Delhi High Court Directs Customs Commissioner To Release Amount After Realising Redemption Fine, Penalty From Seized Foreign Currency

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 has observed that ordinarily, the adjudicating officer needs to give the owner of the goods the option to pay a fine in lieu of confiscation, and if such a fine is not paid within a period of 120 days, such an option will become void. But the goods seized in the present case are nothing else but foreign currency.

The petitioner or assessee is a foreign national of Turkmenistan. She was to depart from New Delhi for Turkmenistan by flight. After she had completed the 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 notice under Section 102 of the Customs Act, 1962, in the presence of independent panchas and an interpreter, informing her that a personal search and examination of her baggage were required.

The assessee was informed that it could be conducted in the presence of a Gazetted Officer or any Gazetted Lady Customs Officer. As per her consent, a Lady Customs Officer conducted the personal baggage search of the petitioner, which led to the recovery of USD 18500. Petitioner failed to produce any documentary evidence for the legal possession and export of the recovered foreign currency. The foreign currency was then seized under Section 110 of the Customs Act, 1962. Subsequently, the recovered foreign currency was deposited with the Central Bank of India, IGI Airport Branch.

The show cause notice was served upon the petitioner. In her reply, the petitioner stated that she had no knowledge of the legal provisions, that the non-declaration and attempt to take the foreign currency out of India were unintentional, and that the seized foreign currency may be released and the confiscation or penal action may be waived.

Adjudication proceedings were conducted by the respondent, and the seized foreign currency, i.e., USD 18,900, equivalent to Indian currency, i.e., Rs. 13,07,950, seized from the petitioner, was ordered to be confiscated. However, the petitioner was allowed the redemption of the foreign currency on the payment of a redemption fine of Rs. 2,60,000 under Section 125 of the Customs Act, with the stipulation that the offer of redemption was valid only for a period of three months from the date of the order. In addition, a penalty of Rs. 2,60,000 was also imposed on the petitioner under Section 114 of the Customs Act.

The petitioner, through her power of attorney, addressed a letter to the Commissioner of Customs for permitting redemption of USD 18,900 after deducting the penalty or fine.

The petitioner submitted that due to the COVID pandemic and lockdown in March 2020, she was stranded; all the offices were shut, due to which she could not get her seized foreign currency released. The Supreme Court, in suo-moto proceedings, had ordered the extension of the limitation period in all the matters until March 31, 2022. The petitioner called the respondent's office on the phone several times and also sent a letter allowing the redemption of her seized foreign currency, but her request has not been accepted.

The department argued that the adjudicating authority had given an option of redemption of goods to the petitioner upon payment of a redemption fine, and such an offer of redemption was valid only for a period of three months from the date of issuance of the order. The petitioner did not avail of the option within the prescribed period of three months or even 120 days as directed under Section 125 of the Customs Act. Even taking into account the order passed by the Supreme Court in suo-moto proceedings, the redemption period of three months was valid only up to May 10, 2022. The statutory limit to avail of the redemption has expired; the writ petition is therefore liable to be dismissed.

Section 125 of the Customs Act vests discretion in the authority to levy a fine in lieu of confiscation. Reading Section 125(3) makes it clear that an option has to be given to the owner of the goods to pay a fine in lieu of confiscation, and such an option has to be exercised within a period of 120 days from the date of the option.

The court noted that there is a clear direction for the realization of the redemption fine and the penalty collectively amounting to 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.

The court held that the deemed payment had been made; there is no justification in the respondent's holding that the payment has not been made and the option has lapsed. The action of the petitioner is accordingly not sustainable.

Counsel For Petitioner: Pramod Kant Saxena

Counsel For Respondent: Anushree Narain

Case Title: Oguljeren Hajyyeva Versus Commissioner Of Customs

Citation: 2024 LiveLaw (Del) 61

Case No.: W.P.(C) 11354/2023

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