2015 (4) TMI 200 - AT - Customs

Redemption fine - Seizure of currency - A plea has been taken that since currency is not a prohibited item, an option must be given under Section 125 of the Customs Act to pay fine in lieu of confiscation. - discovery of foreign currency which was not declared - He illegally took foreign currency and smuggled into India goods such as textile needless and pharmaceuticals etc. without declaring them to Customs at Ahmedabad Air Port and without paying duty on them. - Penalty u/s 114(i) - Held that - In the present case, the act of smuggling is not established through statements only. It is established through a series of facts and events namely non declaration, detection of currency in a packet contained in a suitcase already checked in, repeated statements of appellant, the circumstantial evidence in the form of statement of M/s. Arcadia etc. The Section 125 states that where the importation or exportation is prohibited under the Act or any other law, the officer adjudicating the case may give to owner of the goods an option to pay fine in lieu of confiscation. The para 6 of Foreign Exchange Regulations only permit an amount of 5000 which is attempted to be taken out of India has to be possessed in accordance with para 7 (3) (i) and 3(ii) of FEMA Regulations. It has not even been proved by the appellant that he was in legal position of 5000 what to talk about 70000 . Thus, the possession of such huge amount of foreign currency is prohibited under FEMA Regulations and the option to redeem the same under Section 125 is not there. Even if one extends the argument that the verdict of the larger bench related to a case of Indian currency, I find that in the present case the appellant does not deserve my discretion to give an option to pay fine in lieu of confiscation. In view of the totality of circumstances and the evidentiary value of facts, the appellant does not deserve an option to release the goods on payment of redemption fine. His clear active role in the act of smuggling also does not deserve mitigation of the penalty imposed. - Decided against assessee.

Summary

Issues:
- Confiscation of foreign currency
- Imposition of penalty under Section 114(i) of the Customs Act, 1962
- Legality of penalty and confiscation
- Applicability of Section 125 of the Customs Act
- Defense arguments regarding ownership of currency
- Admissibility of statements and retraction

Confiscation of Foreign Currency:
The judgment revolves around the confiscation of foreign currency amounting to Indian Rs. 32,87,673 and the imposition of a penalty under Section 114(i) of the Customs Act, 1962. The appellant was apprehended at Mumbai Airport with undeclared foreign currency in his checked-in baggage, leading to the seizure under the Customs Act. The appellant's involvement in smuggling activities, including illegal importation of goods and currency, was established through investigations and statements recorded by DRI.

Legality of Penalty and Confiscation:
The Legal Counsel argued that the currency should be released on payment of a redemption fine, citing previous tribunal cases. However, the Adjudicating Authority highlighted the deliberate attempt to export currency in violation of FEMA regulations, justifying the confiscation under Section 113 of the Customs Act. The appellant's defense of lack of knowledge and ownership claims were refuted based on the evidence and legal provisions.

Applicability of Section 125 of the Customs Act:
The appellant sought the option to pay a fine in lieu of confiscation under Section 125 of the Customs Act. The judgment referred to a Larger Bench decision and FEMA regulations to establish that the possession of such a large amount of foreign currency was prohibited, thus denying the option for redemption. The case laws cited during the hearing did not support the appellant's plea for fine payment instead of confiscation.

Defense Arguments Regarding Ownership of Currency:
The appellant's defense, claiming the currency belonged to his brother in the US, was deemed weak. The lack of a convincing explanation for importing a substantial amount of currency without declaration, coupled with changing stories and lack of supporting documents, led to the dismissal of this defense. The judgment emphasized the appellant's active role in smuggling activities based on corroborated evidence.

Admissibility of Statements and Retraction:
The judgment highlighted that the act of smuggling was not solely established through statements but through a series of facts and events, including non-declaration, detection of concealed currency, and circumstantial evidence. The retraction of statements did not diminish the weight of evidence, as the appellant's role in smuggling was established beyond doubt, leading to the rejection of the appeal and upholding of the original order.

This comprehensive analysis of the judgment provides a detailed overview of the legal issues, arguments presented, and the reasoning behind the final decision.