2004 (11) TMI 153 - AT - Customs

Summary

Issues:
1. Confiscation of Indian currency under Section 121 of the Customs Act.
2. Determining whether the confiscated amounts were sale proceeds of smuggled foreign exchange.
3. Applicability of Section 121 of the Customs Act to the case.
4. Complicity of the appellants in the nefarious activities of Hotel Zam Zam Money Changing Division.

Issue 1: The appeal involved the confiscation of Indian currency belonging to the appellants under Section 121 of the Customs Act. The Commissioner confiscated the amounts based on the premise that they represented sale proceeds of smuggled foreign currency deposited in the accounts of Hotel Zam Zam Money Changing Division.

Issue 2: The Tribunal analyzed whether the confiscated amounts were indeed sale proceeds of smuggled foreign exchange. It was observed that the Indian currency confiscated from the appellants' accounts was a result of genuine transactions involving the sale of foreign currency obtained regularly from the RBI. The investigation did not establish any taint on the foreign currency sold by the appellants.

Issue 3: The Tribunal delved into the applicability of Section 121 of the Customs Act to the case at hand. It was noted that the Commissioner's finding that the confiscated amounts were lying in Hotel Zam Zam's accounts was factually incorrect. The Tribunal emphasized that Section 121 could not be stretched to apply to sale proceeds when changed in form, and it only applied to immediate sale proceeds of smuggled goods.

Issue 4: The Tribunal examined the complicity of the appellants in the activities of Hotel Zam Zam Money Changing Division. It was highlighted that unlike other cases, the appellants' transaction was complete, and the remuneration for the sale of foreign currency had entered their accounts legitimately. The Tribunal found no evidence implicating the appellants in the nefarious activities associated with Hotel Zam Zam Money Changing Division.

The Tribunal referred to a previous case, B.P. Nayak v. CC (P), Mumbai, where it was held that confiscating monies under Section 121 of the Customs Act in genuine transactions would lead to absurd results. Based on the discussions and analysis, the Tribunal concluded that the confiscated amounts could not be considered as sale proceeds of smuggled foreign exchange. The appeal was allowed, and the order confiscating the Indian currency belonging to the appellants was set aside.