2001 (3) TMI 209 - AT - Customs

Summary

Issues:
1. Confiscation of foreign currency under Customs Act
2. Imposition of penalty under Customs Act and FERA
3. Jurisdiction of Customs authorities in case of sale and purchase of foreign currency

Analysis:

Issue 1: Confiscation of foreign currency under Customs Act
The case involved the recovery of US $1990 from the premises of the appellant, who admitted to purchasing and selling foreign exchange. A show cause notice was issued under Section 111 of the Customs Act, 1962, for confiscation of the currency and imposition of a penalty. The Additional Commissioner confiscated the currency and imposed a penalty, which was set aside by the Commissioner (Appeals). The Revenue argued that the recovered currency was smuggled and brought illegally into the country, violating various provisions of the Customs Act, FERA, and Foreign Trade Act. The Revenue relied on a previous Tribunal decision where foreign currency was confiscated for violating FERA. However, the appellant's counsel contended that the case was about the sale and purchase of foreign currency in India, falling under Section 8(1) of FERA, not Section 13(1) relating to bringing in or sending out foreign currency.

Issue 2: Imposition of penalty under Customs Act and FERA
The Revenue argued that the Commissioner erred in not invoking Section 13 of FERA for confiscation and penalty imposition. They cited a Tribunal decision where foreign currency was confiscated for violating FERA. The appellant's counsel countered that the case was about the sale and purchase of foreign currency in India, governed by Section 8(1) of FERA, not Section 13(1) for bringing in or sending out foreign currency. The Commissioner upheld the appeal, stating that Customs had no jurisdiction to act in a case involving the sale and purchase of foreign exchange within the country.

Issue 3: Jurisdiction of Customs authorities in case of sale and purchase of foreign currency
The Tribunal noted that the case involved the purchase and sale of foreign exchange within the country, falling under Section 8 of FERA. Customs Act provisions were not extended to prohibit such transactions under Section 11. The Tribunal found that Customs had no jurisdiction in the matter and upheld the decision of the Commissioner (Appeals). The Tribunal distinguished previous cases cited by both parties, emphasizing the specific circumstances of the present case. The Tribunal rejected the Revenue's appeal, citing a previous case where Customs had no jurisdiction due to lack of evidence of illicit importation of foreign currency.

In conclusion, the Tribunal upheld the decision of the Commissioner (Appeals) and rejected the Revenue's appeal, emphasizing that Customs had no jurisdiction in a case involving the sale and purchase of foreign currency within the country under Section 8 of FERA.