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TMI Blog2006 (12) TMI 378X X X X Extracts X X X X X X X X Extracts X X X X ..... e garments to M/s. Asia Brothers, Chennai. On instructions from an employee of M/s. Asia Brothers he had visited their office at Guindy, where he had signed some forms and received travellers cheques for US $ 35,000 from Shri T. Suresh Babu, Accounts Executive, M/s. Asia Brothers with instructions to hand over the same to one Shri R. Ramnath, Managing Director of M/s. Asia Brothers at Singapore. Singapore Dollar 200 was also given to him to meet expenses. Similar statement was given by Shri A. Suresh Babu, another employee of M/s. Euro Asia Apparels. As per his statement, he and his colleague Shri T. Sakthivel had been contacted by Shri T. Suresh Babu, an employee of M/s. Asia Brothers, whom they had met at his office at Guindy. He had signed certain forms given by Shri T. Suresh Babu and he was given US $ 35,000 to be handed over to Shri Ramnath at Singapore. He was also given Singapore $ 200 for expenses. Shri S. Radhakrishnan, an employee of M/s. Asia Brothers stated that the Manager of M/s. Asia Brothers. Shri T. Suresh Babu had made him sign certain papers and he was given travellers cheques for US $ 35,000 to be delivered to Shri R. Ramnath at Singapore, purported to be advan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that Rs. 17.7 lakhs for which he had issued cheques had been transferred from M/s. Asia Brothers earlier. In her statement dated 29-9-2004, Shri Komaleeswari deposed that she had visited Singapore with travellers cheques for US $ 35,000/- which she had handed over to Shri Ramnath. She had travelled to Singapore on 23-8-2004. She had worked at an exhibition and attended another exhibition in August in Singapore before returning to Chennai. Shri R. Jayavelu, an employee of M/s. Asia Brothers, in his statement dated 29-9-2004 deposed that in August 2003 he had collected US $ 25,000 in travellers cheques and had handed over the money to Shri Ramnath in Singapore. He had visited Singapore to explain functions of printing machinery in an exhibition for nearly 54 days and returned to Chennai. Shri A. Sankar, another employee of M/s. Asia Brothers in his statement dated 29-9-2004 deposed that in August 2004, he had visited Singapore when he had worked at an exhibition before returning to Chennai and had handed over US $ 35,000 to Shri Ramnath. On 6-10-2004, a similar statement was given by Shri M. Senthil Kumar, contract employee of M/s. Asia Brothers, when he stated that he had collecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gers could only encash travellers cheques and even if they were to hand over the cash to Shri Ramnath there was nothing wrong in such an arrangement as he would have looked after them when they stayed in Singapore. The fact that Shri A. Suresh Babu had used the Company fund had shown that they visited Singapore to acquire expertise and to improve business of the company. The passengers had taken foreign exchange with them as permitted under law. The Customs authorities were not empowered to go into the motivation or to deal with the business decisions to make it a ground for confiscation. He stated that Regulations 5 and 7 of Foreign Exchange Management (Export and Import of Currency) Regulations, 2000 was not applicable. The passengers had obtained the foreign exchange lawfully under Regulation 7(2)(ii). Customs authority could not enquire about the utilisation or otherwise of the money so drawn. Therefore, Section 113(d) had no application as the foreign currencies were not sought to be exported contrary to any provision; Section 113(e) spoke of concealment in a baggage and there was no such concealment of travellers cheques. Section 113(i) had no application as currency had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... coercion had been made on 15-5-2005 i.e. after about 8 months of the seizure of travellers cheques. Therefore, the statements given immediately after the seizure that the three persons had been on a pleasure trip and the travellers cheques were to be handed over to Shri Ramnath at Singapore were reliable. The statements of Shri T. Sakthivel, Shri A. Suresh Babu and Shri S. Radhakrishnan supported the finding that the travellers cheques under seizure were not part of the bona fide baggage of each of them. The circumstances of their coming into possession of the travellers cheques were corroborated by the three statements. The Commissioner found that as per AP (DIR Series) Circular No. 1, dated 1-6-2000 issued under FEMA, 1999 read with sub-section 5 of Section 10 of FEMA, 1999 (42/99), a person was required to make a declaration and to give such information as would satisfy that the transaction would not involve and was not designed for the purpose of any contravention or evasion of the provisions of the Act or any Rule, Regulation, Notification, Direction or Order issued there under. Shri T. Sakthivel was an employee of M/s. Euro Asia Apparels supplying garments to M/s. Asia Brothe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt had been transferred from M/s. Asia Brothers earlier. The adjudicating authority found that Shri Vetrivendan had abetted smuggling of foreign currencies and became liable for penalty under Section 114 of the Customs Act, 1962 read with FEMA, 1999. As regards Shri Ramnath, Managing Director of M/s. Asia Brothers, the Commissioner inferred from the statements of various persons recorded that Shri R. Ramnath had controlled and directed the activities of sending employees to Singapore, arranging travellers cheques through his Accounts Executive, Shri T. Suresh Babu