2019 (10) TMI 897 - AT - Customs

Restricted import or not - Nepalese currency - N/N. FEMA 6/ RB-2000 dated 03.05.2000 - Confiscation - penalty - HELD THAT - The confiscation ordered by Original Authority and sustained through impugned Order-in-Appeal is under the provisions of section 121 of Customs Act, 1962. Under said section of 121 of Customs Act, 1962 only such proceeds can be confiscated which are sale proceeds of sale of smuggled goods. It is established that there were no smuggled goods and therefore the question of sale of smuggled goods in the present appeal does not arise. Further when the smuggled goods are sold in India, they were sold against the exchange of Indian currency. How the smuggled goods are sold in exchange of Nepalese currency within the territory of India has not be explained anywhere by Revenue. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Confiscation of Nepali currency under section 121 of Customs Act, 1962
2. Confiscation of vehicle
3. Imposition of penalty under sections 112, 114, and 117 of Customs Act, 1962

Analysis:

Issue 1: Confiscation of Nepali currency under section 121 of Customs Act, 1962
The case involved the confiscation of Nepali currency from an individual possessing it in India. The appellant argued that possessing Nepalese currency in India was not a violation as per the law, citing a notification from the Reserve Bank of India. The appellant, engaged in the business of money exchange, contended that there was no violation on their part. The Original Authority had confiscated the currency without giving an option to redeem it, based on the presumption that the funds were used for unlawful purposes. However, the Tribunal noted that under section 121 of the Customs Act, 1962, confiscation is limited to proceeds from the sale of smuggled goods. As there was no evidence of smuggled goods or their sale, the confiscation of the currency was deemed unsustainable.

Issue 2: Confiscation of vehicle
The case also involved the confiscation of a vehicle along with the currency. The Original Authority had allowed redemption of the vehicle on payment of a fine. The Tribunal, after considering the lack of evidence regarding smuggled goods or their sale, set aside the impugned order, which included the confiscation of the vehicle.

Issue 3: Imposition of penalty under sections 112, 114, and 117 of Customs Act, 1962
The Original Authority had imposed penalties on the appellants under various sections of the Customs Act, 1962. However, the Tribunal, upon finding that the basis for the penalties was flawed due to the absence of evidence regarding smuggled goods, set aside the impugned order and allowed all the appeals. The Tribunal emphasized the necessity for the Customs authorities to establish the sale of smuggled goods before confiscation or imposition of penalties under the relevant sections of the Act.

In conclusion, the Tribunal found that the confiscation and penalties imposed lacked a legal basis due to the absence of evidence of smuggled goods or their sale. As a result, the impugned order was set aside, and all the appeals were allowed.