ORDER
T. Anjaneyulu, Member (J)
1. Heard both sides.
2. This is an appeal against an Order-in-original dated 30.03.2005 passed by the Commissioner of Customs, C.S.I. Airport, Mumbai.
3. The appellants Shri. Rajinder Nirula and Shri. Tilak Raj Sharma were apprehended by the officers of the Directorate of Revenue Intelligence on 01.08.2002 at the Air India Executive waiting room situated at the transit lounge of the Chhatrapati Shivaji International Airport, Mumbai. Shri Rajinder Nirula was to travel by Air India flight from Mumbai to Ahmedabad as a domestic passenger in the international flight. Shri Tilak Raj Sharma was in transit in the midst of his journey from Bangkok to Dubai via Mumbai. US $ 70,000 and four mobile phones (with chargers) valued at Rs. 20,000/- were seized from them.
4. A Show-Cause-Notice was issued to them, inter alia, alleging that the foreign currency was being attempted to be exported out of India in contravention of the provisions of Sections 5 and 7 of the Foreign Exchange Management Act, 1999 with Section 11(1) of the Customs Act, 1962 and hence liable to confiscation under the provisions of Section 113(d), (e) and (h) of the Customs Act, 1962.
5. The impugned Order-in-Original held that the foreign currency in question was handed over by Shri Rajinder Nirula, the domestic passenger to Shri Tilak Raj Sharma, the international passenger in transit at the transit lounge to be carried out of India by the latter.
6. The ld. Commissioner of Customs, the adjudicating authority considered the following facts, inter alia, namely:
i) The panchanama stated that the officers and the witnesses were keeping surveillance over the two persons and after the bags were exchanged, approached the said persons and apprehended them.
ii) Shri Rajinder Nirula made 16 trips by Air India in the domestic sector from March 2002 to August 2002 and Shri Tilak Raj Sharma also traveled 51 times between Mumbai -Bangkok-Hongkong-Dubai within a period of seven months. Of these, on seven occasions both the persons, either had the opportunity to meet each other in the transit lounge or traveled together in the international flight.
iii) Both the persons had confessed in their statements recorded under Section 108 of the Customs Act, 1962 about the modus operandi of the domestic passenger handing over the currency at the transit lounge to the international passenger to carry out the same out of India and their subsequent retractions were not to be considered.
iv) Though the currency was shown by Shri Rajinder Nirula to have been brought into India on 20.04.2002 on his arrival from Dubai, since he was not entitled to keep it for more than 90 days, the currency seized on 01.08.2002 was not the same currency.
v) On 01.08.2002, Shri Rajinder Nirula, for traveling as a domestic passenger, filed a declaration with the customs authorities wherein he did not declare the foreign currency of US $ 70,000/-
7. On these findings, the ld. Commissioner ordered confiscation of the foreign currency amounting to US $ 70.000/- without any option for redemption and also imposed a penalty of Rs. 3,00,000/- each on Shri Rajinder Nirula and Shri. Tilak Raj Sharma.
8. The appellants, aggrieved by the said Order-in-Original, submitted the following points for consideration:
i) Erstwhile Foreign Exchange Regulations Act, 1973 (FERA), by Section 67 of FERA deemed the prohibition under Section 13 of FERA (prohibiting the import and the export of foreign currency without the general or the specific permission of the Reserve Bank of India) as a prohibition under Section 11 of the Customs Act, 1962 but the subsequent enactment, Foreign Exchange Management Act, 1999 (FEMA), does not contain an equivalent provision.
ii) The foreign currency seized was brought from abroad on 20.04.2002 by Shri Rajinder Nirula and the same was declared under Currency Declaration Form at the C.S.I. Airport, Mumbai.
iii) The statements recorded under Section 108 of the Customs Act, 1962 were all retracted at the first available opportunity.
iv) There were contradictions regarding the farts narrated in the seizure panchanama and the application dated 09.08.2002 made by the DRI officers to the Special Metropolitan Magistrate inasmuch as the former stated that the interception was after the bags were exchanged and the latter stated the interception was while the foreign currency was being handed over,
v) Currency and baggage are distinct items as per Section 2(22) of the Customs Act, 1962 and no declaration was prescribed for currency under Section 77.
vi) Though Shri Tilak Raj Sharma had traveled 51 times within a period of seven months, only on 7 occasions the offers suspected of the possibility of Shri Rajinder Nirula meeting him and again without any corroborating evidence to suggest any smuggling activity.
vii) Currency is not among the ‘prohibited goods’ even for exports and absolute confiscation was not tenable.
viii) Since the foreign currency is not an item covered by the provisions of Section 123 of the Customs Act, 1962, the burden of proof lies on the department.
ix) Provisions of the Customs Act, 1962 are completely inapplicable to any alleged contravention of FEMA, 1999.
