2005 (8) TMI 141 - AT - Customs

Summary

Issues:
1. Locus standi to claim impugned currency seized from the Bank.
2. Interpretation of Section 121 of the Customs Act, 1962 regarding confiscation of sale proceeds of smuggled goods.

Analysis:
1. The Tribunal was tasked with determining whether the appellants had the standing to claim the currency confiscated by Revenue. The case involved M/s. Tiruchi Enterprises depositing sale proceeds of foreign currency smuggled out of India in their Bank account, subsequently obtaining pay orders and purchasing more foreign currency from the appellants for smuggling purposes. The Tribunal noted that the appellants were unaware of the smuggling activities of M/s. Tiruchi. The Directorate of Revenue Intelligence seized the pay orders before the appellants could encash them, leading to the Banks depositing the corresponding amounts with Revenue.

2. The appellants argued that the seized money no longer represented the initial smuggled currency's sale proceeds and thus could not be confiscated under Section 121 of the Customs Act, 1962. They relied on a Supreme Court decision stating that pay orders are equivalent to cash and cannot be confiscated. Revenue contended that the sale proceeds were still in the Bank and had not changed character since the pay orders were not encashed. The Tribunal emphasized that the purpose of Section 121 was to confiscate proceeds of crime and that the money, despite internal bank transfers, still represented sale proceeds of smuggled currency, justifying its confiscation.

3. The Tribunal distinguished the cited Supreme Court decision, emphasizing that in the present case, the Bank could not honor the pay orders as the money had been seized by Revenue. Therefore, the appellants could pursue legal remedies against M/s. Tiruchi for breach of contract. Ultimately, the Tribunal upheld the confiscation of the currency, endorsing previous decisions and rejecting a contrary decision. The appeals were remanded to the referral Bench for further proceedings based on the Tribunal's findings.

This detailed analysis of the judgment highlights the issues of locus standi and the interpretation of Section 121 in the context of confiscating sale proceeds of smuggled goods, providing a comprehensive understanding of the Tribunal's decision.