Case Note & Summary
The Commissioner of Customs (C.S.I. Airport), Mumbai, filed an appeal under Section 130 of the Customs Act, 1962, challenging the order dated 6 March 2012 passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), West Zonal Bench, Mumbai. The appeal arose from a seizure of USD 70,000 from Respondent No.1, Pankaj Kishore Jhunjhunwala, at CSI Airport on 23 February 2004. Investigations revealed that Respondent No.1 had allegedly carried USD 3,50,000 out of India illegally in five previous visits, with involvement of Respondent Nos.2 to 4 (Om Prakash Jhunjhunwala, Satish Choudhary, and another). A show cause notice was issued, and the Commissioner of Customs (AP) passed an order-in-original on 21 November 2007, ordering confiscation of USD 70,000 and imposing penalties: Rs.4,00,000 on Respondent No.1 for the seized currency, and Rs.15,00,000 each on Respondent Nos.1 to 3 for the prior visits, along with confiscation of USD 3,50,000. The Commissioner also ordered release of foreign currency seized from Respondent No.4's premises by adjusting it against penalties on Respondent Nos.2 and 3. Aggrieved, the respondents appealed to CESTAT. The CESTAT, by a common order, had a difference of opinion between the Member (Judicial) and Member (Technical) on certain issues, which was referred to a third Member. However, the two Members agreed on setting aside the confiscation of USD 3,50,000, setting aside the penalties of Rs.15,00,000 each on Respondent Nos.1 to 3, dropping the penalty on Respondent No.2, and setting aside the adjustment of foreign currency. The Commissioner appealed against these agreed points. The High Court, after hearing arguments, upheld the CESTAT's findings on the agreed points, dismissing the appeal. The court held that the confiscation of USD 3,50,000 for prior visits was not sustainable as the department failed to establish the alleged illegal exports. Similarly, the penalties under Section 114 of the Customs Act, 1962, were set aside as there was no evidence of active participation by the respondents in any illicit export. The court also upheld the dropping of penalty on Respondent No.2 and the setting aside of the adjustment order.
Headnote
A) Customs Law - Confiscation of Foreign Currency - Prior Visits - Section 113, Customs Act, 1962 - The CESTAT set aside the confiscation of USD 3,50,000 relating to five previous visits abroad, holding that the department failed to establish that the currency was attempted to be exported illegally in those visits. The court upheld this finding, noting that the show cause notice and adjudication did not properly cover those prior visits. (Paras 2-4) B) Customs Law - Penalty - Section 114, Customs Act, 1962 - The penalties of Rs.15,00,000 each on Respondent Nos.1 to 3 for the prior visits were set aside by the CESTAT as the department did not prove their involvement in any illegal export. The High Court agreed, emphasizing that penalty under Section 114 requires active participation in the illicit export. (Paras 2-4) C) Customs Law - Penalty on Respondent No.2 - Dropping of Penalty - The CESTAT dropped the penalty on Respondent No.2 (Om Prakash Jhunjhunwala) as there was no evidence of his involvement. The High Court upheld this decision. (Para 4)
Issue of Consideration
Whether the order of confiscation of USD 3,50,000 and penalties imposed on the respondents for alleged illegal export of foreign currency in prior visits were sustainable in law.
Final Decision
The High Court dismissed the appeal, upholding the CESTAT order setting aside the confiscation of USD 3,50,000, setting aside the penalties of Rs.15,00,000 each on Respondent Nos.1 to 3, dropping the penalty on Respondent No.2, and setting aside the adjustment of foreign currency.
Law Points
- Confiscation of foreign currency for prior visits requires separate adjudication
- Penalty under Section 114 Customs Act requires active participation
- Seizure of currency from passenger not automatically illicit export
- Burden of proof on department for prior illegal exports
- CESTAT agreement on setting aside penalties and confiscation for prior visits
