[Order per : P.R. Chandrasekharan]. - There are 3 appeals directed against Order-in-original No. COMMR/PMG/ADJN/01/2011-2012 dated 22-7-2011 passed by the Commissioner of. Customs, Chhatrapati Shivaji International Airport, Mumbai. Vide the impugned order, the ld. Adjudicating authority has ordered absolute confiscation of foreign currency equivalent to Rs. 1,25,22,780/- seized from Sri. Suresh Ganagaram Hole while he was attempting to smuggle the said currency out of India on his way to Sharjah from Mumbai by Air Arabia Flight No. G9-1402 on 8-1-2006. The said currency was confiscated under the provisions of Section 113(d) and 113(h) of the Customs Act, 1962. The ld.-Adjudicating authority also imposed penalties of Rs. 50 lakhs on Shri Hole, Rs. 1.25 crore on Shri Rajendra G Bhutada, who claims to be the owner of the said currency and Smt. Bharati Bhutada, wife of Sri, Rajendra Bhutada, for their involvement in the alleged smuggling of the said foreign currency. Aggrieved of the same, the appellants are before us.
2. The facts relevant to the case are as follows. Sri. Suresh Gangaram Hole (Mr. Hole in short) was intercepted- by the Air Customs Intelligence Unit at the Mumbai Airport on 8-1-2006 while he was proceeding for security check after clearance by the immigration and customs authorities. Examination of his checked in baggage and personal search resulted in recovery of US $ 2,35,000, UAE Dirhams, 1,89,000 and Qatar Rial 2000, equivalent to Rs. 1,25,22,780/- Investigation conducted revealed that the said foreign currency was handed over to Sri. Hole by Sri. Rajendra G. Bhutada for smuggling out of India. Sri Hole further admitted that he had smuggled foreign currency twice on earlier occasions also and on one such occasion Smt. Bharati Bhutada had handed over packages of foreign currency to be handed over to the seized currency and by imposing penalties on the 3 appellants. Hence the appeals before us.
3. At the time of consideration of the stay petition,’ stay was granted and early hearing of the appeal was allowed and the case was fixed for final hearing on 17-4-2014. Thereafter; the appeals were listed for final disposal on 5-6-14, 20-8-2014, 17-10-2014, 27-11-2014 and finally : to-day (i.e. 12-12-2014) due to the request for adjournment by the appellant or revenue. Though the counsel for the appellant Sri. Suresh Gangaram Hole wanted one more adjournment, we declined this request in the absence of a valid reason for the adjournment and therefore, directed the counsel to argue the matter, especially considering the fact this is a case where application for early hearing had been allowed and the case had been” adjourned 4 times earlier. As per the provisions of the proviso to section 129 B (lA) of the Customs Act, 1962, only 3 adjournments are required to be given and the said provision has been complied with by granting more than 3 adjournments.
4. The ld. Counsel for the appellant Sri. Suresh Gangaram Hole made the following submissions :-
(1) The appellant was under detention and custody of the customs- officers from. 3.40 am on 8-1-2006 after he was intercepted with the foreign currency at the Mumbai airport and he was produced before the judicial magistrate only on 9-1-2006 in the post lunch session. Therefore, the detention was illegal and the statement recorded from the appellant during the illegal detention is not a valid evidence.
(2) The panchnama proceedings for seizure of currency was made in English and the appellant did not know English and knew only Marathi & Hindi. The panchnama was prepaired first and the signature of the panchas obtained later. Hence the same cannot be relied upon as an evidence for recovery of foreign currency from the appellant.
(3) The statement recorded from the appellant in English was retracted on 9-1-2006 and all the subsequent statements recorded on 10th, 16th & 17th January and 23rd February, 2006 were in English (that is, in a language not known to the appellant) and the appellant had retracted all the statements vide affidavit dated 23-2- 2006. The statements, though recorded in the Jail, were not in the presence of Jail Officials. Therefore, these statements have no evidentiary value. All the subsequent statements are exculpatory.
