Case Note & Summary
The matter concerned a seizure of foreign currency totaling US$403,550 (approximately Rs.1.24 crore) from the checked baggage of Ajit Dodia at Mumbai airport on 27/28 September 1993, while he was traveling to Hong Kong. The currency was alleged to be illegally exported in contravention of the Foreign Exchange Regulation Act, 1973 (FERA). Ajit Dodia and his brother Jitendra Dodia were arrested; Jatin Jhaveri, a diamond dealer, was later arrested. The investigation revealed that the trip was financed by Jatin Jhaveri, and the Dodia brothers had packed the currency at Jhaveri’s office. Jhaveri claimed that US$289,250 of the seized amount belonged to him and was legally imported and declared upon his return from the USA, supported by currency declaration forms dated 25 June 1993 and 28 June 1993. Customs proceedings were initiated, and by an order dated 30 August 1995, the Commissioner of Customs ordered absolute confiscation of the entire foreign currency under Sections 113(d), (e) and (i) of the Customs Act, 1962 read with Section 13(2) of FERA, and imposed penalties on all three individuals under Section 114 of the Customs Act. On appeal, the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) partly allowed the appeals, holding that US$289,250 declared by Jhaveri was legally imported and could be re-exported, subject to conditions. Separately, the respondents were issued show cause notices under FERA and their statements recorded under Section 40 of FERA and Section 108 of the Customs Act. The adjudicating authority under FERA found them guilty of contravention, but the FERA Tribunal, by a common order dated 10 March 2004, allowed their appeals, exonerated Jitendra Dodia, and gave certain directions regarding confiscation and penalties. The Union of India (Directorate of Enforcement) filed the present FERA appeals in the High Court, along with a connected writ petition by Jatin Jhaveri seeking related relief. During the pendency, an amendment application was allowed on 17 June 2010, substituting the Union of India as appellant in place of the Directorate of Enforcement, without prejudice. The High Court heard the matters finally, reserving judgment on 24 September 2010 and pronouncing it on 19 October 2010. The available text of the judgment, however, does not contain the final decision or the court’s detailed reasoning on the merits of the appeals.
Issue of Consideration
Whether the FERA Tribunal rightly allowed the appeals and exonerated the respondents from charges of contravening Sections 8(1) and 64(2) of FERA, and whether the confiscation and penalties were justified under the Customs Act
Law Points
- Foreign Exchange Regulation Act
- 1973
- Section 8(1) and 64(2) violations
- Customs Act
- 1962
- confiscation under Section 113
- import declaration
- retracted statements
- substitution of party
Case Details
2010 LawText (BOM) (10) 104
FERA Appeal No.64 of 2006, FERA Appeal No.65 of 2006, FERA Appeal No.66 of 2006, and Writ Petition No.2976 of 2004
Y.S. Bhate, Manjula Rao, M.M. Patel
Jatin C. Jhaveri, Jitendra K. Dodia, Ajit K. Dodia
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Nature of Litigation
Appeal against order of FERA Tribunal setting aside confiscation and penalties under FERA, and connected writ petition
Remedy Sought
Union of India sought to set aside the Tribunal's order and restore confiscation and penalties; in the writ petition, Jatin Jhaveri sought relief connected to the same dispute
Filing Reason
Alleged contravention of FERA provisions and smuggling of foreign currency out of India
Previous Decisions
FERA Tribunal allowed respondents' appeals, exonerated Jitendra Dodia and gave directions on confiscation and penalty; earlier, Customs Commissioner ordered absolute confiscation and penalties, partly overturned by CEGAT
Issues
Whether the FERA Tribunal erred in allowing the appeals and setting aside the confiscation and penalties
Whether the foreign currency (US$289,250) was legally imported and declared, thus not liable for confiscation
Whether the substitution of Directorate of Enforcement by Union of India in the appeals was valid
Judgment Excerpts
The CEGAT held that the said amount was legally imported into India since it was declared on arrival to the Customs Department and, therefore, the CEGAT permitted the said amount to be reexported subject to the
The Respondent Jitendra Dodia was exonerated of all the allegations leveled against him for contravention of the provisions of the Foreign Exchange Regulation Act, 1973.
In terms of the Order of this Court dated 1762010 the Learned Counsel for the respective parties addressed us on the said issue also.
Procedural History
On 27/28 September 1993, foreign currency of US$403,550 was seized from Ajit Dodia's checked baggage at Mumbai airport. Statements were recorded, and searches were conducted. The Commissioner of Customs passed an order on 30 August 1995, ordering absolute confiscation and penalties. The accused appealed to CEGAT, which partly allowed the appeals, holding that US$289,250 was legally imported. Meanwhile, FERA adjudication proceedings ensued, culminating in an order by the FERA Tribunal on 10 March 2004, allowing the respondents' appeals and exonerating Jitendra Dodia. The Union of India filed the present FERA appeals in 2006, along with a related writ petition. During pendency, a civil application for amendment of cause title was allowed on 17 June 2010. The High Court heard the matters finally and reserved judgment on 24 September 2010, pronouncing it on 19 October 2010.
Acts & Sections
- Foreign Exchange Regulation Act, 1973: 8(1), 64(2), 40
- Customs Act, 1962: 113(d), 113(e), 113(i), 114
- Imports and Exports Control Act, 1947: 3(2)
