2024 (8) TMI 215 - AT - Customs

Levy of penalty - smuggling - illegal export of currency and illegal import of gold - violation of FEMA regulations as well - HELD THAT - It is observed that Shri Suneet Kalra and Shri Rajinder Kalra have been held to have illegally imported gold into India from Dubai without payment of duty but having full knowledge and intention of committing the alleged act. Both of them have also been held to have illegally exported foreign currency of UAE Dhirams valuing INR 244000. There is a voluntary admission of both Shri Suneet Kalra and Shri Rajinder Kalra for these acts. Both of them have also been held to have violated the provisions of Foreign Exchange Management (posession and retention of foreign currency) Regulations, 2015. There is no denial that the appellant is a licensed money exchanger i.e. he is authorized to exchange currencies pertaining to different countries into various respective denominations. Resultantly, it is clear that he was authorized to exchange. INR into UAE Dhirams though he has exchanged the money without any legal document admittedly no invoice was issued but this admission proves violation of conditions of his license or the respective regulations and the directions of RBI, if any. In no circumstance the act of the licensed money exchanger to exchange the money but without issuing an invoice cannot, from any stretch of imagination, be called as an act of illegal export or illegal import. It is further observed that appellant premises were also search and nothing incriminating which may suggests his involvement/indulgence in any kind of illegal exports or imports. In fact, the original adjudicating authority has refrained itself from ordering confiscation of money as was detained from the appellant premises at the time of search. I also observe that there is no finding discussed by the adjudicating authorities below while imposing penalty on the appellant under Section 114, Section 114 AA and Section 117 of the Customs Act, 1962. Under Section 114 penalty is to be imposed for attempts to export goods improperly - the appellant has not contravened any provision of the Customs Act nor has failed to comply therewith. Hence, the penalties under three of the sections have wrongly been imposed on appellant no. 3. The order under challenge is absolutely silent about specifically mentioning the reason for imposing penalty under each respective section. The order confirming imposition of penalty upon appellant is therefore liable to set aside. Similarly, the penalty under Section 13 of FEMA Act confined under discussion in the order under challenge. The said penalty is also liable to be set aside - Appeal allowed.

Summary

Issues:
1. Imposition of penalty on the appellant for alleged involvement in illegal import of gold and export of foreign currency.
2. Appellant's challenge to the penalty imposed under various provisions of Customs Act and FEMA Act.
3. Evidence and arguments presented by both parties regarding the appellant's involvement in the alleged illegal activities.
4. Analysis of the legal provisions and regulations applicable to the case.
5. Examination of the call records and voluntary statements to determine the appellant's role in the illegal transactions.
6. Review of the adjudicating authorities' decisions and the basis for imposing penalties on the appellant.
7. Assessment of the evidence and findings to determine the sufficiency of proof against the appellant.
8. Conclusion regarding the imposition of penalties and setting aside the order under challenge.

Analysis:
The judgment revolves around the appeal filed against the penalty imposed on the appellant for his alleged involvement in illegal import of gold and export of foreign currency. The appellant challenged the penalties under various provisions of the Customs Act and FEMA Act, arguing lack of evidence to prove his knowledge or intention in the illegal transactions. The appellant, a licensed money exchanger, exchanged currency without issuing invoices, violating regulations but not engaging in illegal exports or imports. The call records and voluntary statements were insufficient to establish the appellant's connivance with the other parties. The judgment highlighted the absence of findings supporting the penalties imposed under different sections of the Customs Act, leading to the conclusion that the penalties were wrongly imposed on the appellant. The order under challenge was set aside, and the appeal was allowed, emphasizing the lack of specific reasons for imposing penalties and the need to revoke them. The judgment concluded by pronouncing the decision to set aside the order and allow the appeal on 02.08.2024.