(4) As per the statement dated 8-1-2006, it has been alleged that the appellant was acting as a carrier for Mr. Butada in the smuggling of foreign currency; in the statement dated 10-1-2006, it has been recorded that he was working as a salesman with the company of Mr. Butada and there are a number of contradictions in the various statements recorded by the department.
(5) The appellant had sought cross-examination of 7 witnesses but the same was allowed only in respect of 2 witnesses, which is a violation of the principles of natural justice.
(6) In his affidavit dated 23-2-2006, the appellant has stated that the seized foreign currency was sourced at Dubai at the behest of Mr. Rajendra Butada and belonged to M/s. Tycoon General Trading in Dubai and was meant for transfer to M/s. a3 holdings Ltd., Hongkong and since the appellant could not do the job, he brought it to India on 28-12-2005 but did not declare the same to the Customs. It was the company’s money which he was taking it back to Dubai on 8-1-2006 when he was intercepted by the customs officers. Further vide letter dated 15-4-2006 Sri. Rajendra Butada has also confirmed these facts apart from the letter dated 26-4-2006 from his advocate. The department has not conducted any enquiry about the source of funds nor have they contradicted the evidences led by Shri. Butada in this regard.
(7) The absolute confiscation of the seized currency is not warranted as it has been claimed by Sri. Butada and therefore, the same should be returned to Butada or his company.
(8) As regards the allegation that Mrs. Bharati Butada had given him money on an earlier occasion to be smuggled out of India, there is no evidence adduced by the department in this regard and the department confronted both the persons face to face and drew a confrontation panchnama which has not been relied upon in the proceedings.
(9) The penalty of Rs. 50 lakhs imposed on the appellant is quite harsh as the appellant has not acted dishonestly .and therefore, the same be set aside.
5. The ld. Counsel appearing for Sri. Rajendra Butada. and his wife Smt. Bharati Butada made the following submissions :-
(a) As regards Smt. Bharati Butada, the allegation is that she handed over a package’ containing foreign currency to Sri. Suresh Gangaram Hole on 27-12-2005 to be handed over to her husband in Dubai on 28-12-2005. In the show cause notice issued, there is no proposal to confiscate the said currency allegedly handed over and therefore, no penal action can be taken against the appellant. Since her husband was in India on 28-12-2005, this contention of the department is clearly wrong. The present seizure pertains to an altogether different transaction and the appellant has nothing to do with the same. The confrontation panchnama between her and Mr. Hole drawn on 1-9-2006, was never relied upon, and the investigating officer has also denied having drawn any such panchnama. Hence the entire charge against the appellant is on flimsy grounds without any basis. Accordingly, it is prayed that the penalty imposed on the appellant be set aside.
(b) As regards the charges against Mr. Rajendra Butada, the appellant has been implicated only on the basis of uncorroborated and retracted confessional statement of co-noticee and the same cannot constitute sufficient basis for penalising the appellant.
(c) The investigating agency has not conducted any enquiry to verify the genuineness of all documents submitted’ by the appellant regarding the ownership and source of procurement of seized foreign currency. In the absence of a proper investigation and rebuttal of the’ evidence produced by the appellant, the absolute confiscation of the seized currency is not warranted. Further, the show cause notice in this case has been issued only on 11-12-2006 whereas the currency was seized on 8-1-96, that is after a period of almost 11 months. Section 124 of the Customs Act mandates that show cause notice shall be issued within a period of 6 months from the date of seizure. Therefore, the entire notice and the proceedings are vitiated.
(d) The appellant is the owner of the seized currency although he was not concerned or connected with the import or export thereof and he is a victim of an error committed by the employee of his overseas company who allegedly took out the funds from the , Kishin Shewaram Loungani [2002 (140) E.L.T.
