2020 (3) TMI 774 - HC - Customs

Smuggling - Bangladesh currency taka - Whether on the facts and in the circumstances of the present case, the Tribunal has proceeded on irrelevant considerations and has erred in passing the impugned order dated 28-4-2017 and in approving the order-in-appeal dated 31-5-2016 and order-in-original dated 7-12-2015 without examining the entire record? - HELD THAT - On perusal of sub-section (1), it is explicit that when any goods to which the Section applies are seized under the Act under a reasonable belief that they were smuggled goods, the burden of establishing that they were not smuggled goods, shall lie upon the person from whose possession the goods were seized. Sub-section (2) has applicability insofar as gold and manufactures thereof are concerned and to watches as well. However, the Central Government has been empowered to extend its applicability to any other class of goods by issuance of notification in the Official Gazette in that behalf - The Indian currency seized in the present case falls outside the ambit of Section 123 of the Act not being a notified item. However, by virtue of Section 121 of the Act, it is still liable to be confiscated provided it is as a result of sale proceeds of smuggled goods. In such a situation, the presumption contained in Section 123 of the Act would not be available to the Revenue which can be relied upon. Even though the provisions of the Evidence Act, 1872 (In short, the 1872 Act) are not applicable to proceedings under the Act, yet the broad principles and rule of evidence contained in Section 101 of the 1872 Act regarding Burden of proof would place the initial burden on the Department to establish by producing material evidence that the Indian currency or the asset sought to be confiscated was a result of sale proceeds of smuggled goods. In the present case, the appellant from whose possession cash of ₹ 8,23,100/- was seized had by preponderance of evidence shown that partly the amount was for the purpose of discharging the loan which was taken by him from his father-in-law - In the absence of any material to substantiate the allegation of the Revenue, the Additional Commissioner of Customs (Preventive), the Commissioner (Appeals) and the CESTAT were not justified in upholding the order of confiscation of the amount of ₹ 8,23,100/- and imposition of the penalty in respect thereof. The substantial question of Law is answered in favour of the appellant and against the Revenue relating to seizure of Indian currency of ₹ 8,23,100/- - appeal disposed off.

Summary

Issues Involved:
1. Confiscation of Indian currency under Section 121 of the Customs Act, 1962.
2. Confiscation of Bangladeshi Taka under Section 111(b) and (d) of the Customs Act, 1962.
3. Burden of proof under Section 123 of the Customs Act, 1962.

Detailed Analysis:

1. Confiscation of Indian Currency under Section 121 of the Customs Act, 1962:
The appellant contested the confiscation of Indian currency amounting to ?8,23,100/- seized from his shop. The Revenue assumed that this amount was the sale proceeds of smuggled goods without providing any cogent evidence. The court noted that Section 121 of the Act requires the sale proceeds to be a result of smuggling of goods and that the sale was made by a person having knowledge that the goods were smuggled. The court emphasized that the burden of proof lies on the Department to establish, with material evidence, that the Indian currency was indeed from the sale of smuggled goods. The appellant presented evidence, including statements and financial records, indicating that part of the money was for repaying a loan from his father-in-law. The court found that the Revenue failed to substantiate its claims with convincing evidence, and thus, the confiscation of Indian currency was not justified.

2. Confiscation of Bangladeshi Taka under Section 111(b) and (d) of the Customs Act, 1962:
The appellant's shop was also found with Bangladeshi Taka 3,32,335/- valued at ?2,32,635/-. The appellant claimed that this currency belonged to his cousin, a Bangladeshi national visiting India. The court noted that the confiscation of Bangladeshi Taka did not raise any substantial question of law and upheld the lower authorities' decision to confiscate the foreign currency under Section 111(b) and (d) of the Act.

3. Burden of Proof under Section 123 of the Customs Act, 1962:
The court examined the applicability of Section 123 of the Act, which deals with the burden of proof in cases involving smuggled goods. It was noted that Section 123 applies to specific goods like gold, watches, and other notified items, but not to Indian currency. Therefore, the presumption under Section 123 was not available to the Revenue for the Indian currency. The court reiterated that the initial burden of proof lies on the Department to show that the Indian currency was linked to smuggling activities. The appellant had provided sufficient evidence to suggest that the seized Indian currency was legitimate, including his business records and the loan from his father-in-law.

Conclusion:
The court concluded that the Revenue failed to provide sufficient evidence to justify the confiscation of the Indian currency under Section 121 of the Customs Act. The appellant's evidence was found credible, and the confiscation order was overturned. However, the confiscation of Bangladeshi Taka under Section 111(b) and (d) was upheld. The appeal was disposed of in favor of the appellant concerning the Indian currency but not the Bangladeshi Taka.