CHENNAI, June 22, 2005 : THE US $ 55,500 was seized from appellant who died on 3.10.2001. Since there was no RBI clearance for the above foreign exchange it was absolutely confiscated and penalty of Rs five lakhs was imposed. The successor impleaded as appellant.

Though the currency was required for remittance for technology purposes, it was a fact that the same was not remitted through legal channels nor procured through legal routes. Tribunal held that US $ 25,000 was permissible to be carried by any passenger going abroad during the material time and the absolute confiscation was converted into confiscation with an option to redeem on payment of fine of Rs two lakhs.

This case has an interesting precedential history

In Felix Dorex Fernnees Vs. Commissioner of Customs (2002-TIOL-194-CESTAT-MUM), the Tribunal in an identical case allowed redemption fine instead of absolute confiscation. Even that was done under strange circumstances. There was a Government of India order No. 298/97, dated 14-3-1997 in which case, undeclared foreign currency was released on redemption fine of about 35%. The Tribunal observed that though the government decisions do not have a binding effect on the Tribunal, a radically different view taken by the Tribunal would create an awkward situation where for lesser amounts, the government would offer redemption and for larger amounts the Tribunal would deny them. Therefore for the sake of equity in that case, the Tribunal allowed redemption of the currency on payment of a fine of Rs 4 lakhs. Here the amount involved was Rs 10.06 lakhs and the fine came to around 40%. And this case became a sort of precedent. However in 2002 (140) ELT 225 for an amount of Rs 28 lakhs of foreign currency, the Tribunal allowed redemption on a fine of Rs 8 lakhs that is about 30%.

In an interesting case Halithu Ibrahim Vs. Commissioner of Customs, 2002-TIOL-195-CESTAT-MAD – the Honourable Technical Member Mr C.N.B. Nair, elucidated the lofty principles involved,

“Free and undeclared import and export of currency from one country to another poses serious threat to any society. Such movement of currency facilitates transactions in banned substances including narcotic drugs. It also facilitates financing of illegal and terrorist activities by foreign elements. It also facilitates money-laundering by criminal elements --------------- The relaxation in respect of passenger is not a liberty for them to import currency, store in India and take it out in installments on return from subsequent visits.

Therefore he held that absolute confiscation of the currency was in order and redemption was now allowed as no lenience was required in an offence of the above magnitude.

However the Honourable Member (Judicial) did not agree with the above observations of the Technical Member for the reasons,

“That the said observation is not on the basis of interpretation of any provision of law. It is a surmise and presumptuous, which the Tribunal should restrain itself from making ……... The policy of import and export of foreign exchange is regulated by the statute and we have to interpret the various provisions of the statute in its term and it is not for the courts to go by the supposed intendment or draw inference other than what is stated in the statute.

The judicial member further observed,

“My learned brother not agreed to follow the Tribunal rulings. Judicial discipline requires that we have to accept Tribunal judgments and if any departure from the ruling is required to be made, then it can be made by recording cogent reasons and by requesting the Honourable President to constitute a larger bench for reconsidering the judgements already on record.

So, the question was referred to a third member to decide whether an option to redeem on payment of fine is required to be given in all cases involving attempted export of foreign currency (undeclared) through concealment in baggage. Honourable Technical Member also noticed the use of the word presumptuous by the judicial member and he recorded that he trusted the word presumptuous was only a typing error and his order is considered a legal presumption and not he being presumptuous.

While this is the legal history of the issue, in the present case the amount involved is around Rs. 26 lakhs or at least Rs. 14 lakhs above the permissible limits. Redemption fine is Rs. 2 lakhs. That is about 14% of the amount above the permissible limit. Interestingly, this decision is given by the Honourable Technical Member Mr. C.N.B. Nair who passed the order described above.

(See full text of the Order 2005-TIOL-515-CESTAT-MAD in 'Customs' + 2005-TIOL-515-CESTAT-MAD in 'Legal Corner')