2009 (11) TMI 625 - CGOVT - Customs

Revision Application - confiscation of the impugned goods with option to redeem the redemption fine and penalty - smuggling of diamonds, on the date of interception as well as for the previous occasions, and channelling sale proceeds through unofficial channels - Held that - Applicant has stated that he has received the advance foreign remittances towards sale proceeds of the said goods from foreign buyer, he was in the business of export of diamonds and the present trip to abroad was in connection with promoting exports. There is also no duty involved in the exports. Govt. is of the opinion that the redemption fine and personal penalty appears harsh being on higher side. Therefore, Government reduces the redemption fine to Rs. 3.50 lakhs and personal penalty to Rs. 1.60 lakhs. Confiscation of Indian currency of Rs. 8500/- it is observed that the applicant was entitled to carry Indian Rs. 5000/- as per Regulation 3(a) of FEMA (Export and Import of Currency) Regulations, 2000 No. GSR 389(E) FEMA 6/2000-RB, dated 3-5-2000 . Government therefore allow the release of Rs. 5000/- to the applicant. The remaining Indian currency of Rs. 3500/- is allowed to be redeemed on payment of redemption fine of Rs. 1000/- in lieu of confiscation under Section 125 of Customs Act, 1962, Revision Application is disposed off in term of above.

Summary

Issues Involved:
1. Confiscation of diamonds and diamond bead necklaces.
2. Valuation of seized goods.
3. Applicability of Notification No. FEMA 116/2004-RB and EXIM Policy provisions.
4. Confiscation of Indian currency.
5. Imposition of redemption fine and personal penalty.

Issue-wise Detailed Analysis:

1. Confiscation of diamonds and diamond bead necklaces:
The applicant was apprehended while attempting to smuggle cut and polished diamonds and diamond bead necklaces valued at Rs. 18,42,875/-. He admitted to purchasing these diamonds on credit and intending to sell them in Kuwait for profit. The lower authority ordered the confiscation of these goods under Section 113(d)(e) and (h) of the Customs Act, 1962, for violation of Section 77 of the Customs Act, read with provisions of the Foreign Trade (Development & Regulation) Act, 1992, Import & Export Policy 2002-07, and the Customs Act, 1962. The applicant argued that the confiscation was contrary to the Handbook of Procedure dated 1-9-04, Baggage Rules (Amendment) Rules, 2002, Section 81 of the Customs Act, 1962, and relevant provisions of the Foreign Trade Policy 2008-09. However, the government found that the goods were not declared before the Customs Officers and were recovered after intercepting the applicant. Therefore, the confiscation was upheld.

2. Valuation of seized goods:
The applicant contested the valuation of the seized goods, claiming that the department assessed the value on the higher side. However, the valuation was conducted by a government-approved jewellery valuer and a jewellery expert, and it was accepted by the applicant at the time of drawing the punchnama. Thus, the valuation was deemed reasonable and legally correct.

3. Applicability of Notification No. FEMA 116/2004-RB and EXIM Policy provisions:
The applicant argued that the seized goods were within the permissible limits under Notification No. FEMA 116/2004-RB, dated 25-3-04, and relevant EXIM Policy provisions, which exempt exports of goods valued not more than USD 25,000 and gifts valued up to Rs. 5,00,000 from filing GR/PP declarations. However, the total value of the goods was Rs. 18,42,875 (US$ 40907), exceeding the permissible limits. Therefore, the said notification and policy provisions were not applicable.

4. Confiscation of Indian currency:
The applicant contested the absolute confiscation of Indian currency amounting to Rs. 8,500/-. The government observed that the applicant was entitled to carry Indian Rs. 5,000 as per Regulation 3(a) of FEMA (Export and Import of Currency) Regulations, 2000. Consequently, the government allowed the release of Rs. 5,000 to the applicant and permitted the remaining Rs. 3,500 to be redeemed on payment of a redemption fine of Rs. 1,000 in lieu of confiscation under Section 125 of the Customs Act, 1962.

5. Imposition of redemption fine and personal penalty:
The lower authority imposed a redemption fine of Rs. 7,50,000 and a penalty of Rs. 3,75,000 on the applicant. The government, considering the circumstances, found the redemption fine and personal penalty to be harsh and on the higher side. Therefore, the government reduced the redemption fine to Rs. 3,50,000 and the personal penalty to Rs. 1,60,000.

Conclusion:
The government modified the impugned order-in-appeal to the extent of reducing the redemption fine and personal penalty and allowed partial release of the confiscated Indian currency. The Revision Application was disposed of accordingly.