15 January 2024 Administrative Law >> Constitution & Law Procedure   |   Custom Duty >> Tax Laws  

In a recent writ petition, a foreign national (hereinafter "Petitioner") successfully challenged the inaction of the Indian Customs Department regarding the release of seized foreign currency.

Facts:

The Petitioner, while attempting to depart India via Delhi Airport in December 2019, was found to be carrying USD 18,500 without declaring it to customs officials. This act constitutes a violation under the Customs Act, 1962 (the "Act"). Consequently, the authorities seized the aforementioned currency pursuant to Section 110 of the Act.

Adjudication Order and Redemption Option:

Following adjudication proceedings, the Petitioner was presented with an option authorized by Section 125 of the Act. This provision empowers authorities to offer the redemption of seized goods upon payment of a designated fine. In this instance, the Petitioner was granted the opportunity to reclaim the seized currency by tendering a redemption fine of Rs. 2,60,000/-. However, this option came with a strict temporal limitation – a mere three months from the issuance of the order.

Petitioner's Contentions:

The Petitioner asserted that the unforeseen circumstances arising from the Covid-19 pandemic and subsequent lockdowns significantly impeded their ability to exercise the redemption option within the prescribed timeframe. In support of their argument, the Petitioner cited a relevant Supreme Court order extending limitation periods due to the pandemic, urging the court to adopt a more flexible approach.

Customs Department's Response:

The Customs Department countered the Petitioner's claims by emphasizing the missed deadline for exercising the redemption option. They maintained that even after considering the Covid-related extension, the Petitioner's opportunity to reclaim the currency had undeniably expired.

Court's Reasoning and Interpretation:

The court acknowledged the standard 120-day window mandated by Section 125 for exercising the redemption option. However, the court opted for a nuanced interpretation due to the unique nature of the seized item – foreign currency.

The court meticulously examined the Adjudication Order itself, which explicitly directed the Customs Department to recover the redemption fine from the seized currency. This specific directive, according to the court, could be construed as a "deemed payment" of the fine by the Petitioner on the very date of the order's issuance.

Court's Order:

Based on this interpretation, the court found the Customs Department's inaction to be unjustifiable. Consequently, the court ruled in favor of the Petitioner, issuing a writ directing the department to release the remaining amount (USD 18,500 minus the redemption fine) within a period of two weeks.

  Customs Act, 1962