9. The ld. DR submits the following for consideration:
i) Free and undeclared import and export of currency from one country to another country poses serious threat to any society. Such movement of currency facilitates transaction in hand substances including narcotic drugs. It also facilitates financing of illegal and terrorist activities by foreign elements. It also facilitates money laundering by criminal elements. In order to protect nation from such danger most countries have imposed restriction on the movement of money except through banking channels. International banking is not only the easiest mode of transfer of funds from one country to another but is also the safest one. The permission for import and export of currency by passenger is an exception to the restriction. Free flow of foreign exchange into an out of the country in the context of liberalized global economy ought to be accorded the highest priority but this cannot be allowed in the face of attempts to misuse the liberal foreign exchange management system, which can and does result into money laundering activities.
ii) Passenger shall follow the law, which has become very liberal in comparison to earlier stringent law. Liberal statutes have imposed trust on the passenger. He shall not abuse the trust conferred upon him by the Parliament. The trust imposed on him represents the interest on entire nation.
iii) Even from the law point absolute confiscation of foreign currency was sustainable. It was stated that the declaration from to be submitted to proper officer of customs was essential. As seen from the declaration form (copy attached) no declaration of foreign currency was made by the appellant except watch, m/p Samsung, ring & bracelet and Rs. 7000/-
iv) In accordance with the provision to Regulation 6(3) of Foreign Exchange Management (Export & Import of Currency) Regulation 2000, issued under Clause (9) of Sub-section (3) of Section 6 of FEMA, 1999 declaration of foreign currency before the Customs Officer is mandatory.
10. I have carefully considered the arguments and all the documents presented. The first point that craves for attention is the factual position related to the seizure of the foreign currency. It is not disputed by any of the parties concerned that the foreign currency was seized at the transit lounge of the international airport. The petitioners point out that the narration in the panchanama was of the intervention after the exchange of the bags whereas the affidavit of the DRI officer was mentioning of the intervention at the time of exchange of the bags. This no way negates the fact that in either case the foreign currency was seized at the international airport. If the advantage of the perceived confusion is permitted it leads to two probabilities. Since the two persons were present and the foreign currency was seized from them, either before or after the exchange between them, it turns out that either Shri Rajinder Nirula brought it in as a domestic passenger or Shri Tilak Raj Sharma brought it along with him from abroad as an international passenger in transit through Mumbai. Since neither of them claim that the money was brought by Shri Tilak Raj Sharma, it boils down to the truth that there is not other version of the event from any quarter and the version acceptable to one and all concerned is that it was Shri Rajinder Nirula who was a domestic passenger booked for traveling from Mumbai to Ahmedabad was the person who brought in the foreign currency.
11. The next point that has to be considered is the set of events and facts related to Shri Rajinder Nirula. Shri Rajinder Nirula filed a declaration as a domestic passenger and did not declare the foreign currency of US $ 70.000/-in it. This declaration is not mandatory as the same is not prescribed under any of the statutes. Hence the non-declaration of the foreign currency in it by the domestic passenger, ipso facto, does not render the goods liable to confiscation under the provisions of the Customs Act, 1962. Nevertheless the role of the said declaration can not be neglected altogether. The non-declaration of the foreign currency confirms the theory that the said currency was brought by Shri Rajinder Nirula to be handed over to the international passenger and hence to aviod further complications in case of subsequent verification at Ahmedabad he refrained from declaring the same.
12. It is claimed on behalf of Shri Rajinder Nirula that he was in fact in possession of the Currency Declaration Form (CDF) at the time of the interception on 01.08.2002 but the same was not shown in the panchanama drawn by the DRI officers. Since the preparation appeared to be to hand over the foreign currency to the international passenger and not to leave any trail at a later stage, it fits into the scheme of things if only Shri. Rajinder Nirula did not carry the CDF on his sojourn. The co-relation between the currency and the declaration can any time be established and it is not necessary that the person should carry it along with him all the time. On the contrary, the presence of CDF might have jeopardized his scheme if the same was with him after he succeeded in handing over the currency to the international passenger. For these reasons I do not find any substance in the claim that the CDF was available with Shri Rajinder Nirula and that the DRI officers deliberately omitted to show the same in the panchanama.
13. Now, I take up the issue of the peculiar combination of the air travels of the two persons, namely, Shri Rajinder Nirula and Shri Tilak Raj Sharma. The theory propagated in the Show Cause Notice was that Shri Tilak Raj Sharma made 51 trips as international passenger, Shri Rajinder Nirula made 16 trips as domestic passenger in the international flights and the two had opportunity to meet at the lounge or to travel together on seven occasions. This time co-relation factor has been taken up by the Ld. Commissioner to have been an indelible evidence to show the novel modus operandi of exchanging the currency at the transit lounge.
