2022 (8) TMI 841 - AT - Customs

Undervaluation - Rejection of request of importer for provisional release of seized currency - rejection on the ground that since the investigation by DRI was under process, release cannot be ordered and there is no provision under the Customs Act for provisional release of the currency - HELD THAT - Whether or not the allegations leveled in the Show Cause Notice stands the fate of truth is not the subject matter of present adjudication which is confined merely to the question as to whether the currency notes seized from the premises of the appellant despite being alleged to be sale proceeds of the imported goods owned by appellant, can be provisionally released. Show Cause Notice is sufficient to show that investigation has been concluded in this matter. Hence first ground for rejecting appellant s request for provisional release of currency is now redundant. Coming to the other ground of rejection that there is no provision of law to provisionally release the currency notes, it is observed that section 110 of Custom Act 1962 rather requires that any goods seized under section 110 of Customs Act 1962 may pending adjudication can be released provisionally on taking bond with security or such conditions as may be required - No doubt in terms of section 121 of Customs Act, the sale proceeds of smuggled goods shall be liable to confiscation, but apparently the said provision shall not be applicable to the present case wherein there is no allegation of goods imported in question to be smuggled one. The allegations against the importing firm are that the goods as have been imported are undervalued. The Hon ble Apex Court in the case of Gurmukh Singh vs UOI 1983 (12) TMI 69 - HIGH COURT OF PUNJAB AND HARYANA, CHANDIGARH has held that where there is nothing to prove that the amount which is sought to be confiscated is sale proceed of smuggled goods, that must be returned to the person from whom it is seized and authorities are not empowered to take said money into custody. The said money has been taken into custody as on the sole consideration that the appellant is beneficial owner of the goods imported by M/s. Rudra Overseas. The correctness of the said allegation has yet to undergo the test of truth. Hon ble Apex Court also in the case of Commissioner of Customs New Delhi vs. Euroasia global 2009 (3) TMI 199 - SUPREME COURT has considered the question as to whether mis-declaration of description and value constitute smuggling as defined under section 2(39) of Customs Act, 1962, the question was decided in negative. Further the release of currency notes was stayed but for the reason that the Hon ble High Court had granted unconditional release of cash. Thus, it is clear that belief of the department about the impugned currency notes to be the sale proceeds of imported goods allegedly under-valued goods, but otherwise not alleged to be smuggled goods cannot, be a reason to deny the provisional release of the said currency. The said belief is still to be proved by the department - The release of currency notes otherwise also cannot be denied merely on the basis of statements as was held by Hon ble Supreme Court of Madras in the case of J K.S. Air travels vs Chief Commissioner of Customs, Chennai-I, 2015 (12) TMI 536 - MADRAS HIGH COURT . Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Provisional release of seized currency
- Interpretation of Customs Act provisions
- Allegations of under-valuation and ownership
- Legal basis for provisional release of currency
- Compliance with statutory provisions

Analysis:
1. Provisional Release of Seized Currency:
The appeal challenged the rejection of the request for provisional release of seized currency amounting to Rs.82,67,900/- and USD 5000. The currency was alleged to be the sale proceeds of imported goods owned by the appellant. The appellant contended that the investigation was complete, and the currency should be released provisionally. The department argued against the release, leading to the rejection of the request.

2. Interpretation of Customs Act Provisions:
The appellant argued that currency falls under the definition of 'goods' as per section 2(22) of the Customs Act, 1962, making it eligible for provisional release under section 110A. The Tribunal analyzed the relevant legal provisions, including CBIC Circular No. 35/2017, to determine the applicability of these provisions to the case at hand.

3. Allegations of Under-Valuation and Ownership:
The seized currency was linked to the under-valuation allegations concerning the imported goods owned by the appellant. The show cause notice implicated the appellant as the bona fide owner of the goods. However, the Tribunal clarified that the current adjudication was not about the truth of these allegations but focused on the provisional release of the currency.

4. Legal Basis for Provisional Release of Currency:
The Tribunal emphasized that the Customs Act allows for the provisional release of seized goods, including currency, pending adjudication. It cited precedents and legal provisions to support the argument that the currency could be provisionally released based on statutory provisions and guidelines.

5. Compliance with Statutory Provisions:
The Tribunal highlighted the importance of following statutory provisions and legal principles in deciding on the provisional release of seized currency. It underscored that the belief of the department regarding the currency being sale proceeds should not be the sole reason to deny provisional release, especially when there is no evidence to support the confiscation of the currency.

In conclusion, the Tribunal set aside the order rejecting the provisional release of the currency, emphasizing that the belief of the department needed to be substantiated with evidence. The appeal was allowed based on the interpretation of relevant legal provisions and the lack of legal grounds to withhold the provisional release of the seized currency.