Madras High Court
Commissioner Of Customs (Air) vs M/S.Premier Tours & Travels on 4 February, 2021
CMA.No.2746 of 2009
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 04.02.2021
CORAM :
The Honourable Mr.Justice T.S.SIVAGNANAM
and
The Honourable Ms.Justice R.N.MANJULA
C.M.A.No.2746 of 2009
and
M.P.No.1 of 2009
Commissioner of Customs (Air),
Customs House,
Chennai - 600001. ...Appellant
Vs
1. M/s.Premier Tours & Travels
(Chennai) Pvt Ltd.,
579, Anna Salai, 1st Floor,
Chennai - 60006.
2. Customs Excise & Service Tax
Appellate Tribunal,
South Zonal Bench,
Shastri Bhavan Annexe,
1st Floor, 26, Haddows Road,
Chennai - 600006. ...Respondents
Civil Miscellaneous Appeal filed under Section 130 of Customs Act,
1962 by setting aside the impugned Final Order No.1403/2008 dated
15.12.2008 passed by Hon'ble CESTAT, Chennai.
1/12
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CMA.No.2746 of 2009
For Appellant: Mr.A.P.Srinivas
Senior Standing Counsel
For Respondent: No Appearance
JUDGMENT
(Delivered by T.S.Sivagnanam,J)
This appeal, filed by the appellant under Section 130 of the
Customs Act, 1962, is directed against the order dated 15.12.2008 passed by
the Customs Excise Service Tax Appellate Tribunal (CESTAT), Chennai in
Final Order No.1403 of 2008.
2. The appeal was admitted on 04.12.2009 on the following
substantial question of law:
“1. Whether the Tribunal was right in
granting the benefit of redemption based on its
earlier decisions by ignoring the fact that in the
cases cited by CESTAT, the goods confiscated
were only foreign currencies and not Travellers
Cheques hence the above fact has lost sight of the
second respondent?"
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CMA.No.2746 of 2009
3. We have heard Mr.A.P.Srinivas, learned Senior Standing
Counsel appearing for the appellant.
4. Though the respondents were initially represented by a counsel,
subsequently they withdrew their appearance and the Court had ordered
notice, which was not served and therefore, substituted service was ordered
and accordingly publication was effected in 'Thinamani', Dharmapuri
edition, dated 22.06.2017. Even today, none appears for the respondents.
5. The Tribunal, in the impugned order, rejected the case of the
respondents upholding the orders passed by the Authorities stating that the
travellers cheques are offending goods and hence liable for confiscation.
However, the Tribunal permitted redemption of the travellers cheques, by
placing reliance on the decision of the Tribunal in the case of Savier
Poonolly vs CC, Chennai, 2005 [reported in (192) ELT 263 (Tribunal)].
The said decision has been reversed by the Hon'ble Division Bench of this
Court in Commissioner of Customs vs Savier Poonolly [reported in 2014
(310) ELT 231]. The operative portion of the judgment reads as follows:
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CMA.No.2746 of 2009
"9. The dispute raised in this case
involves the following substantial questions of
law:
"(i) Whether the Tribunal was justified in
allowing the redemption of the foreign
currency attempted to be exported in
violation of the provisions of law?
(ii) Whether the Tribunal was justified in
reducing the quantum of penalty?"
10. On facts, there appears to be no
dispute that the foreign currency was attempted to
be exported by the first respondent - passenger
(since deceased) without declaring the same to the
Customs Department and therefore, it resulted in
seizure.
11. Regulation 5 of the Foreign
Exchange Management (Export and Import of
Currency) Regulations, 2000 prohibits export and
import of foreign currency without the general or
special permission of the Reserve Bank of India.
Regulation 7 deals with Export of foreign
exchange and currency notes. It is relevant to
extract both the Regulations, which are as follows:
"Prohibition on export and import of
foreign currency.
5. Except as otherwise provided in these
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CMA.No.2746 of 2009
regulations, no person shall, without the
general or special permission of the Reserve
Bank, export or send out of India, or import
or bring into India, any foreign currency.
7. Export of foreign exchange and
currency notes.
(1) An authorized person may send out of
India foreign currency acquired in normal
course of business.
