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2013 Supreme(Mad) 3443
High Court of Judicature at Madras
CHITRA VENKATARAMAN & T.S. SIVAGNANAM, JJ.
The Commissioner of Customs (Air), Chennai
Versus
Veerachi Vithayaphalert & Another
CMA No. 762 of 2006 & CMP. No. 3035 of 2006
Decided on: 26-09-2013
Advocate Appeared:
For the Petitioner:S. Thirumavalavan, Advocate.
For the Respondents:R1, T. Ramesh, Advocate, R2, Tribunal.
The main legal point established in the judgment is that stringent conditions are imposed under the Regulations with regard to the export or import of foreign currency, and the power of confiscation under the Customs Act 1962 is applicable to the illicit exportation of currency.
Headnote:
Currency - Illicit Exportation - Customs Act 1962, FEMA 1999, Foreign Exchange Management (Export & Import of Currency) Regulations, 2000 - The judgment discusses the provisions of the Customs Act 1962, FEMA 1999, and the Foreign Exchange Management (Export & Import of Currency) Regulations, 2000. It highlights the definitions of currency, capital account transactions, and the regulations related to the export and import of foreign currency. The court emphasizes the prohibition on export and import of foreign currency and the power of confiscation under the Customs Act 1962.
Fact of the Case:
The first respondent, a foreign national, was found carrying assorted foreign currencies without declaring them to the Customs authorities. The adjudicating authority ordered for absolute confiscation of the currency under the Customs Act 1962 and FEMA 1999. The Tribunal allowed the appeal, stating that there was no requirement to make a declaration at the time of leaving India about the possession of currency.
Finding of the Court:
The court found that the Tribunal's decision was unsustainable and without considering the effect of FEMA 1999 and the Regulations framed thereunder. It emphasized the stringent conditions imposed under the Regulations with regard to the export or import of foreign currency and the power of confiscation under the Customs Act 1962.
Issues: The issues revolved around the requirement to make a declaration at the time of leaving India about the possession of currency, the power of the Customs authorities to invoke Section 113(d) & (h) of the Customs Act, and the legality of absolute confiscation of the currency.
Ratio Decidendi: The court held that the first respondent was not entitled to import or export foreign currency without complying with the provisions of the Regulations. It also rejected the contention that there was no power to confiscate the currency under Section 113(d) of the Customs Act.
Final Decision: The order of the Tribunal was set aside, and the order of the adjudicating authority for absolute confiscation of the currency under the Customs Act 1962 and FEMA 1999 was confirmed. The first respondent was granted liberty to approach the authorities concerned under the provisions of FEMA.
The net result of this judgment is that the court has upheld the order of confiscation of the foreign currency carried by the first respondent, a foreign national, for attempting to export currency without proper declaration or compliance with regulations. The court has rejected the Tribunal's decision that there was no legal requirement to declare foreign currency at the time of leaving India and has emphasized that the regulations under FEMA and the Customs Act impose strict restrictions and prohibitions on the import and export of foreign currency. Consequently, the court confirmed the authority of the Customs Department to confiscate the currency when such regulations are violated, and it set aside the Tribunal's order allowing the appeal. The first respondent was also granted the liberty to approach the authorities under FEMA for remedies available under that law.
T.S. Sivagnanam, J.
1. This appeal by the Revenue, is directed against the Final Order No.681 of 2005, dated 28.04.2005, passed by the CESTAT.
2. The first respondent is a foreign national, holding a Thailand passport and he was a passenger bound for Singapore by Singapore Airlines Flight on 14.03.2001 from Chennai. The officers of the DRI, Chennai Zonal Unit questioned the first respondent about the possession of foreign currency. The first respondent replied that he was having approximately US$ 20,000 in his hand baggage and he had not declared the same to the Customs Authorities. The first respondent further informed that he was having US$3310 in the form of Traveller's Cheque for which the endorsement has been made in his passport. On an examination of his baggage in the presence of the witnesses, it was found that the first respondent was carrying assorted foreign currencies approximately Rs.13.95 lakhs and the same was recovered. A query was made to the first respondent about the carrying of foreign currencies, he appears to have stated that he brought the same for the purpose of his nephew's educational expenditure and for his miscellaneous expenditure in India and he does not possess any currency declaration form for the said currencies. Since the first respondent did not possess any valid documents for the illicit exportation of the foreign currencies, the same were seized under the provisions of the Customs Act. The Traveller's Cheques having been endorsed in the passport, were returned to the first respondent. In the statement given by the first respondent under Section 108 of the Customs Act, the first respondent accepted the offence pleaded for leniency and the matter may be finalised at the earliest by waiving the issuance of show cause notice and affording personal hearing. Further, the first respondent stated that he had not declared foreign currency at the time of arrival in Chennai Airport due to his carelessness and that the currency brought by him for the purpose of his nephew's school admission and to meet small expenses at various Airports during his business trips and he was working as General Manager of processing business in export of frozen shrimp from India to all over the world. The adjudicating authority, after considering the submissions made, ordered for absolute confiscation of currency under Section 113(d) and (h) of the Customs Act 1962, read with Section 6(3) of the Foreign Exchange Management Act, 1999, (hereinafter referred to as "FEMA"). Challenging the said order, the first respondent preferred appeal to the CESTAT.
3. The Tribunal allowed the appeal by order dated 28.04.2005, by observing that as per law, there was no requirement to make a declaration at the time of leaving India about the possession of currency, and that the currency in possession of the first respondent was also within the limit permitted by Reserve Bank of India. Challenging the said order, the Revenue has filed the present appeal, which has been admitted on the following substantial question of law:-
Whether the lower Tribunal is correct in law in its decision that the currency notes were within the limit provided by Reserve Bank of India Regulations without considering the relevant provisions under Section 77 of the Customs Act, 1962; Section 6(3) of Foreign Exchange Management Act, 1999; Section 7 of Foreign Exchange Management (Export & Import of Currency) Regulations, 2000 and the provisions found in Foreign Exchange Management (Possession and Retention of Foreign Currency) Regulations, 2000, though the original authority reasoned its finding based on the above law?
4. The learned counsel for the appellant contended that the findings of the Tribunal that there is no requirement under law to make a declaration at the time of leaving India about the possession of foreign currency, is incorrect. Since the declaration is a prerequisite and the first respondent neither made a declaration at the time of arriva
