2013 (9) TMI 466 - AT - Customs

Tribunal rules in favor of appellant in currency confiscation case under Customs Act & FERA

The Tribunal ruled in favor of the appellant in a case involving the confiscation of foreign currency under the Customs Act and FERA. The appellant ... Confiscation u/s 111(d) and 121 r.w. section 13(1) of FERA – revenue could not produce any licit documents for acquisition and possession of the foreign currency recovered from him – Held that:- Revenue failed to discharge the burden - confiscation u/s 111(d) was not sustainable - the burden to prove that the foreign currency had been obtained through illicit means lies on the Revenue – assessee had been able to prove that the foreign currency had obtained by them against an export order and the goods had exported against that export order - Court relied upon Pukhraj Nihalchand Jain vs. Commissioner of Customs (2003 (3) TMI 374 - CEGAT, MUMBAI) – order was set aside – appeal decided in favour of assessee. Issues:- Confiscation of foreign currency under Customs Act and FERA- Allegation of smuggling and confiscation of currency- Appellant's defense of foreign currency as advance for export order- Retraction of statement and evidentiary value- Legal principles regarding confessional statementsConfiscation of Foreign Currency under Customs Act and FERA:The appeal was filed against the order confiscating US $10,100 under Sections 111(d) and 121 of the Customs Act, 1962, along with a penalty imposed under FERA, 1973. The appellant failed to produce legitimate documents for the foreign currency, leading to its seizure and initiation of proceedings.Allegation of Smuggling and Confiscation of Currency:The appellant was apprehended with the foreign currency, initially claiming it as sale proceeds of smuggled goods. However, the appellant later provided evidence that the currency was an advance for an export order from foreign nationals. The appellant argued that the currency was not obtained through illicit means and should not be confiscated.Appellant's Defense of Foreign Currency as Advance for Export Order:The appellant contended that the seized amount was an advance for an export order, supported by documents like export orders, affidavits, and passports of foreign nationals. The appellant highlighted the trade practice of receiving foreign currency for export orders and cited relevant legal guidelines and precedents to support the defense.Retraction of Statement and Evidentiary Value:The appellant retracted the initial statement about the currency being proceeds of smuggled goods within 15 days, presenting documentary evidence to support the claim of it being an advance for an export order. The Tribunal emphasized the importance of corroborating evidence and the reduced weight of retracted statements in determining the evidentiary value.Legal Principles Regarding Confessional Statements:The Tribunal considered legal principles related to confessional statements recorded under Section 108 of the Customs Act. It emphasized the need for corroborating evidence when statements are retracted and highlighted that a case cannot solely rely on retracted statements without rejecting supporting documents. The Tribunal also noted the absence of evidence proving the currency as proceeds of smuggled goods obtained through illicit means.In the final judgment, the Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal with consequential relief. The decision was based on the appellant's ability to prove that the foreign currency was obtained against an export order and used for exporting goods, thereby rendering the confiscation under the Customs Act unsustainable.