and receiving the same in Singapore. This was obvious from the statements of various other employees sent earlier to Singapore who had given statements to the effect that they had handed over money on encashment of travellers cheques to him and had been given money to meet their expenses in Singapore separately. Shri Ramnath had lured employees for smuggling foreign currency out of India and rendered himself liable for penal action under Section 114 of the Customs Act read with FEMA, 1999. The Commissioner accordingly passed the following order :- (1) I order absolute confiscation of the travellers cheques totaling US ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not involve any violation of Foreign Exchange Management (Export and Import of Currency) Regulations, 2000. As the travellers cheques allowed to be taken out of India by RBI were not prohibited goods, Section 113(d) of the Customs Act was not attracted. Section 113(e) applied only to concealed goods. As the travellers cheques had been in blue pouches received from money exchangers as compliment, the travellers cheques had not been kept concealed. Section 114(i) attracted only to the goods, which were either dutiable or prohibited under Customs Act or any other law. The subject goods had been obtained lawfully as per the provisions of Foreign Exchange Management (Export and Import of Currency) Regulations, 2000 with permission from RBI. They were not prohibited goods. There was no duty on such goods. Therefore, Section 114(i) would not apply. Therefore, penalty was not backed by law. 8. It was submitted that how the foreign exchange released to a passenger was spent was not within the jurisdiction of Customs authorities to enquire or adjudicate. The FEMA authorities had enquired into the matter and the appellants had learnt that FEMA authorities were not contemplating any action i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 9-9-2004, S/Shri T. Sakthivel, A. Suresh Babu and S. Radhakrishnan bound for Singapore by IC-555 were intercepted at the arrival hall of the Chennai airport. In the statements recorded immediately on their detention and after inspection of their baggage, each of which had contained 35,000 US $ , they submitted that they were on a pleasure trip and that they were to hand over the travellers cheque for 35,000/- US $ each seized from them to Shri R. Ramnath, Managing Director of M/s. Asia Brothers. Shri T. Sakthivel and Shri A. Suresh were employees of M/s. Euro Asia Apparels, Tirupur and Shri S. Radhakrishnan was an employee of M/s. Asia Brothers. Statement recorded from Shri T.Suresh Babu, Accounts Executive of M/s. Asia Brothers on 9-9-2004 revealed that travel by the three persons had been funded by Rs. 45 lakhs allotted for the purpose by the Managing Director of M/s. Asia Brothers. Rs. 27.3 lakhs was drawn from M/s Asia Brothers and Rs. 17.7 lakhs from the account of M/s.Vendan Exim Trades which had been received from M/s. Asia Brothers earlier. As per the statement of Shri T. Suresh Babu, the visit of the three passengers to Singapore had been sponsored by M/s. Asia Brothers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for M/s. Asia Brothers. On a careful consideration of all the relevant facts, we are inclined to believe that currencies involved had been obtained for business purpose. 14. The Show Cause Notice had proposed confiscation of the seized currency under 113(d), (e) and (i) of the Customs Act, 1962 read with Foreign Exchange Management (Export Import of Currency) Regulations, 2000 under Foreign Exchange Management Act, 1999 (FEMA). As against that under the impugned order the currency had been confiscated under Section 113(d) of the Customs Act, read with Section 3(3) of Foreign Trade (Development and Regulation) Act, 1992 (FTDRA) and FEMA, 1999. As rightly contended by the ld. Counsel for the appellants we find that neither provisions of Section 3(3) of FTDRA nor Section 3 of the FEMA has any application to the case on hand. Section 3 of FTDRA empowers the Government to provide for prohibiting, restricting, or otherwise regulating export or import of any goods. The impugned order does not speak of any such notification specifying foreign currency. Section 3(3) of FEMA prohibits dealing in foreign exchange otherwise than as provided under that Act, rules or regulations made ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en for verification by the Reserve Bank. The said clause further provides that where the said person (applicant) refuses to comply with any such requirement or makes unsatisfactory compliance therewith, the authorised person shall refuse in writing to undertake the transaction and shall if he has reasons to believe that any contravention/evasion is contemplated by the person, report the matter to Reserve Bank. 3. FFMCs are advised that they shall continue to be governed by all other provisions of FLM. 4. Amendments to FLM will be issued separately. In the meantime authorized persons may bring the contents of this Circular to the notice of their constituents. 5. The directions contained in this Circular have been issued under Section 10(4) and Section 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999). Any contravention or non-observance of these directions is subject to the penalties prescribed under the Act. [Amount of foreign exchange allowed as per Note 1(a) of the circular was US $10000 at the material time.] 15. The currencies confiscated had been obtained from authorized foreign exchange dealers. If the currency dealers had suspected that the series of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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