No Confiscation of Indian Currency u/s 121 without Clear Nexus to Smuggling: CESTAT Rules Investigative Statements Cannot Form Sole Basis for Seizure [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Kolkata Bench has held that Indian currency cannot be confiscated under Section 121 of the Customs Act, 1962 merely on the basis of investigative statements unless the department establishes a clear and direct nexus between the seized cash and smuggled goods through cogent evidence.

The case arose from a search conducted by officers of the Divisional Preventive Unit, Barasat Customs Division at Tarak Nath Melting House, Kolkata on June 25, 2018. During the operation officials recovered six foreign-origin gold biscuits weighing 699.810 grams and Indian currency amounting to ₹70 lakh. The department alleged that the cash represented sale proceeds of smuggled gold and confiscated the amount under Section 121 of the Customs Act.

According to the Revenue, statements recorded during investigation indicated that the seized amount had been handed over as payment in relation to smuggled gold transactions. Based on these statements, Customs authorities concluded that the currency constituted proceeds derived from smuggled goods.

The appellants argued that there was absolutely no independent evidence establishing any sale of smuggled gold or any connection between the seized currency and alleged smuggling activities. It was contended that statements recorded during investigation, without corroborative material, could not legally sustain confiscation proceedings under Section 121.

The Bench comprising Ashok Jindal and K. Anpazhakan observed that the department had failed to trace the source of the currency or establish any actual transaction involving smuggled gold. The Bench noted that no corroborative evidence whatsoever had been produced to justify confiscation of the cash.

The Tribunal further held that mere suspicion, cannot substitute proof and investigative statements alone cannot ipso facto form the sole basis for confiscating Indian currency as sale proceeds of smuggled goods.

Relying upon the decision in Ramchandra v. Collector of Customs, the Bench reiterated that the department must establish actual sale of smuggled goods, identify the buyer and seller, and prove the connection between the seized cash and smuggling activity before invoking Section 121 of the Customs Act.

Accordingly, the bench held that none of these essential ingredients had been proved, the Tribunal set aside the confiscation of ₹70 lakh and allowed the appeal on this issue.

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