6. The ld. Additional Commissioner (AR) appearing for the Revenue seeks to justify the impugned order. He submits that Sri. Suresh Gangaram Hole in his statements recorded under Section 108 of the Customs Act has clearly admitted to first importing the foreign currency without any declaration and then again attempting to re-export the same, again without any ‘declaration. Since the currency has been sought to be taken out of the country illegally, the same is an offence under the FEMA and RBI- guidelines issued in this regard and therefore, the goods are ‘‘prohibited’’ goods as defined under the Customs Act, thereby making them liable to confiscation under the provisions of Section 113(d) and 113(h) of the Customs Act. Therefore they are liable to absolute confiscation and it is the prerogative of the adjudicating authority to use his discretion with regard to grant of option for redemption. He relies on the decision of a Larger Bench of this Tribunal in the case of Peringatil Hamza vide Order No. M/1280/14/CSTB/C-I dated 23-6-2014 [2014 (306) E.L.T. 322 (Tribunal)]. He further states that statement of a co-accused can be used as a substantive evidence against the accused and relies on the decision of the Hon’ble Apex Court in Naresh J. Sukhwani [ (S.C.)] in support of this contention. He further relies on the decision of the Hon’ble Madras High Courtwherein it has been held that if goods are .’prohibited’, then they are liable to confiscation. Accordingly he pleads for upholding the impugned order and dismissing the appeals.
7. We have carefully considered the rival submissions. Our findings and conclusions are discussed in the ensuing paragraphs.
7.1 There are certain preliminary objections raised by the appellants pertaining to violation of principles of natural justice, that is obtaining statements under threat or coercion, disallowing the cross -examination of co-accused and other witnesses and so on. Sri Suresh Hole has contended that the statement recorded by the investigating officers on 8-1-2006 was obtained under threat and duress and therefore should not be relied upon and he was under illegal detention of the customs authorities before he was produced before the Chief Metropolitan Magistrate(CMM) on 9-1-2006. This contention of the appellant is clearly wrong for the reason that the CMM while considering the remand application on 9-1-2006 had recorded the following observations - ‘‘Heard Remand application. Investigation is in progress. No complaint of. ill-treatment. Hence remanded to judicial custody till 20-1-2006.’’ This observation of the CMM belies the claim of the appellant in this regard. Secondly it is a fact on record that Sri. Suresh Hole was medically examined by the doctors of St. George Medical Hospital before being produced before the CMM on 9-1-2006 and the doctor has certified that ‘‘neither there were any signs of any injury or assault nor was there any complaint in that regard from the accused’’. These two documents on record clearly lays hollow the allegation of the appellant in this regard and therefore, has to be rejected outright.
7.2 As regards the denial of cross-examination of certain’ witnesses, same of whom were also co-accused, the adjudicating authority has -examined the matter at length in para 11 of the impugned order where he has recorded detailed reasons why the request for cross-examination was not agreed to. We do not find any reasons to disagree with or over-rule the findings recorded by the adjudicating authority in this regard, especially when there is no dispute about the fact of seizure of foreign currency from Sri. Suresh Hole on 8-1-2006 when he was leaving for Sharjah at the Mumbai International Airport. As held by the Hon’ble apex court in the case of Tele star Travels Pvt. Ltd. v. Special Director of Enforcement [2013-TIOL-17-SC-FEMA], (S.C.) the question to be considered in this regard is ‘‘whether the failure to permit the party to cross examine has resulted in any prejudice so as to call for reversal of the orders and a de novo enquiry into the matter. The answer to that question would depend upon the facts and circumstances of each case.’’ We find that the adjudicating authority has specifically dealt with this’ issue and rejected the claims of the appellants holding that the statements were voluntary in nature and the subsequent retraction is a mere afterthought with a view to escaping the consequences of the violations committed. The adjudicating authority was aware of the requirement of examining the voluntary nature of the statements relied upon by it and has accordingly examined this aspect and given cogent reasons for holding that the statements were indeed voluntary’ and incriminating. Paragraphs 19 to 23.17 of the impugned order records the detailed examination of the points urged by the appellants and the cogent reasons for rejection of cross-examination of the witnesses and holding why the statements have to be considered as voluntary and’ incriminating. Therefore, we are of the considered view that these contentions raised before us in this regard lack merit and have been dealt with adequately by the adjudicating authority. As regards the contention that the Show Cause Notice should have been issued within 6 months of seizure, the Commissioner of Customs has the power to extend the time limit by “another six months. Therefore we do not find any infirmity in this regard.