14. The dates of the seven occasions wherein the two persons had the change of meeting at the transit lounger of international airport are: 17.03.02, 21.03.02, 13.04.02, 27.04.02, 01.05.02, 19.05.02 and 25.07.02. It is on record that Shri Rajinder Nirula arrived from Dubai on 16.04.2002 and obtained a Currency Declaration Form in proof of having brought with him US $ 70,000 into India. The first three of the seven occasions precede the date of the CDF as a cover for any exchange of the foreign currency. This fact coupled with the other facts that of the trips of the international passenger and the 16 trips of the domestic passenger only 7 could be mapped to coincide and that these 7 trips only 4 were subsequent to the issuance of the CDF leads one to reject the theory that all these trips were arranged only for the exchange of currency.
15. At this juncture I take up another point pertaining to the issue of CDF and the consequences of retaining the foreign currency beyond the permissible period. The Ld. Commissioner in the impugned order observed that the FEMA (Realisation, Repatriation and Surrender of foreign exchange), Regulations permitted the facility of retention of foreign exchange to a period of 90 days in personal custody and that since the law did not permit indefinite holding of foreign exchange, the seized currency was not to be taken as the same currency for which the CDF was issued. In the absence of any deeming provisions regarding the currency retained after 90 days, would it not be prudent to say that after 90 days the foreign exchange would be deemed illegal? Does the law say that after 90 days the foreign exchange would be deemed to have been not brought under the CDF? Preponderance of probability, no doubt, stretches the limits for a quasi-judicial authority to apply less stringent degrees of proof.
16. For the reasons cited above, I do not subscribe to the view that the rips were only for the purpose of exchange of currency on all the occasions. Again for the same reasons I find it difficult to consider that the foreign currency was not the same for which the CDF was issued on the arrival of Shri Rajinder Nirula on 16-04.022.
17. The Show-Cause-Notice alleged that the notices contravened the provisions of Sections 5 and 7 of the FEMA, 1999 read with Section 11(1) of the Customs Act, 1962, and Section 13(2) of FEMA, 1999. Section 5 of FEMA deals with the current account transactions with an authorized person and Section 7 deals with the export of goods and Services. Section 11(1) of the Customs Act, 1962 empowers the Central Government to prohibit the import of goods of any specified description by way of notifications. Strangely none of the plethora of notifications issued by the Central Government contain any entry pertaining to the export of foreign currency. Section 13(2) of FEMA, 1999 deals with the adjudication of the offences under provisions of the Customs Act, 1962. Strange are the ways of the investigating agencies to coagulate all irrelevant provisions of the status to give an unsustainable Show Cause Notice.
18. Despite all these aspects, since the counsel for the appellant submitted that he did not want to challenge the confiscation of the foreign currency, I refrain from setting aside the confiscation of the foreign currency. Nevertheless the discussions on the various issued involved had to be entered into for the purpose of deciding the issue of allowing an option for the redemption of the foreign currency confiscated and also to re-consider the quantum of penalties.
19. Now I take up the issue of allowing the confiscated foreign currency to he redeemed. Contrary to the findings of the ld. commissioner elaborated in the impugned Order-in-Original, in the aforesaid discussions I have detailed the reasons for holding that the investigating agency could not assail the claim of Shri Rajinder Nirula that the foreign currency seized was the same brought in by him on his arrival from Dubai. In deciding the issue of allowing redemption I find that the Hon’ble High Court of Delhi in the matter of Mohd. Ayaz v. Union of India , not only endorsed the redemption option extended but also ordered the reduction of the same, Likewise in the case of Pankaj Jagda a Bench of this forum endorsed the redemption option extended in the case of confiscated foreign currency. Judicial discipline need to be emphasized in many a word. In addition to these, the circular bearing No. 33/2005 dated 02.08.2005 exhorts that in the case of export of goods, except for prohibited /contraband goods, the seized goods should be released provisionally and allowed to be exported, albeit, on conditions.
20. Considering the totality of the circumstances and the peculiar facts of the case, I find that it would be appropriate to allow the confiscated foreign currency amounting to US $ 70,000 to be redeemed on payment of a fine of Rs. 3,00,000/-(Rupees Three Lakhs only). If the foreign currency is not available, the Indian equivalent currency as on the date of this Order should be paid. I order that the penalty imposed on Shri. Rajinder Nirula and Shri Tilak Raj Sharma be reduced to Rs. 50,000/- (Rupees Fifty Thousand only Each.
(Pronounced in Court on 25.4.2006.)