(2) any person may take or send out of
India, -
(i) cheques drawn on foreign currency
account maintained in accordance with
Foreign Exchange Management (Foreign
Currency Accounts by a Person Resident in
India) Regulations, 2000;
(ii) foreign exchange obtained by him by
drawal from an authorized person in
accordance with the provisions of the Act or
the rules or regulations or directions made
or issued thereunder
………”
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
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CMA.No.2746 of 2009
include currency and negotiable instruments,
which is corresponding to Section 2(h) of the
FEMA. Consequently, the foreign currency in
question, attempted to be 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.
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CMA.No.2746 of 2009
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.
14. It is of no avail to plead that the
foreign currency upto certain limit is permissible.
The Tribunal has misguided itself in holding that
upto 25,000 US$ is permitted to be carried by a
passenger while going abroad. This error arose
from a misreading of Clause 8 of Schedule III of
Foreign Exchange Management (Current Account
Transactions) Rules, 2000. Rule 5 of the said
Rules, speaks about prior approval of the Reserve
Bank of India for transaction included in Schedule
III. Clause 8 of Schedule III speaks about release
of foreign exchange, exceeding US $ 25,000 to a
person irrespective of period of stay, for business
travel, or attending a conference or specialized
training or for maintenance expenses of a patient
going abroad for medical treatment or check-up
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CMA.No.2746 of 2009
abroad, or for accompanying as attendant to a
patient going abroad for medical treatment/check-
up. We find that this provision is made under the
Foreign Exchange Management (Current Account
Transactions) Rules, 2000, which imposes
prohibition in respect of Schedule I, restriction in
Schedule II transaction, which are to be done on
prior approval and Schedule III also come with
the rider that prior approval of the Reserve Bank
of India should be obtained. Assuming that a
person is permitted to carry 25,000 US $ for
business purpose, the fact remains, that the said
drawal of the foreign currency should be only
from an authorized person in terms of Rule 2(b) of
the Foreign Exchange Management (Current
Account Transactions) Rules, 2000. The
passenger, in this case, attempted to take the
money out of India without a proper declaration
and has not obtained from an authorized person,
thereby, he has violated the Foreign Exchange
Management (Export and Import of Currency)
Regulations, 2000. Therefore, the Department was
justified in rightly invoking the said provision. The
Tribunal, without adverting to the prohibition
imposed under Regulation 5 of the Foreign
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CMA.No.2746 of 2009
Exchange Management (Export and Import of
Currency) Regulations, 2000 has come to the
erroneous conclusion that the amount not
exceeding 25,000 US $ may be freely taken out of
India. If both the Rules and Regulations are
properly applied to the facts of the present case, it
will be evident that the first respondent -
passenger in this case has clearly violated the
provisions of the FEMA, more particularly
Regulation 5 of the Foreign Exchange
Management (Export and Import of Currency)
Regulations, 2000 read with Section 113 of the
Customs Act. Therefore, the Tribunal fell into
error by setting aside the order of absolute
confiscation. Accordingly, we answer the first
question in favour of the Revenue."
6. In the light of the observations made by the Hon'ble Division
Bench, more particularly, in paragraph 14 of the judgment, we have no
hesitation to hold that the Tribunal has committed an error in permitting
redemption of the offending goods. Therefore, the present Civil
Miscellaneous Appeal filed by the Department is allowed and the order
passed by the Tribunal, in so far as it permits redemption of the offending
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CMA.No.2746 of 2009
goods, is set aside and the substantial question of law is answered in favour
of the appellant-Department. No costs. Consequently, connected
miscellaneous petition is closed.
(T.S.S.,J.) (R.N.M.,J.)
04.02.2021
Index: Yes/No
Internet:Yes/No
Speaking Judgment/Non speaking Judgment
hvk
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CMA.No.2746 of 2009
To
1. Customs Excise & Service Tax
Appellate Tribunal,
South Zonal Bench,
Shastri Bhavan Annexe,
1st Floor, 26, Haddows Road,
Chennai - 600006.
2. Commissioner of Customs (Air),
Customs House,
Chennai - 600001.
https://www.mhc.tn.gov.in/judis/
CMA.No.2746 of 2009
T.S.SIVAGNANAM,J
AND
R.N.MANJULA,J
hvk
C.M.A.No.2746 of 2009
and
M.P.No.1 of 2009
04.02.2021
https://www.mhc.tn.gov.in/judis/
