By TIOL News Service

MUMBAI, JUNE 15, 2016: THE two appellants smuggled to Hong Kong foreign currency concealed in their baggage. These persons were deported back from Hong Kong. Upon landing in India, they were intercepted by the Directorate of Revenue Intelligence officials after crossing the green channel. On examination, it was found that the foreign currency was concealed. Statements were recorded, Panchanamas drawn and after the requisite formalities were completed, both confiscation proceedings and criminal prosecution was launched.

The appellants are before the High Court against the order of the Tribunal.

The following submissions are articulated by the appellants -

"This is not a case where the Indian currency was tried to be smuggled out of India. This was a case of an alleged smuggling of foreign currency, but the act was complete on the appellants leaving the Indian shores and reaching Hong Kong. Thereafter, having returned from Hong Kong allegedly with the currency does not merit application of section 113 [Confiscation of goods attempted to be improperly exported etc.] of the Customs Act, 1962. Rather, section 111 [ Confiscation of improperly imported goods etc.] should have been applied. Thirdly, the discretion insofar as the option to pay fine in lieu of confiscation should have been exercised in favour of the appellants. In large number of cases even today, the Revenue has been allowing the option to pay fine in lieu of confiscation. There cannot be different yardsticks as between the others who default in compliance with law and the appellant before this Court."

++ The act of smuggling in relation to any goods is covered by section 2(39). The Tribunal has found from the facts and which are undisputed that the foreign currency could not have been taken out of India unless compliances were made with the other law for the time being in force, namely, Foreign Exchange Management Act, 1999, read with Foreign Exchange Management (Current Account Transaction) Rules, 2000. Once this was the act attributed to these persons, then, it was the discretion of the Adjudicating Authority to allow redemption or to resort to absolute confiscation.

++ In the present case, what was attributed to the persons was an act clearly within the meaning of section 113 of the Customs Act, 1962. The foreign currency in this case was attempted to be improperly exported. It is one thing to say that the currency may have been taken without complying with FEMA and the Rules thereunder, but on reaching the foreign country, these persons were deported. On deportation, they boarded a flight to return to India, but with the currency with them. It is these goods which were taken away without the above compliance. They were confiscated.

++ The contentions as raised before us were specifically raised, duly noted and considered by the Tribunal. The Tribunal found that once this is an admitted case of illegal export of foreign currency from India by concealing the same in baggage and considering the substantial quantum of currency seized, the discretion ought not be exercised so as to allow release of the same by paying redemption fine, then, this is not a case of any perversity or an error of law apparent on the face of the record. Rather, this is a case where the prohibited act was rightly dealt with. This is not a case where any other provision but section 113 could be applied. In the facts peculiar to this case, the invocation and application of section 113 also was permissible.

Holding that the penalties were rightly imposed on the appellants as their complicity and involvement in the illegal act was established, the appeals were dismissed.

(See 2016-TIOL-1147-HC-MUM-CUS)