1. The appellant, Shri Tarlok Singh Bajaj had on 24-8-1981 gone to the Palam Airport, New Delhi for catching an Air France Flight to proceed to Singapore. The case for the Department is that on a search of his person various items of foreign exchange were recovered, out of which the item relevant to this appeal is a bank draft for 65,000 dated 13-8-1981 issued by the National Westminster Band Ltd., London in the name of the appellant..., Shri Tarlok Singh Bajaj. The were detained, since the appellant failed to produce any evidence for the lawful possession/acquisition/ carrying of the said foreign exchange.
Statements were recorded from him that day and subsequently, and show cause notices were issued to the appellant and others and adjudication proceedings were held. Thereunder the appellant had been called upon to show cause why the above said bank draft should not be confiscated and why penalty should not be imposed. On the conclusion of the adjudication proceedings the Additional Collector of Customs passed an order on 15-9-1983 whereunder he ordered confiscation of the above bank draft under Section 113(d)and 1 i 3(h) of the Customs Act, 1962 permitting redemption, for home consumption, on payment of a fine of Rs. 2 lakhs. In addition he imposed a personal penalty of Rs. 1 lakh on the appellant under Section 114 of the Customs Act. Under this appeal the appellant prays for setting aside the said order. Shri M.Chandrasekharan, learned Advocate for the appellant, contended mainly that the bank draft in question is not an export goods with reference to which action could have been taken for contravention of the provisions of the Customs Act and that there has been no attempted export in this case and in any event the order for confiscation is bad since it related not to the bank draft or the currency payable thereunder, since even before the date of the order the bank draft had been converted into Indian currency. He further contended that in so far as no declaration is said to have been made by the appellant with reference to this bank draft, action under Section 113(h) is not valid.
Shri Kapoor, JDR, appearing for the Respondent, contested the above submissions and relied upon the reasons given in the order of the Additional Collector to support the findings therein.
2. We have carefully considered the submissions on both side. The appellant, Shri Tarlok Singh Bajaj is the Proprietor of M/s.
Cosmopolitan Apparels, New Delhi. His son, Shri Avtar Singh is a resident of the United Kingdom and appears to be a partner in a firm by name M/s. Little Penny Ltd. dealing in garments in London. In this appeal we are concerned only with one item recovered from the appellant on 24-8-1981, that is, a bank draft for 65,000/-, issued by the National Westminster Bank Ltd., London on 13-8-1981 in favour of the appellant, Shri Tarlok Singh Bajaj. The draft has been marked "a/c payee" "not negotiable". The case for the appellant is that the draft had been sent to him by his son for purchase of articles on behalf of his son at Singapore from where they were to be transported to London.
There appears to have been some investigation on the question whether this explanation could be true or whether this draft represents the money due to the appellant himself under manipulations by way of under-invoicing on his part. But the said case has been found by the Department itself to be not made out. Therefore, the only case against the appellant is that he had attempted to export the said draft, which is in the nature of foreign exchange, illegally and without having made a declaration thereof when he was leaving India. On a finding against the appellant on these aspects that the order for confiscation has been passed and penalty imposed.
3. The confiscation has been ordered under Section 113(d) and 113(h) of the Customs Act. Under the said section the export goods described in Sub-clauses (a) to (1) are declared liable to confiscation. The first question would, therefore, be whether the bank draft in question would be an item of export goods. Export goods are defined in Section 2(19) as meaning any goods which are to be taken out of India to a place outside India. Goods have been defined in Section 2(22) as including (a) vessels, air-craft and vehicles, (b) stores, (c) baggage, (d) currency and negotiable instruments, and (e) any other kind of movable property. Obviously, the bank draft in question will not fall under Sub-clauses (a), (b) and (c). Nor would it be currency mentioned in Sub-clause (d). Nor would it be a negotiable instrument since drafts are not negotiable instruments and this particular draft has been specifically mentioned to be not negotiable. But the Addtional Collector has held that the draft would be a movable property based upon the definition of a 'movable property' in Section 3(36) of the General Clauses Act. That reasoning does not appear to be correct. Nor would it be foreign exchange, as held by 'the Additional Collector, in view of the would it be foreign exchange' in Section(h) of the Foreign Exchange Regulation Act, 1973 Under Section so far as drafts are concerned they would be foreign exchange if they are expressed or drawn in Indian currency but payable in any foreign currency. The draft in question is drawn in foreign currency and not in Indian currency. Under Section 2(h)(ii) any instrument payable at the option of the drawee or holder thereof or any other party thereto either in Indian currency or in foreign currency or partly in one and partly in the other would be foreign exchange. Hence, that definition also would not apply to the bank draft in question. In the circumstances, the bank draft for 65,000/- carried by the appellant would not be foreign exchange as defined in the Act. Therefore, the conclusion in this regard also by the Additional Collector appears to be incorrect.
4. An order for confiscation under Section 113(d) of the Customs Act could be passed with reference to an export goods attempted to be exported or brought within the limits of any customs area for the purpose of being exported, contrary to any prohibition by or under the Customs Act or any other law for the time being in force. In the present instance it has been already seen that the bank draft in question would neither be goods nor foreign exchange. It has been accepted by the Additional Collector himself that after the receipt of the bank draft by the appellant the time for deposit thereof into any Indian bank had not fully run out but that he had one more week time therefor. In the circumstances, the fact that he was taking out the same from India, would not amount to an export by him contrary to any prohibition imposed by or under the Customs Act or any other law for the time being in force. In the circumstances, the order for confiscation purporting to be under Section 113(d) cannot be upheld.5. The order for confiscation has been made under provisions of Section 113(h) also. Thereunder any dutiable or prohibited goods which are not included or are in excess of those included in the entry made under the Customs Act or in the case of baggage in the declaration made under Section 77 shall be liable for confiscation. According to the Department no declaration had been made in this case by the appellant.
In that event, the provisions under Section 113(h) would not be attracted, whatever may be the action to which the appellant may be exposed on the basis of failure to make a declaration under the appropriate Act. Therefore, the order of confiscation purporting under Section 113(h) of the Customs Act also does not appear to be correct.
6. In the circumstances, we accept the contention of the learned Counsel for the appellant that the order of confiscation of the bank draft in question was not valid. We, therefore, further hold that the imposition of penalty was also not called for. The appeal is, accordingly, allowed and the order of the Additional Collector dated 15-9-83 is set aside so far as it relates to the order of confiscation of the bank draft for 65,000/- and the imposition of penalty of Rs. 1 lakh imposed on the appellant.