2016 (2) TMI 310 - HC - Customs

Illegal acquisition of foreign currency - Both the notices, however, placed sufficient evidence in support of the lawful acquisition of 1000 Euros each for authorized dealer. As regards 110 Euros, in his opinion, were lying unspent from their previous foreign visit. - These lawfully acquired 2110 Euros, were, however, used to conceal the 34000 Euros. - Held that - It is not in dispute that foreign currency possessed by the petitioner consisted of Euros 23195 and Euros totalling Euros 36120. Considering the provisions of the Customs and FEMA Act, the Appellate Authority, i.e. Commissioner of Customs (Appeals) upheld the petitioner s contention that foreign currency is not declared to be prohibited goods under provisions of either of above Acts, accordingly vide order dated 17.10.2007 directed the respondent department to release entirety of above described foreign currency to the petitioner. Thus, if the Department has accepted the contention of the petitioner in adjudication proceedings and released the foreign currency in his favour, then he cannot be held liable under Section 132 of the Customs Act. - Decided in favor of petitioners.

Issues Involved:
1. Quashing of proceedings in complaint case no. 19/1/06.
2. Legality of the foreign currency confiscation and penalties under the Customs Act, 1962.
3. Applicability of Section 132 and 135 of the Customs Act, 1962.
4. Impact of the appellate authority's findings on the criminal proceedings.

Issue-wise Detailed Analysis:

1. Quashing of Proceedings in Complaint Case No. 19/1/06:
The petitioner sought to quash the proceedings in complaint case no. 19/1/06 under Section 482 Cr.P.C. The petitioner's counsel argued that since the petitioner had been exonerated for offences under Section 135 of the Customs Act, 1962, the trial court proceedings could not continue. The court agreed, referencing the case of Karamveer Singh v. Rajesh Arora, which established that if a person is exonerated on merits in departmental adjudication, criminal proceedings on the same facts should not continue. Consequently, the court quashed the complaint and all proceedings emanating from it.

2. Legality of the Foreign Currency Confiscation and Penalties:
The Additional Commissioner of Customs had ordered the absolute confiscation of a significant amount of Euros and imposed personal penalties on the petitioner and another individual. The appellate authority later modified this order, noting that foreign currency is not prohibited under the Customs Act, 1962 or FEMA. The appellate authority determined that the foreign currency should be released to the petitioner upon payment of a fine, reducing the penalties imposed. The court found that the appellate authority's decision was correct and that the confiscation of legally acquired foreign currency was unwarranted.

3. Applicability of Section 132 and 135 of the Customs Act, 1962:
Section 132 deals with false declarations in customs transactions, punishable by imprisonment or fine. Section 135 pertains to evasion of duty. The appellate authority's findings exonerated the petitioner under Section 135, as the foreign currency was not declared as prohibited. The court concluded that since the petitioner was exonerated under Section 135, the consequences under Section 132 became irrelevant. The court emphasized that the adjudication order was passed on merit, and thus, the criminal prosecution could not continue.

4. Impact of the Appellate Authority's Findings on the Criminal Proceedings:
The appellate authority's findings had a significant impact on the criminal proceedings. The authority found that the petitioner lawfully acquired part of the foreign currency and that the confiscation of this currency was illegal. The court noted that the adjudication order was based on merit and that the same set of facts and circumstances applied to the criminal case. Therefore, the criminal prosecution could not be justified. The court referenced the Supreme Court's judgment in Radheyshyam Kejriwal vs. State of West Bengal, which supported the view that exoneration in departmental proceedings on merits should lead to the dismissal of related criminal charges.

Conclusion:
The court allowed the petition, quashing the complaint and all related proceedings. The court upheld the appellate authority's decision that the foreign currency was not prohibited and should be released to the petitioner. The court emphasized that the petitioner's exoneration in departmental proceedings on merits precluded the continuation of criminal prosecution under the same facts. The petition was allowed with no order as to costs, and the related application was dismissed as infructuous.

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