By TIOL News Service

MUMBAI, JULY 27, 2017: THE Commissioner of Customs, CSI Airport, Mumbai had inter alia held thus -

(a) I order absolute confiscation of the impugned foreign currency i.e. 70,000 US Dollars equivalent to Indian Rs. 31,11,500/- seized from Shri Pankaj Jhunjhunwala under Section 113 (d), (e) & (h) of the Customs Act, 1962, read with section 6 (3) (g) of FEMA, 1999 and the Regulations made thereunder

(b) I impose penalties under Section 114 (i) of the Customs Act, 1962, for attempted smuggling of the above said foreign currency, in the following manner:

(i) A penalty of Rs 4,00,000/- (Rs. Four Lacs only) on Shri Pankaj Jhunjhunwala.

(ii) A penalty of Rs 5,00,000/- (Rs. Five Lacs only) on Shri Satish Chaudhary.

(iii) A penalty of Rs 5,00,000/- (Rs. Five Lacs only) on Shri Om Prakash Jhunjhunwala.

(c) I uphold the confiscability of the USD 3,50,000 equivalent to Indian Rs. 1,57,50,000/- approximately, smuggled out by Shri Pankaj Jhunjhunwala on his previous five visits , as they are not available physically, under the provisions of Section 113(d), (e) and (h) of the Customs Act, 1962 read with the FEMA 1999 and the Regulation made thereunder. I impose a fine of Rs.1,57,50,000/- (Rs. One Crore fifty seven lacs and fifty thousand only) under Section 125 of the Customs Act, 1962

(d) I impose penalties under Section 114 (i) of the Customs Act, 1962, for smuggling out the above said foreign currency, in the following manner:

(i) A penalty of Rs.15,00,000/- (Rs. Fifteen Lacs only) on Shri Pankaj Jhunjhunwala

(ii) A penalty of Rs.15,00,000/- (Rs. Fifteen Lacs only) on Shri Satish Chaudhary

(iii) A penalty of Rs 15,00,000/- (Rs. Fifteen Lacs only) on Shri Om Prakash Jhunjhunwala.

The appellants filed appeals before the CESTAT in the year 2007/2008.

The matter was heard in February 2012 and an order came to be passed by the Division Bench on 06.03.2012.

The Member (Judicial) took the following view -

8.

(a) It was held that the foreign currency of Rs.70,000 USD was held liable for confiscation and same can be redeemed on payment of redemption fine of Rs.5,00,000/-. A penalty of Rs.4,00,000/- (Rupees four lakhs) has also been imposed on Shri Pankaj Kishore Jhunjhunwala as the foreign currency was held liable for confiscation, therefore he is liable for imposition of the penalty under Section 114(i) of Customs Act, 1962.

(b) Penalty on Shri Satish Choudhary is dropped.

(c) Penalty on Shri Omprakash Jhunjhunwala is dropped.

(d) The concerned authorities are directed to release the foreign currency seized from M/s. Monalisa Forex Services Pvt. Ltd. which was not held liable for confiscation within seven days of the receipt of this order.

However, the Member (Technical) had a differing view –

12. To sum up, I am of the view that USD 70000 seized from Shri Pankaj Kumar Jhunjhunwala is liable to absolute confiscation under the provisions of Section 113(d), (e) and (h) of the Customs Act, 1962 and Shri Satish Choudhary is also liable to penalty of Rs.4,00,000/- under the provisions of Section 114 (i) of the Customs Act, 1962, apart from Shri Pankaj Kumar Jhunjhunwala.

In view of the above, the following matter was referred to the third Member –

(a) Whether in the facts and circumstances of the case, USD 70000 seized from Shri Pankaj Kumar Jhunjhunwala is liable to absolute confiscation or not?

(b) Whether in the facts and circumstances of the case, USD 70000 seized from Shri Pankaj Kumar Jhunjhunwala is liable for confiscation and can be released on payment of redemption fine or not?

(c) Whether in the facts and circumstances of the case penalty can be imposed on Shri Satish Choudhary or not?

The third Member on reference has passed an order recently.

Adverting to the decisions in Bhargav B. Patel - 2015-TIOL-1951-CESTAT-MUM in the context of the question regarding absolute confiscation of seized goods and the decision in Horizon Ferro Alloys Pvt Ltd - 2016-TIOL-1239-HC- P&H-CUS (concurring with the view taken by the Tribunal) and concluding that the same is binding, the third Member on reference viz. Member (Judicial)observed that under Section 125 of the Customs Act, unless the importation or exportation of goods is expressly "prohibited" the Adjudication Authority would be obliged to offer to the Owner the goods an option to pay fine in lieu of confiscation .

Holding that the option to redeem the seized foreign currency hadbeen rightly granted by the Member (J), the said view was concurred with and the first two referred issues were answered accordingly.

The view taken by the Member (J) on the third issue was also concurred with by the third Member by inter alia observing –

++ Shri Satish Choudhary in his statements never accepted the allegation of giving foreign currency to Shri Pankaj Jhunjhunwala. Exculpatory statements of Shri Satish Choudhary cannot be ignored without any justifiable reasons, to give credence to the retracted, contradictory and highly improbable statement of Shri Pankaj Jhunjhunwala.

++ There is no cogent evidence to show procurement of illicit foreign currency by Shri Satish Choudhary, so as to hand over the same to Shri Pankaj Jhunjhunwala as alleged.

++ Further, it is also relevant to note that both the Members were inclined to set aside the confiscation of the currency allegedly carried on 5 previous occasions. Penalty on Shri Om Prakash Jhunjhunwala was also dropped by both the Members. Thus, inculpatory statements were not found sufficient to sustain the allegations in this behalf in absence of any material evidence. I am unable to persuade myself to taken a different yardstick for deciding role of Shri Satish Choudhary for imposition of penalty.

And, therefore, the Majority order is –

(i) Foreign Currency of 70,000 USD are liable to confiscation, but it can be redeemed on payment of redemption fine of Rs.5 lakhs

(ii) There shall be penalty of Rs.4 lakhs on Shri Pankaj Kishor Jhunjhunwala under Section 114(i) of the Customs Act, 1962.

(iii) There shall be no penalty on Shri Satish Choudhary and Shri Om Prakash Jhunjhunwala.

(See 2017-TIOL-2632-CESTAT-MUM-LB)