TMI Blog2024 (2) TMI 980X X X X Extracts X X X X X X X X Extracts X X X X ..... aw for the time being in force shall be liable for confiscation. Foreign Trade (Development and Regulation) Act, 1992 r/w Foreign Trade (Regulation) Rules, 1993 read with The Foreign Trade Policy 2015-2020 and the provisions of the Foreign Exchange Management Act, 1999 read with The Foreign Exchange Management (Export and Import of Currency) Regulations, 2015 thus contain restriction on import and export of foreign currency. Section 125 of the Customs Act, 1962 gives a discretion to the Adjudicating Authority to impose fine in lieu of confiscation. There is no doubt that the currency that was attempted to be exported out of country without proper declaration by the petitioner was liable for the confiscation under the provisions of the Customs Act, 1962 and the provisions of the regulations mentioned above framed under the provisions of the Foreign Exchange Management Act, 1999. Therefore, without doubt, it is clear that import or export of foreign currency is prohibited if it is in contradiction of the above Regulation. Thus, discretion is to be exercised by the Adjudicating Officer u/s 125 of the Customs Act, 1962, to allow redemption of prohibited goods of payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Commissioner of Customs (Appeals-I), Chennai. 5. By the Impugned Order, the third respondent has accepted the Revision Petition filed by the first respondent herein against the order of the aforesaid Order of the Commissioner of Customs (Appeals-I), Chennai. 6. Operative portion of the Impugned Order reads as under:- 15. Once goods are held to be prohibited, Section 125 still provides discretion to consider release of goods on redemption fine. Hon'ble Supreme Court in case of M/s. Raj Grow Impex has laid down the conditions and circumstances under which such discretion can be used. The same are reproduced below. 71. Thus, when it comes to discretion, the exercise thereof has to be guided by law; has to be according to the rules of reason and justice; and has to be based on the relevant considerations. The exercise of discretion is essentially the discernment of what is right and proper, and such discemment is the critical and cautious judgment of what is correct and proper by differentiating between shadow and substance as also between equity and pretence. A holder of public office, when exercising discretion conferred by the statute, has to ensure that s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner of Customs (Appeals-I) partly modified Orde - in - Original No.61/2020-2021-Commissionerate-1 dated 08.06.2020 of the second respondent by holding that the petitioner was entitled for redemption of the currency seized from the person of the petitioner on payment of redemption fine. 11. Operative portion of the Order-in-Original No.61/2020-2021- Commissionerate-1 dated 08.06.2020 reads as under:- 18. Considering the above facts, I pass the following order:- ORDER i. I order for absolute confiscation of the seized foreign currency equivalent to Indian Rs.46,44,120/- (Rupees Forty Six Lakhs Forty Four Thousand one Hundred and Twenty Only) under Section 113 (d), 113 (e) 113 (h) of the Customs Act, 1962 read with FEM (Export and Import of Currency) Regulations, 2015. ii. I impose a penalty of Rs.5,00,000/-(Rupees Five Lakh Only) on the passenger, Smt. Rayavarapu Sridevi w/o Shri.E.Subramaniam under Section 114 of the Customs Act, 1962. 12. Operative portion of the Order in Appeal Airport, Cus.I No.206/2020 dated 20.08.2020 of the Commissioner of Customs (Appeals-I) reads as under:- 11. Having regard to the above discussions, the pax's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2018. 16. Section 11 of the Customs Act, 1962 is in Chapter IV of the Customs Act, 1962. It deals with Prohibition on Importation and Exportation of Goods . Section 11(1) of the Customs Act, 1962, empowers the Central Government to prohibit import and export of goods either absolutely or subject to such Notification for any of the purpose specified in Sub-Section (2). Sub-Section (2) to Section 11 of the Customs Act, 1962 reads as under:- Section 11. Power to prohibit importation or exportation of goods (1) If the Central Government is satisfied that it is necessary so to do for any of the purposes specified in sub-section (2), it may, by notification in the Official Gazette, prohibit either absolutely or subject to such conditions (to be fulfilled before or after clearance) as may be specified in the notification, the import or export of goods of any specified description. (2) The purposes referred to in sub-section (1) are the following: (a)the maintenance of the security of India; (b) the maintenance of public order and standards of decency or morality; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Customs Act, 1962 Section 59 of the Finance Act, 1959 11(3) Any prohibition or restriction or obligation relating to import or export of any goods or class of goods or clearance thereof provided in any other law for the time being in force, or any rule or regulation made or any order or notification issued thereunder, shall be executed under the provisions of that Act only if such prohibition or restriction or obligation is notified under the provisions of this Act, subject to such exceptions, modifications or adaptations as the Central Government deems fit. 59.In the Customs Act, in section 11, after sub-section (2), the following sub-section shall be inserted with effect from such date as the Central Government may, by notification in the Official Gazette, appoint, namely:- (3) Any prohibition or restriction or obligation relating to import or export of any goods or class of goods or clearance thereof provided in any other law for the time being in force, or any rule or regulation made or any order or notification issued thereunder, shall be executed under the provisions of that Act only if such prohibition or restr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he limits of any customs area for the purpose of being exported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force shall be liable for confiscation. 