7.3 It is an admitted fact on record that Sri. Suresh Hole brought to India foreign currency worth Rs. 1.25 crore approx. on 28-12-2005 without declaring the same before the customs authorities and” attempted to take, out the same out of India on 8-1-2006 at the behest of Sri. Rajendra Butada. As per Regulation 6 of Foreign Exchange Management (Export and Import of Currency) Regulations, 2000, effective from 1-6-2000,
‘‘A person may -
(a) send into India without limit foreign exchange in any form other than currency notes, bank notes and travellers cheques;
(b) bring into India from any place outside India without limit foreign ex-change (other than unissued notes),
provided that bringing of foreign exchange into India under clause (b) shall be subject to the condition that such person makes, on arrival in India, a declaration to the Custom authorities in Currency Declaration Form (CDF) annexed to these Regulations; provided further that it shall not be necessary to make such declaration where the aggregate value of the foreign exchange in the form of currency notes, bank notes or traveller’s cheques brought in by such person at any one time does not exceed US $ 10,000 (US Dollars ten thousands) or its equivalent and/or the aggregate value of foreign currency notes brought in by such person, at any one time does not exceed US$ 5,000 (US Dollars five thousands) or its equivalent.’’
(3) any person may take out of India, -
(ii) unspent foreign exchange brought back by him to . India while returning from travel abroad and retained in accordance with the Foreign Exchange Management (Possession and Retention of Foreign Currency) Regulations, 2000; any person resident outside India may take out of India unspent foreign exchange not exceeding the amount brought in by him and declared in accordance with the proviso to clause (b) of Regulation 6, on his arrival in India’’.
7.4 As per the provisions of section 2 (22) of the Customs Act, ‘‘goods’’ includes currency. Further as per section 2(33) “prohibited goods” means any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of-which the conditions subject to which the goods are permitted to be imported or exported have been complied with.” In the present case, the appellant did not have permission from the RBI for export of foreign currency nor did he declare the foreign currency when he came to India on 28-12-2005. Therefore, the currency under seizure are ‘‘prohibited goods’’ as per the provisions of the Customs Act and therefore, liable to confiscation under Section 113(d) as ‘‘any goods attempted to be exported or brought within the limits of any customs area for the purpose of being exported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force’’ as well as under section 113(h) as ‘‘any goods which are not included or are in excess of those included in the entry made under this Act, or in the case of baggage in the declaration made under section 77’’.
7.5 The liability to absolute confiscation of Indian currency attempted to be illegally exported was considered by a larger bench of this Tribunal in the case of Peringattil Hamza (supra) and after considering extensively the various decisions of the Hon’ble apex court, it was held by this Tribunal that- ‘‘In case a person attempted to export Indian currency outside India without the permission of the RBI more-than Rs. 5000/- or Rs. 10,00d/- as the case may be, in that case the Indian currency can be absolutely confiscated and it is the discretion of the proper officer in the facts and circumstances of the case to allow redemption on payment of fine and imposition of penalty.’’ The ratio of the said decision applies equally well in the case of attempted illegal export of foreign currency also. An identical issue came up for consideration before the Hon’ble Madras High Court in the case of CC, Chennai v. Shri[2014-TIOL-1662-HC-MAD-CUS = (Mad.) wherein foreign declaring the same to the Customs Department’ and therefore, it resulted in seizure. The Hon’ble High Court held as follows :-
‘‘12. Section 113 of the Customs Act imposes certain prohibition and it includes foreign exchange. In- the present case, the jurisdiction Authority has invoked Section 113 (d),-(e) and (h) of the Customs Act together with Foreign Exchange Management (Export & Import of Currency) Regulations, 2000, framed under Foreign Exchange Management Act, 1999. Section 2(22)(d) of the Customs Act, defines ‘goods’ to include currency and negotiable instruments, which is corresponding to Section 2(h) of the FEMA. Consequently, the foreign currency in question, attempted to the exported contrary to the prohibition without there being a special or general permission by the Reserve Bank of India was held to be liable for confiscation. The Department contends that the foreign currency which has been obtained by the passenger otherwise through an authorized person is liable for confiscation on that score also.
