By TIOL News Service

MUMBAI, AUG 06, 2014: ON an intelligence, the appellant, a native of Malapuram District, Kerala, was intercepted at the Sahar Airport, Mumbai on 08.12.2004 and during search, Indian currency of Rs.24,17,500/- was found with the appellant which was not declared or permitted by RBI for export.

Therefore, proceedings were initiated and the Commissioner of Customs (Airport) vide order dated 24.10.2007 ordered absolute confiscation of Indian currency and also imposed a penalty of Rs.2 lakhs.

Aggrieved by the said order, the appellant filed an appeal before the CESTAT in the year 2008.

The appeal was heard in February, 2014.

Relying on the decision in the case of AmanulahAbul Hassan - 2009-TIOL-1084-CESTAT-MAD, the appellant submitted that the violation is to be considered procedural in nature and, therefore, the order of absolute confiscation is to be set aside and the Indian currency is allowed to be redeemed on payment of fine and penalty.

The Revenue representative opposed the said submission by adverting to the CESTAT, WZB decision in Harish Muljimal Gandhi - 2012-TIOL-2051-CESTAT-MUM wherein the Bench held that the absolute confiscation of currency is correct.

The Single Member Bench of Member (Judicial) observed that in view of the two contrary decisions, it would be in the interest of justice to refer the matter to the Larger Bench.

And so, the following reference was made -

"In case a person attempted to export Indian currency outside India without permission of RBI more than Rs.5,000/-, in that case whether absolute confiscation is correct or Indian currency can be redeemed by imposition of redemption fine and penalty."

We reported this order as 2014-TIOL-488-CESTAT-MUM.

The Larger Bench answered the reference thus -

"In case a person attempted to export Indian currency outside India without permission of RBI more than Rs.5,000/- or Rs.10,000/- (as the case may be) in that case the Indian currency can be absolutely confiscated and it is discretion of the proper officer in the facts and circumstances of the case be allowed to redeem on payment of redemption fine and imposition of penalty."

We reported this order as 2014-TIOL-1156-CESTAT-MUM-LB.

The appeal was heard by the Referral bench recently.

The appellant submitted that initially they had stated that the currency belongs to one ShriP.Muhammed, and, therefore, the statement of ShriP.Muhammed was recorded on 02.02.2005 wherein ShriP.Muhammed has stated that the currency does not belong to him and he has nothing to do with the currency; that the adjudicating authority has also failed to prove that if the currency does not belong to ShriP.Muhammed then to whom the currency belongs. Inasmuch as absolute confiscation of the currency by the adjudicating authority is arbitrary and, therefore, the option of the redemption of currency should be granted.

The AR submitted that the adjudicating authority has rightly held that the currency neither belongs to the appellant nor he is owner of the same.

The Bench observed –

++ The general principle is that on whose possession the goods are found then that person is to be owner of the goods. In this case, the currency has been recovered from the possession of the appellant and the appellant claims the owner of the goods and the adjudicating authority is holding that he is not the owner of the goods. Therefore, the onus lies on the adjudicating authority to find out who is the owner of the goods.

++ As he has not arrived at a decision as who is the actual owner of the goods, therefore, in all probability the appellant is the owner of the goods as the currency has been recovered from his possession on 08.12.2004. Further, the absolute confiscation has been done by the adjudicating authority holding that the appellant is not the owner of the goods is incorrect in the light of the findings here-in above.

Holding that absolute confiscation of the currency is not warranted, the CESTAT held that the Indian currency can be released to the appellant on imposition of redemption fine and penalty.

Nonetheless, the Single Member Bench observed that the appellant has suffered for 9 ½ years and the quantum of currency is about Rs.24 lakhs;appellant also has made expenses on litigations to get the currency released, therefore, quantum of redemption fine is determined to 10% of the currency seized. Penalty imposed of Rs.2 lakhs was held to be appropriate.

In fine, the CESTAT directed the adjudicating authority to release the currency on payment of redemption fine of 10% of currency seized and on payment of penalty of Rs.2 lakhs.

The Appeal was disposed of.

In passing : Whose money is it anyway?

SECTION 125. Option to pay fine in lieu of confiscation. - (1) Whenever 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 shall, in the case of any other goods, 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 :

(See 2014-TIOL-1434-CESTAT-MUM )