25. Section 113(d) of the Customs Act, 1962 reads as under:- any goods attempted to be exported or brought within the limits of any customs area for the purpose of being exported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force 26. The definition goods in Section 2(22) (d) of the Customs Act, 1962 includes currency and negotiable instruments . Section 2(33) of the Customs Act, 1962 defines the expression prohibited goods . 27. As per the definition of prohibited goods in Section 2(33) of the Customs Act, 1962, prohibited goods? means any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with. 28. Section 2(22)(d) and Section 2(33) of the Customs Act, 1962 read as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Currency) Regulations, 2015 any person may take out of India unspent foreign exchange brought back by him to India while returning from travel abroad and retained in accordance with the Foreign Exchange Management (Possession and Retention of Foreign Currency) Regulations, 2015. 31. Regulation 7(3)(b) of The Foreign Exchange Management (Export and Import of Currency) Regulations, 2015 reads as under:- 7. Export of foreign exchange and currency notes:- (3) Any person may take out of India, - (b) unspent foreign exchange brought back by him to India while returning from travel abroad and retained in accordance with the Foreign Exchange Management (Possession and Retention of Foreign Currency) Regulations, 2015; 32. The Reserve Bank of India has issued A.P.(DIR Series) Circular No.45/2015-16 [(1)/6(R)] dated 04.02.2016. Relevant portion of A.P.(DIR Series) Circular No.45/2015-16 [(1)/6(R)] dated 04.02.2016 reads as under:- 2. Synopsis of the new regulations is given as under: A. Export and import of Indian currency and currency notes b) Any person resident outside India, not being a citizen of Pakistan or Bangladesh, and visiting India, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulations, 2015 thus contain restriction on import and export of foreign currency. 35. Section 125 of the Customs Act, 1962 gives a discretion to the Adjudicating Authority to impose fine in lieu of confiscation. There is no doubt that the currency that was attempted to be exported out of country without proper declaration by the petitioner was liable for the confiscation under the provisions of the Customs Act, 1962 and the provisions of the regulations mentioned above framed under the provisions of the Foreign Exchange Management Act, 1999. 36. Therefore, without doubt, it is clear that import or export of foreign currency is prohibited if it is in contradiction of the above Regulation. 37. If import or export of goods is prohibited either under the provisions of the Customs Act, 1962, or under any other law time being in force, such goods can be ordered to be confiscated under Section 112 Section 113 of the Customs Act, 1962. 38. Under Section 114 of the Customs Act, 1962, penalty can also be imposed for attempting to export goods improperly. Section 113 and Section 114 of the Customs Act, 1962 go hand in hand. They read as under:- Section 113 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under a claim for drawback under section 74; k) any goods cleared for exportation 3 *** which are not loaded for exportation on account of any wilful act, negligence or default of the exporter, his agent or employee, or which after having been loaded for exportation are unloaded without the permission of the proper officer; l) any specified goods in relation to which any provisions of Chapter IVB or of any rule made under this Act for carrying out the purposes of that Chapter have been contravened. 114. Penalty for attempt to export goods improperly, etc. Any person who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 113, or abets the doing or omission of such an act, shall be liable:- i. in the case of goods in respect of which any prohibition is in force under this Act or any other law for the time being in force, to a penalty 5 [not exceeding three times the value of the goods as declared by the exporter or the value as determined under this Act], whichever is the greater; ii. in the case of dutiable goods, other than prohibited goods, subject to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of such goods. (3) Where the fine imposed under sub-section (1) is not paid within a period of one hundred and twenty days from the date of option given thereunder, such option shall become void, unless an appeal against such order is pending. Explanation. For removal of doubts, it is hereby declared that in cases where an order under sub-section (1) has been passed before the date on which the Finance Bill, 2018 receives the assent of the President and no appeal is pending against such order as on that date, the option under said sub-section may be exercised within a period of one hundred and twenty days from the date on which such assent is received. 41. The Hon ble Supreme Court in Union of India Vs. Raj Grow Impex LLP, 2021 (377) E.L.T. 145 (S.C.), held that when export or import have a far reaching impact on the national economy. Therefore, discretion under Section 125 of the Customs Act, 1962 needs to be exercised with caution. Paragraph No.82 of the said judgment reads as under:- 82. The sum and substance of the matter is that as regards the imports in question, the personal interests of the importers who made improper imports are pitted against the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owner is not known, the person from whose possession or custody such goods have been seized, an option to pay in lieu of confiscation such fine as the said officer thinks fit: 125(1) Option to pay fine in lieu of confiscationWhenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and,(*) in the case of any other goods, (shall) give to the owner of the goods or, where such owner is not known, the person from whose possession or custody such goods have been seized, an option to pay in lieu of confiscation such fine as the said officer thinks fit: (*) The word shall shifted. 46. Thus, discretion is to be exercised by the Adjudicating Officer under Section 125 of the Customs Act, 1962, to allow redemption of prohibited goods of payment of redemption fine. The Appellate Commissioner has modified by giving an option to the petitioner to pay redemption fine and has reduced the penalty. Although the Central Government is empowered to file revision to modify any order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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