COMMISSIONER OF CUSTOMS Vs. L. RAJKUMAR

JUDGEMENT

(1.) IN this case, assorted foreign currencies and coins equivalent to the value of Indian Rs. 10,03,922 were seized by the customs officers in Trichy on November 18, 2003 at 6.30 a.m. from the respondent while riding a two wheeler on the Cauvery bridge in Trichy. Since under the Foreign Exchange Management Act, 1999 (in short, "FEMA") and the Rules and Regulations made thereunder an individual was not authorised to possess foreign currency of such high value the officers conducted investigations. Since it appeared that the currencies were smuggled into India and also was intended for smuggling out of India, further proceedings were initiated by recording the statement of Shri L. Rajkumar (respondent herein) from whose possession the said currencies were seized. In his statement dated December 23, 2003 Shri Rajkumar admitted that he bought these foreign currencies through brokers. He also stated that he knew that seized foreign currency was illicitly imported into India. He also stated that he was taking the currency for giving to traders in Burma Bazaar in Chennai for a commission for smuggling it to Singapore. Based on such statement, the customs officials made out a case that the currencies were liable for confiscation under section 111(d) and under section 113(d) of the Customs Act, 1962. On adjudication, the seized currency was absolutely confiscated. The vehicle was confiscated under section 115 of the Customs Act and ordered to be released on payment of redemption fine of Rs. 1,000. Further penalty of Rs. 40,000 under section 112 and Rs. 10,000 under section 114 of the Customs Act, 1962 were imposed. Aggrieved by the order, the respondent filed an appeal with the Commissioner (Appeals). The Commissioner (Appeals) held that lower authority solely relied upon the statement of the respondent and arrived at the conclusion that foreign currencies were illicitly imported into India and attempted to be illicitly exported out of India and the said statement was neither corroborated by any other statement nor by any other evidence. The Commissioner (Appeals) held that the respondent denied that foreign currency was illicitly imported into India but was only collected through local brokers. As regards the attempted illicit export, there is no such attempt as the respondent was intercepted at Trichy Cauvery bridge having possession of the foreign currencies and not anywhere near a customs barrier. Consequently, he set aside the order of the lower authority and ordered that value of the foreign currency absolutely confiscated should be paid to the respondent in equivalent Indian rupees. Aggrieved by the order of the Commissioner (Appeals) Revenue has filed this appeal. Arguing for the Revenue, learned authorised representative submits that sections 3 and 4 of the FEMA clearly puts restriction on dealing and holding or transferring any foreign exchange or foreign currencies by a resident in India, without necessary permission from the Reserve Bank of India. He submits that in this case, the respondent was not having necessary permission from the RBI for dealing in or holding foreign currency. He relies on section 3(c) and the Explanation thereunder reading as under:

(2.) HE further argues that in view of the prohibition under section 111(d) of the Customs Act, the goods becomes liable to confiscation if there is contravention of prohibition under any other law. He also relies on the following decisions:

(3.) HE also relies on Commissioner of Customs (Air.) v. Samynathan Murugesan : [2009] 247 ELT 21 (Mad.) to argue that prohibited goods could not be allowed to be redeemed on payment of redemption fine. He relies on the decision of the hon'ble Supreme Court in Om Prakash Bhatia v. Commissioner of Customs : [2003] 1 RC 212 : [2003] 155 ELT 423 (SC) to interpret the meaning of "prohibited goods". He further relies on Notification No. 1156(E), dated December 26, 2000 issued under sub -section (1) of section 38 of the FEMA, 1999 under which the officers of Central excise not below the rank of the Deputy Commissioner are given powers to investigate matters referred to in clause (g) of sub -section (3) of section 6 in the matter of export, import or holding of currency or currency notes. He therefore submits that Central excise officers had the jurisdiction to investigate and adjudicate the case.