reduced - appeal allowed in part.

Summary

Issues:
1. Applicability of Customs Act, 1962 vs. Foreign Exchange Management Act, 1999 on penalty imposed.
2. Validity of penalty imposed on the appellant.

Analysis:

Issue 1: Applicability of Customs Act vs. Foreign Exchange Management Act
The appellant argued that the arrival card received upon entering India did not mention the need to declare currency, which was introduced later. However, the court referred to the Foreign Exchange Management Regulations, stating that a declaration in the Currency Declaration Form (CDF) is required upon arrival in India if the value of foreign exchange exceeds specified limits. The court rejected the appellant's claim that there was no requirement to fill in such a form, emphasizing the clear provisions of the regulations. The court also dismissed the argument that matters related to foreign exchange should be under FEMA, highlighting that import and export issues fall under the Customs authorities' domain.

Issue 2: Validity of Penalty Imposed
The court found a breach of Section 77 of the Customs Act, 1962, as the appellant failed to declare the currency and negotiable instruments brought into India. Despite the appellant's claim of following advice from the Bank of England and carrying traveler's cheques, the court concluded that the failure to declare in the CDF constituted a violation. However, the court noted that there was no evidence of mala fide intent or deliberate evasion of legal provisions by the appellant. Consequently, the court reduced the redemption fine and penalty imposed, considering the circumstances. The court modified the orders, reducing the redemption fine and penalty amounts significantly, requiring the respondent to refund the excess amount paid by the appellant.

In conclusion, the court partially allowed the appeal, modifying the redemption fine and penalty amounts significantly, and ordered the respondent to refund the excess amount paid by the appellant. The appellant was directed to provide bank details for the refund within a specified period, failing which interest would accrue.