Currency Cannot be Confiscated Merely on Suspicion, Customs Must Establish Nexus with Smuggled Gold: CESTAT [Read Order]

The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that currency cannot be confiscated merely on suspicion. It said that authorities must establish a clear nexus between the seized cash and alleged smuggled goods before invoking Section 121 of the Customs Act, 1962.

The customs officers conducted a search at the premises of a jewellery trader, Kishore Kumar Gilda in Vijayawada and seized 10 gold biscuits bearing foreign markings along with Indian currency amounting to ₹33.56 lakh.

The customs alleged that the gold biscuits were smuggled into India and that the cash represented proceeds from sale of smuggled gold. Based on these allegations, confiscation proceedings were initiated under Sections 111 and 121 of the Customs Act, along with penalties under Sections 112 and 117.

The appellant argued that the gold had been purchased locally in the ordinary course of jewellery business and that there was no evidence whatsoever connecting the seized currency with any smuggled goods.

It was further submitted that the department depended mainly on a statement recorded under Section 108 of the Customs Act, which had later been retracted.

During the proceedings, the Tribunal noted the requirements of Section 121 of the Customs Act. It observed that for confiscation of money as sale proceeds of smuggled goods, the department must establish there was an actual sale, that the goods sold were smuggled goods. Also the department should prove that the seized money represented proceeds from such sale.

CESTAT noted that in the present case, the customs authorities failed to establish any of these requirements.

The appellate bench of A.K. Jyotishi (Technical member) and Angad Prasad (Judicial member) observing decision in Bijoy Kumar Agarwala and Hanumansingh Lakhavat held that “currency cannot be confiscated merely on suspicion. In the present case, there is absolutely no evidence to establish any nexus between the seized cash and alleged smuggled gold. Therefore, confiscation of currency is also not sustainable.”

Accordingly, the tribunal set aside the confiscation of ₹33.56 lakh seized from a jeweller, observing that there was no proper evidence linking the money to sale proceeds of smuggled gold. Thus, the orders were set aside.

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