13. In view of the above, the Original Authority has ordered absolute confiscation. We find, in the present case, the passenger has concealed the currency of 55,500 US dollars and other currencies, attempted to be take it out of India without a special or general permission of the Reserve Bank of India and this is in violation of the Rules. The fact that it was procured from persons other than authorized person as specified under the FEMA, makes the goods liable for confiscation in view of the above-said’ prohibition. Therefore, the Original Authority was justified in ordering absolute confiscation of the currency. The key word in Regulation 5 is prohibition of import and export of foreign currency. The exception is that special or general permission should be obtained from the Reserve Bank of India, which’ the passenger has not obtained and therefore the order of absolute confiscation is justified in respect of goods prohibited for export, namely, foreign currency.”
7.6 The ratio of the above decision was followed by this Tribunal in the case of M K S Mohammed Rafi v. Commissioner of Customs (Airport & ACC), Chennai [2014-TIOL-1681-CESTAT-MAD] wherein it was held that- ‘‘Under Section 3 of the Foreign Exchange Management Act, 1999 read with Regulation 5 of the Foreign Exchange Management (Export & Import of Currency) Regulation, 2000, no person shall without the general or special permission of the Reserve Bank export/send out of India or import/bring into India any foreign exchange currency-admittedly, the appellant was carrying foreign currency without the permission of RBI - adjudicating authority had already examined as to whether in the facts and circumstances of the case, the goods may be released on payment of redemption fine and negatived the claim of the appellant, a habitual offender, who admitted that they have purchased the electronic goods in Singapore and brought the foreign currencies acquired through sale in the grey market and passing through green channel.’’ Similarly in another case, recently decided by the Bangalore Bench of this Tribunal in the case of Joseph Sebastian Prekash v. Commissioner of Central Excise, Customs and Service Tax [2014-TIOL-2457-CESTAT-BANG], foreign exchange being carried by appellant was confiscated since the same was not declared and was in excess of the permitted limit and the appellant’s submission that absolute confiscation was not proper in the absence of mala fide and law does not require any passenger to make declaration, was found not acceptable. Since the currency was not declared and was concealed in the baggage and could not have been detected but for the information received by authorities, absolute confiscation was upheld. ‘ In our considered view, the ratio of the above decisions apply squarely to the facts of the present case before us.
7.7 The appellants have, given two versions about the nature of the transaction. Sri Suresh Gangaram Hole in his statements recorded on 8-1-2006 (prior to his arrest) and on 10th, 16th and 17th January, 2006 and 2-2-2006 (when he was in judicial custody) had admitted that the seized foreign currency was given to him for smuggling to Dubai by Sri. Rajendra Butada and he agreed to do the act for a monetary consideration. These statements were retracted on 23-2-2006 through an affidavit, after he was released from jail. In his affidavit dated 23-2-2006, he has claimed that the seized currency was sourced in Dubai and belonged to M/s. Tycoon General Trading LLC, Dubai, a company owned by Sri. Rajendra Butada, where Sri. Hole was working as a salesman. It has been contended by the appellants that the origin of the foreign, currency was genuine and was given by Shri. Rajendra Butada to Sri. Suresh Gangaram Hole in Dubai for transfer of the same to M/s. a3 Holdings Ltd., Hongkong, towards purchase of laptops. If that was so, there was no need for Mr. Suresh Hole to bring the same to India without declaration to the Customs and again take it back to Dubai without any permission from RBI and without declaration to the Customs. No evidence worth the name has been produced by the appellants to show that the foreign currency was meant for purchase of laptops by way of purchase orders or otherwise to M/s. a3 Holdings Ltd., Hongkong. Further, there is no evidence led by Sri. Hole showing that he was employed as a salesman in