2017 (7) TMI 230 - AT - Customs

Confiscation Order Overturned Due to Lack of Evidence and Procedural Flaws

The Tribunal set aside the impugned order concerning the confiscation of cash seized during a search, as there was no evidence linking the currency to the ... Validity of confiscation proceedings - seizure of cash - Valuation - It is alleged that the respondent arranged for the sale of cloves and other spices to various Indian importers with an arrangement to issue substituted invoices indicating prices to be much lower than the actual transaction value - Held that: - adjudicating authority has failed to examine the facts arising from the various statements and has failed to test the conclusions derivable therefrom for validity and reliability. Without such ascertainment of smuggling of goods, of disposal of smuggled goods, of knowledge that the goods are smuggled, and of the currency having been received from the buyers of smuggled goods, a decision to drop proceedings or to confiscate would lack the authority of law - it is necessary that this notice be brought to its logical conclusion by a fresh adjudication - appeal allowed by way of remand. Issues involved: Proceeds of sale of smuggled goods, confiscation of seized cash, nexus between seized currency and sale proceeds, validity of statements, legal authority for confiscation, flaws in seizure proceedings, examination of evidence, remand for fresh adjudication.Analysis:1. The appeal filed by Revenue concerns the confiscation of cash amounting to Rs. 1.02 crores seized during a search at the premises of the respondent, who was alleged to be involved in arranging the sale of cloves and other spices to Indian importers through substituted invoices indicating lower prices than the actual transaction value. The seized currency was explained as proceeds being retained by the respondent to ensure importers remit the differential value to the supplier in Singapore.2. The adjudicating authority found no evidence linking the seized currency to the sale proceeds of smuggled spices, emphasizing the lack of nexus between the goods and the currency. The denial by the respondent of any association with the sale proceeds, despite an earlier admission in a statement, was considered an afterthought by the Authorized Representative.3. The Authorized Representative relied on previous Tribunal decisions to support the contention that a retraction of a statement after a prolonged lapse of time is not acceptable. The relevance of the Hon'ble Supreme Court's decision in a different context was also discussed, highlighting the procedural differences in the present dispute governed by the Customs Act, 1962.4. The Counsel for the respondent urged acceptance of the findings in the impugned order due to procedural lacunae in the proceedings, which were elaborated upon. The Tribunal noted the emphasis on seizure proceedings but clarified the focus on the legality and propriety of the confiscation proceedings.5. The Tribunal emphasized the importance of establishing a reasonable belief in dealing with smuggled goods to permit confiscation of sale proceeds, regardless of the direct association of the seized person with the sale or goods. The inadequacy of examining facts and testing conclusions from statements led to the finding that the impugned order lacked legal authority.6. Consequently, the Tribunal set aside the impugned order, leaving only the show cause notice pending. The matter was remanded back to the original authority for a fresh adjudication, emphasizing the need to examine evidence thoroughly to determine the issue afresh.This detailed analysis of the judgment highlights the key issues, legal arguments, and the Tribunal's decision to set aside the impugned order for a fresh adjudication based on a more comprehensive examination of the evidence.