Delhi High Court directs Customs Commissioner to Release Amount After Redemption Fine, Penalty From Seized Foreign Currency

Delhi High Court directs Customs Commissioner to Release Amount After Redemption Fine, Penalty From Seized Foreign Currency

The petitioner, a foreign national, was intercepted at the IGI Airport for carrying USD 18,500

The Delhi High Court has directed the Customs Commissioner to release the remaining amount after realizing the redemption fine and penalty from the seized foreign currency.

The Bench of Justice Sanjeev Sachdeva and Justice Ravinder Dudeja observed that customarily, the adjudicating officer (AO) had to provide the owner of the goods the option to pay a fine instead of confiscation. If the fine was not paid within 120 days, the option would become void. But herein, the goods seized were only foreign currency.

The petitioner-assessee is a foreign national of Turkmenistan. She was to depart from New Delhi for Turkmenistan by flight. After immigration and boarding formalities, she was intercepted near the flight gate of the departure hall of T-3, IGI Airport.

The assessee was served with a notice under Section 102 of the Customs Act, 1962, in the presence of independent panchas and an interpreter. She was informed of a personal search and examination of her baggage. The same could be conducted in the presence of a gazetted officer or any gazetted woman customs officer.

As per her consent, a woman customs officer conducted the personal baggage search of the petitioner, which led to the recovery of USD 18500 (Rs.13,07,950).

The petitioner failed to produce any documentary evidence for the legal possession and export of the recovered foreign currency, which was then seized under Section 110 of the Customs Act.

Thereafter, the recovered foreign currency was deposited with the IGI Airport branch of the Central Bank of India.

A show-cause notice was served upon the petitioner. In response, she stated not knowing the legal provisions. She submitted that the non-declaration and attempt to take the foreign currency out of India were unintentional. She sought the release of the seized foreign currency and waiver of the penal action.

Meanwhile, adjudication proceedings were conducted by the respondent, and the seized foreign currency was confiscated.

However, the petitioner was allowed the redemption of the currency by paying a fine of Rs.2,60,000 under Section 125 of the Customs Act. This was on the condition that the redemption offer was valid only for three months. Additionally, a Rs.2,60,000 fine was also imposed on her under Section 114 of the Customs Act.

Subsequently, through her attorney, the petitioner addressed a letter to the Commissioner of Customs for permitting the redemption of USD 18,900 after deducting the penalty. She submitted that due to the Covid-19 pandemic and lockdown in March 2020, she was stranded. Since all offices were shut, she could not get her seized foreign currency released.

Meanwhile, due to the prevailing circumstances, the Supreme Court, in suo-moto proceedings, had ordered the extension of the limitation period in all matters until 31 March 2022.

The petitioner approached the respondent's office several times telephonically and sent a letter allowing the redemption of her seized currency. However, her request was not accepted.

The department argued that the adjudicating authority provided her the option of redemption of goods upon payment of a fine. However, the petitioner did not avail of the offer within the prescribed period. Even as per the Top Court’s order, the redemption period was valid up to 10 May 2022. This meant that the statutory limit to avail of the redemption had expired. Thus, the writ petition was liable to be dismissed.

(Section 125 of the Customs Act vests discretion in the authority to levy a fine instead of confiscation. Reading Section 125(3) makes it clear that an option must be given to the owner of the goods to pay a fine instead of the confiscation. The option must be exercised within 120 days).

The Bench observed the direction for the realization of the redemption fine and the collective penalty of Rs.5,20,000 from the total amount of Rs.13,07,950 and for the release of the remaining amount of Rs.7,87,950 to the petitioner.

Thus, the Court held that since the deemed payment was made, there was no justification for the respondent holding the payment on the pretext that the option had lapsed. Therefore, the petitioner’s action was not sustainable.