the Tycoon General Trading LLC, Dubai and no appointment letter employing him as” a salesman was produced by Sri. Hole to support his claim in this regard. This is also contrary to the initial statements of Sri Suresh Hole that the money was given to him by Smt. Bharati Butada in Pune for handing over the same to Mr. Rajendra Butada in Dubai. Further, there are contradictions in the statements of Sri. Rajendra Butada and Sri Suresh Gagaram Hole which has been discussed at length in the impugned order in paras 23 to 23.17 thereof. Further, the conduct of Sri. Rajendra Butada, immediately after the interception of Sri. Suresh Gangaram Hole on 8-1-2006 and his subsequent arrest is also very strange. If the money belonged to Sri. Butada and its source was genuine, there was no need for him not to respond to the various summons issued by the investigating officer during January to April, 2006, when he was very much in India at the relevant time and when he was very much aware that Sri. Suresh Gangaram Hole was intercepted by the Custom Authorities. The department had to approach the Addl. CMM, Mumbai for issue of summons to secure the presence of Sri. Rajendra Butada. It is also on record that during the said period Mr. Rajendra Butada was seeking legal advice on the matter and he was busy preparing documents for the illicit procurement of the seized foreign currency as per the statements given by Smt. Bharati Butada and various others. If the source of the currency was legal, there was no need to take such a long time to present the evidence before the investigating authority in this regard. Thus the whole conduct of Sri. Rajendra Butada leads to the inevitable conclusion that he was busy manipulating the records and fabricating evidences so as to show that the seized foreign currency was legally sourced. Thus the whole story of illicit procurement of the foreign currency is far from convincing and appears a concocted story to mislead the investigation. Be that as it may, even going by the versions of the appellants, the foreign currency was brought into India in violation of the provisions of FEMA, 1999 and without declaration to the Customs and was sought to be taken out of India illicitly. Thus the illicit nature. of the transactions is manifest and amounts to ‘smuggling’ in and out foreign currency. Thus the tainted nature of the seized currency and the transaction’ is established beyond any doubt. Consequently, absolute confiscation of the seized foreign currency under Sections 113 (d) and (h) of the Customs Act is beyond any legal challenge and we hold accordingly.
7.8 The next question for consideration relates to the penalties imposed on the appellants under section 114 (i) of the Customs Act. Penalties of Rs.50 lakhs, Rs. 1.25 crore and Rs. 25 lakhs have been imposed on Sri. Suresh Gangaram Hole, Sri. Rajendra Butada and Smt. Bharati Butada respectively for their involvement in the attempted smuggling of foreign currency. The role of Sri. Hole is that of a carrier and the seized currency did not belong to him. He agreed to be a carrier in view of the inducements by way of monetary considerations offered by Sri. Rajendra Butada. It is Sri. Rajendra Butada who masterminded the whole transaction. Smt. Bharati Butada’s role is limited to handing over the foreign currency to Sri. Hole in Pune. However, considering the fact the we have upheld the absolute confiscation of the seized foreign currency, which itself is a substantial punishment, the penalties on the appellants need to be moderated commensurate with their roles in the transaction. Accordingly we reduce the penalty on Sri. Suresh Gangaram Hole from Rs. 50 lakhs to Rs. 5 lakhs, on Sri. Rajendra Butada from Rs. 1.25 Crore to Rs. 25 lakhs and on Smt. Bharati Butada from Rs. 25 lakhs to Rs. 1 lakh. But for the above modification by way of reduction in the penalties imposed, we uphold the impugned order.
8. To sum up, we uphold the absolute confiscation of seized foreign currency equivalent to Rs. 1,25,22,780/- under Sections 113(d) and (h) of the Customs Act, 1962. We reduce the penalties imposed under Section 114(i) of the said Customs Act on the appellants, Sri. -Suresh Gangaram Hole, Sri. Rajendra Butada and Smt. Bharati Butada to Rs.5 lakhs, Rs 25 lakhs and Rs. 1 lakh respectively.
(Operative part of the order pronounced in the Court on 15-1-2015)