2017 (9) TMI 596 - AT - Customs

Jurisdiction of Customs Department - Recovery and seizure of Cash currency - Held that - when the matter is pending before the Enforcement of Directorate (E.D.) and Income Tax Department, then the matter cannot be considered by the Customs Department, as no imported item has been seized/recovered - the Government of India functions on the basis of Business Conduct Rules , where the work has been distributed to various Department - In the instant case, recovery of the money, may be un-accounted money, primarily, is the subject matter of Income Tax Department and certainly, not of the Customs Department as no imported item was recovered during search. It is also the allegation of the Department that another Company known as M/s Kalpena Industries Ltd. had imported plastic granules without paying proper duty, but sold the same in the open market at a higher price with the help of the assessee-company and it is the sale consideration of plastic granules - Held that - action may be taken against M/s Kalpena Industries Ltd., who had imported the plastic granules. M/s Kalpena Industries Ltd. is an independent legal identity. The assessee company cannot be penalized, especially, when the appellant is engaged in an independent business of Real Estate. There is no justification to detain the cash amount and the same is directed to be released of course, provisionally by the Customs Department as per C.B.E & V Circular No.686/2/2003-CX dated 02.01.2003 as amended from time to time - decided partly in favor of appellant.

Summary

Issues:
Appeal against Order-in-Original seizing cash currency recovered during a search operation. Allegation of involvement in sale of plastic granules without paying proper duty. Request for release of seized currency. Jurisdictional matters pending before High Court. Nexus between seized currency and contraband goods.

Analysis:
The appeal was filed against the Order-in-Original seizing cash currency recovered during a search operation at the appellant's business premises. The Department alleged that the appellant was involved in the sale of plastic granules without paying proper duty. The appellant contended that the seized cash was related to real estate transactions, not plastic granules. The appellant argued that the cash was fully explained and requested the release of the amount along with interest. The Department supported the impugned order, stating that the recovered amount had been deposited in the bank as a fixed deposit. The Customs Department's jurisdiction was questioned as the matter was pending before the Enforcement Directorate and Income Tax Department, and no imported item was seized.

The Tribunal observed that the Customs Department could not consider the matter when no imported item was recovered during the search operation. It was noted that the recovery of unaccounted money fell under the jurisdiction of the Income Tax Department, not the Customs Department. The Tribunal emphasized that the appellant and M/s Kalpena Industries Ltd. were different legal entities, engaged in separate businesses. The Tribunal referred to legal precedents to establish the statutory requirements for proving a link between seized currency and contraband goods. It was held that the burden to prove that the seized currency was the sale proceeds of contraband goods rested with the Revenue.

Considering the totality of facts and circumstances, the Tribunal found no justification to detain the cash amount and directed its provisional release in accordance with Circular No.686/2/2003-CX. Legal judgments were cited to support the decision to release the refund provisionally in favor of the appellant within three months. The Tribunal referred to a High Court case emphasizing the need for authorities to take security from the appellant in accordance with regulations. The appeal was disposed of by modifying the impugned order to release the refund provisionally in favor of the appellant.

In conclusion, the Tribunal's decision was based on the lack of evidence linking the seized cash to contraband goods, the jurisdictional issues, and the legal precedents regarding the burden of proof on the Revenue. The provisional release of the seized currency was ordered, taking into account the specific circumstances of the case and relevant legal principles.