2023 (9) TMI 732 - AT - Customs

Confiscation of immovable properties procured from the sale proceeds of smuggled goods - section 121 of Customs Act, 1962 - HELD THAT - Without going into the issue of intent of sale therein, it is found that the appellant was not placed on notice of proposal to confiscate his property. Indeed, both the lower authorities have failed to determine ownership of the property in question and have merely concerned themselves with its alleged characteristic as sale proceeds of smuggled goods for dealing with it in the context of finding on gold having been smuggled. This is a dangerous trend for such action could be used whimsically to deprive any legal owner of property an act of expropriation under cover of law. The essential condition of the owner having to be placed on notice before depriving title to the goods has rendered the confiscation illicit. For that reason the impugned order is set aside - appeal allowed.

Summary

Issues Involved:
The judgment involves the scope and extent of invoking section 121 of the Customs Act, 1962 against property seemingly unrelated to any Customs Act activity, the compliance with procedural requirements under section 124 of the Customs Act, and the determination of ownership of confiscated property based on alleged connection with smuggled goods.

Issue 1: Scope of Section 121 of Customs Act, 1962:
The appeal centered on the application of section 121 of the Customs Act, 1962 concerning the confiscation of property allegedly linked to smuggling activities, as initiated by the Commissioner of Customs (Appeals) and challenged by the appellant due to lack of notice and procedural irregularities.

Details:
The impugned order dismissed the appellant's plea, including procedural aspects, following the confiscation of property under section 121 of the Customs Act, 1962. The appellant's ownership of the property and its connection to smuggling activities involving gold were key points of contention.

Issue 2: Compliance with Procedural Requirements:
The appellant argued that the confiscation of property under section 121 was unwarranted as proper procedures under section 124 of the Customs Act, 1962 were not followed, specifically regarding notice to the property owner and the opportunity to contest the confiscation.

Details:
The appellant contended that the adjudicating authority failed to comply with the notice requirements under section 124, depriving the appellant of the chance to establish lack of connection to the alleged offense. The absence of proper notice jeopardized the appellant's ability to defend ownership rights over the confiscated property.

Issue 3: Determination of Ownership of Confiscated Property:
The judgment highlighted the significance of determining ownership rights over confiscated property, emphasizing that the lower authorities focused on the property as alleged sale proceeds of smuggled goods rather than establishing clear ownership.

Details:
Both lower authorities neglected to ascertain ownership of the property in question, instead categorizing it as sale proceeds of smuggled goods. This approach was criticized for potentially enabling arbitrary deprivation of property ownership without due consideration of legal rights.

Conclusion:
The Tribunal ruled in favor of the appellant, setting aside the impugned order due to the lack of proper notice before depriving the appellant of property rights. The judgment underscored the necessity of issuing notice before confiscation, emphasizing procedural fairness over the source of funds used for property purchase.

This summary provides a detailed breakdown of the issues involved in the judgment, addressing the scope of section 121 of the Customs Act, procedural compliance under section 124, and the importance of determining ownership rights over confiscated property.