Penalty for smuggling upheld, but confiscation of currency failed for lack of proof linking it to sale proceeds of smuggled gold.

Active involvement in smuggling and movement of foreign-marked gold attracted penalty, as the appellant's own statement and corroborating evidence established participation in the contraband operation. Confiscation of foreign currency, traveller's cheques and bank drafts as alleged sale proceeds of smuggled gold was unsustainable because the Revenue failed to prove the necessary nexus between the seized instruments and a proved smuggled gold sale. The penalty was upheld, but the confiscation of currency-related instruments was set aside, granting partial relief.

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Issues: (i) Whether the appellant was liable to penalty for his active involvement in the smuggling and movement of foreign-marked gold. (ii) Whether the confiscation of foreign currency, traveller's cheques and bank drafts under Section 121 of the Customs Act, 1962 was sustainable as sale proceeds of smuggled gold.

Issue (i): Whether the appellant was liable to penalty for his active involvement in the smuggling and movement of foreign-marked gold.

Analysis: The appellant's statement admitted the modus operandi adopted for sending contraband gold through Kathmandu, and this was corroborated by the statements of co-noticees. The material on record established that he was actively involved in the smuggling operation and that the gold seized from the premises was traceable to his activities.

Conclusion: The penalty was rightly imposed under the Customs Act and the Gold (Control) Act.

Issue (ii): Whether the confiscation of foreign currency, traveller's cheques and bank drafts under Section 121 of the Customs Act, 1962 was sustainable as sale proceeds of smuggled gold.

Analysis: For confiscation under Section 121, the Revenue had to establish that the currency represented sale proceeds of smuggled gold and prove the necessary link between the sale, the smuggled gold, the persons involved, and the quantity. On the facts, that link was not proved to the required standard, and the materials on record did not establish that the seized currency represented sale proceeds of smuggled gold.

Conclusion: The confiscation of the seized currency was not sustainable and was set aside.

Final Conclusion: The order was sustained to the extent of penalty but the confiscation of currency and related instruments was set aside, resulting in a partial relief to the appellant.

Ratio Decidendi: Confiscation of currency as sale proceeds of smuggled gold under Section 121 of the Customs Act, 1962 is permissible only when the Revenue proves the requisite nexus between the currency and the proved smuggled sale transaction.

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