Intention To Smuggle Prohibited Goods Can't Be Equated With Attempt To Export Prohibited Goods: CESTAT

The Hyderabad Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that intention to smuggle prohibited goods cannot be equated with an attempt to export prohibited goods.

The bench of Anil Choudhary (Judicial Member) and A.K. Jyotishi (Technical Member) observed that the appellant was intercepted by the CISF officials outside the customs area. The appellant had admittedly not approached the airline counter. This fact is supported by the no-show status of the ticket of the appellant on the website of the airline. In the circumstances, the appellant had not entered the customs area, nor was there any failure on the part of the appellant to make the appropriate declaration as required under Section 77 of the Customs Act. The bench found that the provisions of Section 113(e) and (h) are not attractive.

The appellant was intercepted at Rajeev Gandhi International Airport, Hyderabad, by CIF officials on the plea of carrying foreign currency. After interception, the CISF officials informed the Customs Officers and handed over the appellant with foreign currency to the Customs Officers for further proceedings. The AIU officials verified the total quantity of foreign currency in the presence of the appellant and panchas, and the same was found to match the quantity mentioned by the CISF officials.

On being questioned by the officers as to whether the appellant had obtained any authorization or permission from the Reserve Bank of India to carry the foreign currency and whether he had obtained the same from any authorized exchange dealer, the appellant replied in the negative. The Customs Officers (AIU) seized the aforementioned foreign currency under panchanama dated March 24, 2021, on the reasonable belief that the same was attempted to be smuggled out of India in contravention of the provisions of the Customs Act read with the Foreign Exchange Management Act, 1999, and the RBI guidelines issued in pursuance of the said Act, and thus is liable for confiscation.

The appellant preferred to appeal before the Commissioner (Appeals) inter alia on the grounds that there was no ground for confiscation of foreign currency under the Customs Act, when in fact the appellant has admittedly not entered the Customs area. Admittedly, the appellant was intercepted by the CISF officers before he could enter the airport and approach the airline counter for a boarding pass.

The appellant produced a copy of the travel status of his ticket, which shows 'no show', on the website of the airline, Indigo. Thus, the whole case has been made out by the customs officers on assumption, as admittedly, the appellant was intercepted by the CISF officers before he could enter the airport.

It is only after a passenger obtains the boarding pass from the concerned airline and thereafter proceeds for security check and emigration clearance that the person or passenger enters the customs area, and he is required to declare the goods he is carrying if required by law. Thus, in the facts of the present case, the customs officers had no jurisdiction over the assumed plea of non-declaration of foreign currency.

The appellant had also requested cross-examination of the punch witnesses during the course of the personal hearing. However, the Commissioner (Appeals) observed that the punch witnesses have already been examined during adjudication proceedings, and their re-examination is not going to serve any purpose, so accordingly, the same was rejected. The offenses have been committed in the airport and in the customs area, and the Superintendent of Customs is the proper officer for investigation and seizure, as reflected under the Customs Act, though provisions of the FEM Act were also invoked. The Commissioner (Appeals) dismissed the appeal.

The appellant appealed before the Tribunal on the grounds that Section 100 provides for the power to search a person who has landed, is about to board, or is on board a foreign vessel or craft. The appellant had not entered the international/customs area, as he had not even obtained the boarding pass. The status of the appellant's ticket on the website of the airline shows 'no show'. The appellant has neither done a web check-in nor approached the airline counter to obtain the boarding pass inside the airport.

The tribunal held that there is only a venial breach of the provisions of Section 113(d) of the Act. The tribunal set aside the order of absolute confiscation under Section 113(e) and (h).

However, the CESTAT held that the foreign currency in question is liable for confiscation under Section 113(d), though we set aside the order of absolute confiscation.

Counsel For Appellant: R Narasimha Murthy

Counsel For Respondent: P Amaresh

Case Title: Sh Mohammed Mustafa Versus Pr. Commissioner of Customs Hyderabad

Case No.: Customs Appeal No. 30005 of 2024

Click Here To Read The Order