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of <h1>Tribunal overturns confiscation and penalty, finding appellants' business lawful. Importance of event sequence highlighted.</h1> <h3>WALL STREET FINANCE LTD. Versus COMMISSIONER OF CUSTOMS (PREV.), MUMBAI</h3> WALL STREET FINANCE LTD. Versus COMMISSIONER OF CUSTOMS (PREV.), MUMBAI - 2007 (209) E.L.T. 427 (Tri. - Mumbai) Issues Involved:1. Confiscation of Rs. 68 lakhs received by the appellants in the shape of two bank drafts from TTC.2. Confiscation of Rs. 23 lakhs adjusted by the appellants from the security deposit given by TTC.3. Imposition of personal penalty of Rs. 20 lakhs upon the appellants.4. Locus standi of the appellants to maintain the appeal.Detailed Analysis:Confiscation of Rs. 68 Lakhs:The appellants, a Full Fledged Money Changer (FFMC), sold VISA Brand Travellers' Cheques (TCs) to TTC, another FFMC, under a legal agreement. The TCs were sold in the normal course of business, and TTC paid the appellants Rs. 68 lakhs through two pay orders. The Customs authorities confiscated this amount, alleging it was the sale proceeds of smuggled goods. The Tribunal held that the act of smuggling must precede the sale of the goods for the sale proceeds to be confiscated under Section 121 of the Customs Act. Since the TCs were sold legally within India and the appellants received the payment before the TCs were smuggled out, the amount could not be considered as sale proceeds of smuggled goods. The Tribunal referenced the case of B.P. Nayak v. Commissioner of Customs (Prev.), Mumbai [2001 (136) E.L.T. 604 (Tri.)] to support this position.Confiscation of Rs. 23 Lakhs:The appellants had adjusted Rs. 23 lakhs from the security deposit given by TTC. The Tribunal found that this amount could not be considered as sale proceeds of smuggled goods either, as it was part of a legal transaction and security deposit. The Tribunal reiterated that the Indian currency received by the appellants as consideration for the sale of TCs to another FFMC, in accordance with the law, could not be held to be the sale proceeds of smuggled TCs.Imposition of Personal Penalty:The Commissioner of Customs imposed a personal penalty of Rs. 20 lakhs on the appellants. The Tribunal set aside this penalty, noting that the appellants had conducted their business legally and there was no evidence of their involvement in the smuggling activities. The Tribunal also referenced another adjudication order dated 25-5-2003, where penal charges against the appellants were dropped, further supporting the decision to set aside the penalty.Locus Standi:The initial appeal was rejected by the Tribunal on the grounds that the appellants had no locus standi. However, the High Court of Mumbai, in Writ Petition No. 493/00 [2006 (202) E.L.T. 776 (Bom.)], held that the appellants did have the locus standi to maintain the appeal. Consequently, the matter was remanded to the Tribunal for fresh hearing. The Tribunal acknowledged this directive and proceeded to hear the appeal on merits.Conclusion:The Tribunal set aside the confiscation of Rs. 68 lakhs and Rs. 23 lakhs, as well as the personal penalty of Rs. 20 lakhs, holding that the amounts were not sale proceeds of smuggled goods and that the appellants had conducted their business legally. The appeal was allowed with consequential relief to the appellants. The Tribunal emphasized the importance of the sequence of events, noting that the legal sale of TCs and receipt of payment by the appellants occurred before any smuggling activities took place.
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