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2010 (9) TMI 331 - HC - CustomsConfiscation Sale proceeds of smuggled goods - authorities have not accepted the retraction of the statement by the Respondent - Respondent in his statement categorically mentioned that the goods of foreign origin were belonging to him and were brought to the room by cargo and that the goods were sent to him by person who is residing in Dubai - It was pertinent to note that room in the hotel was booked in the name of the Respondent - By the said statement the Respondent has therefore accepted in clear terms that he was dealing in goods of foreign origin and that the goods recovered from the said room were belonging to him and that the Indian currency was the sale proceeds out of the sale of foreign goods - in the absence of any corroboration to the case of the Respondent that the said amount was advanced by the party with whom he had entered into an Agreement for running the hotel business Confiscation upheld
Issues Involved:
1. Whether CESTAT was correct in setting aside the absolute confiscation of Indian Currency amounting to Rs. 2,27,100/- under Section 121 of the Customs Act, 1962. 2. Whether the findings of the Tribunal that the Revenue had failed to establish the necessary ingredients for invoking Section 121 of the Customs Act, 1962, were based on no evidence or partly relevant or partly irrelevant evidence and were otherwise perverse and arbitrary. Detailed Analysis: Issue 1: Confiscation of Indian Currency under Section 121 of the Customs Act, 1962 The Customs Appeal was filed by the Commissioner of Customs against the CESTAT's order which set aside the absolute confiscation of Indian Currency amounting to Rs. 2,27,100/- under Section 121 of the Customs Act, 1962. - Factual Background: - On 31st July 1992, a search was conducted at Room No. 103, Hotel Hayat, leading to the recovery of electronic goods of foreign origin and Indian currency. The occupant, referred to as the Respondent, could not produce legal documents for these goods. The goods and currency were seized under the belief that they were smuggled and liable for confiscation under the Customs Act. - The Respondent's statement under Section 108 of the Customs Act admitted that the goods were sent by one Abdullah Mohammed from Dubai and brought to the hotel by one Siddique without duty-paying documents. The Indian currency was stated to be the sales proceeds of these goods. - The Respondent later retracted his statement, claiming the goods belonged to a friend and the currency was given to him for hotel business under an agreement dated 24-7-1992. - Adjudication by Customs Authorities: - The Deputy Commissioner of Customs confirmed the show cause notice, ordering the absolute confiscation of the goods and currency, and imposed penalties. - The Commissioner of Customs (Appeals) initially remanded the matter for de novo consideration due to breach of natural justice, but the Deputy Commissioner reaffirmed the confiscation upon reconsideration. - CESTAT's Decision: - The CESTAT allowed the appeal, setting aside the confiscation of the Indian currency and penalties, stating that the revenue failed to prove the currency was the sale proceeds of smuggled goods as required under Section 121 of the Customs Act. Issue 2: Tribunal's Findings on Evidence and Legal Requirements - Tribunal's Approach: - The Tribunal did not consider the Respondent's retraction letter dated 15-9-1992 and focused solely on the requisites of Section 121. - It concluded that the revenue did not fulfill the burden of proof required under Section 121, thereby setting aside the confiscation. - High Court's Analysis: - The High Court found merit in the appellant's argument that the retraction was an afterthought and unreliable. - The Respondent's initial statement on 31-7-1992 was deemed a substantive piece of evidence, clearly admitting the goods were of foreign origin and the currency was sale proceeds from these goods. - The retraction, made one and a half months later, lacked credibility as the Respondent did not produce supporting documents immediately or inform the authorities about the agreement dated 24-7-1992 during the seizure. - The High Court questioned the genuineness of the agreement and noted inconsistencies, such as the stamp paper's date differing from the agreement date. - Conclusion: - The High Court held that the Tribunal misdirected itself by not considering the Respondent's initial statement and the lack of corroborative evidence for the retraction. - The Tribunal erred in concluding that the conditions under Section 121 were not fulfilled. Judgment: The High Court answered the questions of law in favor of the appellant (Revenue) and against the Respondent (Assessee). The appeal was allowed, the CESTAT's order was set aside, and the order of the Commissioner (Appeals) and the original order were upheld.
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