2023 (10) TMI 324 - HC - Customs

Maintainability of Appeal before CESTAT - Baggage Rules - Interpretation of statute - Smuggling - seizure of foreign currency - legislative edicts manifested in first proviso to section 129A of Customs Act - misreading of the terms goods and baggage defined in the Customs Act, 1962, to arrogate the jurisdiction - proper interpretation to the expression beneficial owner defined in section 2(3A) of the Customs Act, 1962 - failure to appreciate that the ultimate beneficiary of the foreign currency would be the Respondent herein and not SEMPL, thereby failing to notice the form and substance of the transaction. HELD THAT - The Appellate Authority proceeded to invoke the principles of beneficial owner as flowing from Section 2(3A) of the Act and consequently found the respondent liable to be penalized under Section 114(i) of the Act. It is the aforesaid findings as returned by the Appellate Authority, which constrained the respondent to approach the CESTAT. While the expression goods as contained in Section 2(22) of the Act, includes baggage as well as currency, the exclusion contemplated under Section 129A clearly appears to be restricted to a seizure of goods which are sought to be imported as baggage. The expression baggage as appearing in that provision would necessarily have to draw color from the provisions contained in Chapter XI of the Act. In any case and once the respondent themselves had asserted that the goods in question were liable to be confiscated in terms of Section 113(d), the objection taken to the maintainability of the appeal would not sustain. Beneficial owner of the currency - HELD THAT - Undisputedly, the journey in the course of which the seizure was affected was not a personal visit of the respondent but was to attend to various business meetings and events for and on behalf of HMC and which meetings and events were being managed by SEMPL. It is in the aforesaid background that the Tribunal has come to the conclusion that the respondent could not be held to be the beneficial owner of the seized currency. It is noted from the various statements made in the course of investigation and the facts that stood recorded in the Order-in-Original that it was not the case of the appellant that the currency had been provided by the respondent - while appellant had sought to contend that in the past SEMPL employees are allegedly stated to have admitted to carrying currency which was utilized to meet the personal expenses of the respondent, the same is clearly immaterial since the proceedings emanating from the SCN in question stood restricted to the business travel of the respondent while acting as a Managing Director of HMC. The issues which were canvassed for consideration by the appellant essentially require us to re-appreciate the evidence and the material that formed part of the proceedings as drawn. That cannot possibly be undertaken since the appeal itself would have to be restricted to a question of law. Appeal dismissed.

Summary

Issues Involved:
1. Interpretation of the terms 'goods' and 'baggage' under the Customs Act, 1962.
2. Interpretation of the expression 'beneficial owner' under Section 2(3A) of the Customs Act, 1962.
3. Determination of the ultimate beneficiary of the foreign currency.
4. Sustainability of the CESTAT order dated 28.03.2022.

Summary:

Issue 1: Interpretation of the terms 'goods' and 'baggage' under the Customs Act, 1962

The appellant questioned the jurisdiction of CESTAT, arguing that the subject matter pertained to goods imported or exported as baggage, invoking the Proviso to Section 129A. The court found that the SCN did not relate to a violation of the Baggage Rules but invoked Section 113(d) of the Act, which pertains to goods attempted to be exported contrary to prohibitions. The court concluded that the exclusion under Section 129A is restricted to goods imported as baggage, and the objection to the maintainability of the appeal was not sustained.

Issue 2: Interpretation of the expression 'beneficial owner' under Section 2(3A) of the Customs Act, 1962

The CESTAT found that the respondent was traveling for official business as the Chairman and Managing Director of HMC, and the foreign currency was for business purposes managed by SEMPL. The Tribunal concluded that the respondent could not be held as the beneficial owner of the seized currency. The court upheld this conclusion, noting that the currency was obtained from SEMPL's stock and handed over to Mr. Amit Bali, not provided by the respondent.

Issue 3: Determination of the ultimate beneficiary of the foreign currency

The court noted that the investigation did not establish that the currency was for the respondent's personal use. The statements and evidence indicated that the currency was for HMC's business purposes, managed by SEMPL. The court found the appellant's argument about past instances of currency being used for the respondent's personal expenses immaterial to the current proceedings, which were restricted to business travel.

Issue 4: Sustainability of the CESTAT order dated 28.03.2022

The court found that the issues raised by the appellant required re-appreciation of evidence, which is not permissible as the appeal must be restricted to questions of law. The court concluded that no substantial issue of law was raised and dismissed the appeal.

Conclusion:

The appeal was dismissed, upholding the CESTAT's findings that the respondent was not the beneficial owner of the seized currency, which was intended for business purposes managed by SEMPL. The court affirmed that the exclusion under Section 129A pertains to goods imported as baggage and that no substantial issue of law was raised by the appellant.