TMI Blog2013 (12) TMI 1459X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 111(d) and 113(d) of the Customs Act is not maintainable in such circumstances as ordered by the Calcutta High Court in the case of Amit Kumar Saha (2003 (10) TMI 67 - HIGH COURT AT CALCUTTA). An officer empowered to investigate a matter can definitely take assistance of subordinate officers but substantive power of seizure and recording of statement cannot be delegated in the guise of taking help. Such actions cannot have legal validity. So a seizure made by a Superintendent for enforcing prohibitions of FEMA cannot be valid. So is the case with statements recorded. Further there is a procedure laid down in Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000. Such procedure was not followed for adjudication proceeding either. - Decided against Revenue. - C/276/2005 - Final Order No. 40672/2013 - Dated:- 20-12-2013 - Shri Mathew John, Member (T) Shri M. Rammohan Rao, DC (AR), for the Appellant. Shri B. Kumar, Sr. Advocate and M.A. Abdul Huck, Advocate, for the Respondent. ORDER In this case, assorted foreign currencies and coins equivalent to the value of Indian ₹ 10,03,922/- were seized by customs officers in Trichy on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be paid to the respondent in equivalent Indian Rupees. Aggrieved by the order of the Commissioner (Appeals) Revenue has filed this appeal. 2. Arguing for the Revenue, ld. AR submits that Sections 3 4 of 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 Reserve Bank of India. He submits that in this case, the respondent was not having necessary permission from RBI for dealing in or holding foreign currency. He relies on Section 3(c) and Explanation thereunder reading as under :- 3. Save as otherwise provided in this Act, rules or regulations made thereunder, or with the general or special permission of the Reserve bank, no person shall - (a) .... (b) .... (c) receive otherwise than through an authorized person, any payment by order or on behalf of any person resident outside India in any manner; Explanation. - For the purpose of this clause, where any person in, or resident in, India receives any payment by order or on behalf of any person resident outside India through any other person (including an authorized person) without a cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Saha. Ld. AR submits that aforecited decision of Hon. Calcutta High Court s has been maintained by Hon. Supreme Court in 2005 (182) E.L.T. A146 (S.C.). 3. 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:- (1) S. Faisal Khan v. JCC (Airport), Chennai - 2010 (259) E.L.T. 541 (Mad.) (2) Sidhharth Shankar Roy v. CC, Mumbai - 2013 (291) E.L.T. 244 (Tri.-Mumbai). 4. He relies on para 17.1 of the order in the case of Sidhharth Shankar Roy (supra) which reads as under :- 17.1 The show cause notice issued by the Asst. Commissioner of Customs (AIU) proposed to confiscate the currency under the said provision of law and to impose penalties on the appellants u/s 112 of the Customs Act. The adjudicating authority ordered absolute confiscation of the currency u/s 111(d) of the Customs Act and imposed penalties on the appellants u/s 112 of the Act. The proposal in the show cause notice for confiscation of the seized foreign currency was based on alleged violation of the restricti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Apex Court in the case of J.K. Steel Ltd. v. UOI [1978 (2) E.L.T. J355 (S.C.)] cited by the ld. JCDR that, if the exercise of a power can be traced to a legitimate source, the fact that the same was purported to have been exercised under a different power does not vitiate the exercise of the power in question . In that case, the demand notice was issued u/r 9(2) of the Central Excise Rules, 1944. Both the Asst. Collector and the Collector of Central Excise sustained the demand of duty under the said provision of law. When the Collector s order was challenged before the Government, the latter treated the demand as one under Rule 10. In further appeal, the assessee questioned this change of rule. It was in that context that the Hon ble Supreme Court rendered the above ruling. In the case of Collector of Central Excise, Calcutta v. Pradyumna Steel Ltd. [1996 (82) E.L.T. 441 (S.C.)] relied on by the ld. JCDR, the Apex Court held that mention of wrong provision of law when the power exercised was available under a different provision was itself not sufficient to invalidate the exercise of that power. Thus there is a line of decisions in support of the view taken by us with regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Government . 7. He raised an issue that officers below the rank of Deputy Commissioner are not authorized to conduct any investigation and Section 16 envisages that investigating officer shall file complaint to the adjudicating authority and thereafter only adjudication shall be taken up and no such procedure was followed in this case. In the matter of confiscation under Section 111(d), he submits that though at the time of recording the statement the respondent was made to state that all the goods were illicitly brought into India, it is clear that the respondent bought it from persons whom he could not identify since the brokers brought the persons having currency to him and the respondent had no clear knowledge regarding the origin of the goods and any confession about acts of persons not known to the person making the statement cannot be of evidentiary value. He further submits that the appellant had purchased the foreign currency from persons who were coming from abroad and who used to retain some part of the foreign currency with them. Foreign exchange up to a specified amount could be imported without any declaration as laid down in Foreign Exchange Management (Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... absence of any specific and direct evidence about the improper importation and/or exportation of the seized currency, Shri Saha had only been charged as a carrier of the foreign currency. He also submits that Indian currency equivalent to the foreign currency seized has already been paid to him and the impugned order did not permit release of foreign currency to the respondent. So the challenge is about payment of Indian currency equivalent and not release of foreign currency to the respondent. 9. In a rejoinder, the ld. AR relies on Notification S.O. 1156(E), dated 26-12-2000 as issued under Section 38 which is as under :- S.O. 1156(E), dated 26-12-2000. - In exercise of the powers conferred under sub-section (1) of section 38 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Central Government hereby authorize officers of the Customs and Central Excise, not below the rank of Deputy Commissioner and officers of the Directorate General of Revenue Intelligence not below the rank of Deputy Director, to exercise the powers conferred under the Act for the contravention referred to in clause (g) of sub-section (3) of section 6 and clause (a) of sub-section (1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so which aspect also has to be held to be not proved. So the confiscation of the goods under Section 111(d) and 113(d) of the Customs Act is not maintainable in such circumstances as ordered by the Calcutta High Court in the case of Amit Kumar Saha (supra). 13. Section 111(d) of the Customs Act, 1962 lays down that goods imported contrary to any prohibition under any other law for the time being in force are liable to confiscation. It is argued by Revenue that under FEMA there is a prohibition on trading in foreign currency and on possession of foreign currency without the required permission from the Reserve Bank of India. The argument is that the customs officers have power to enforce this prohibition and since the prohibition was clearly contravened in this case the seizure of the goods was valid even if the illegal import and attempt at export are held to be not proved. 14. Section 111(d) reads as under : SECTION 111. Confiscation of improperly imported goods, etc. - The following goods brought from a place outside India shall be liable to confiscation :- --- (d) any goods which are imported or attempted to be imported or are brought within the Indian customs wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rintendent below the rank of Deputy Commissioner and statements also was recorded by officers below the rank of the Deputy Commissioner. The argument of Revenue that an officer empowered to investigate can take assistance of his subordinates in doing the job and hence there is no infirmity in the proceedings is not a correct argument. An officer empowered to investigate a matter can definitely take assistance of subordinate officers but substantive power of seizure and recording of statement cannot be delegated in the guise of taking help. Such actions cannot have legal validity. So a seizure made by a Superintendent for enforcing prohibitions of FEMA cannot be valid. So is the case with statements recorded. Further there is a procedure laid down in Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000. Such procedure was not followed for adjudication proceeding either. 17. I also note that the Indian Currency equivalent of seized and confiscated currency is already released to the respondent and there is no chance of a release of foreign currency to a person not authorized to hold foreign currency taking place as a result of this order. 18. In the cir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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