Revenue fails to prove third country origin for seized silver jewellery and currency under Section 123

CESTAT Kolkata dismissed Revenue's appeal challenging confiscation of silver jewellery (79.58 kgs), silver boondi (50 kgs), and Indian currency (Rs. 79 lakh) seized from respondent trader's premises. Court held Revenue failed to establish goods were of third country origin despite presumption under Section 123, as no evidence showed foreign markings or seizure at port/airport. Without proving third country origin, confiscation was unjustified. Revenue also failed to prove currency represented sale proceeds of contraband goods. Appeal dismissed, upholding Commissioner (Appeals) order.

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Issues Involved:
1. Confiscation of Silver Boondi and Silver Jewellery under Sections 111 and 123 of the Customs Act, 1962.
2. Confiscation of Indian Currency as sale proceeds of smuggled goods under Section 121 of the Customs Act, 1962.
3. Imposition of Penalty under Section 112 of the Customs Act, 1962.

Summary:

1. Confiscation of Silver Boondi and Silver Jewellery:
The Revenue alleged that the Silver Boondi and Silver Jewellery recovered from the respondent were of third country origin and thus liable to confiscation under Sections 111 and 123 of the Customs Act, 1962. However, the Tribunal found no evidence proving the goods were of foreign origin. The respondent provided purchase invoices and stock records, which were accepted as valid. The Tribunal emphasized that "reasonable belief" for seizure must be based on concrete evidence, which was lacking in this case. Therefore, the confiscation of these items was deemed improper.

2. Confiscation of Indian Currency:
The Revenue claimed that the Indian Currency amounting to Rs. 79,00,000/- was the sale proceeds of smuggled goods and thus liable to confiscation under Section 121 of the Customs Act, 1962. The Tribunal found that the Revenue failed to provide evidence linking the currency to the sale of smuggled goods. The respondent's GST returns and cash books showed legitimate business transactions. The Tribunal concluded that the confiscation of the currency was not justified.

3. Imposition of Penalty:
The Tribunal noted that the imposition of a penalty under Section 112 of the Customs Act, 1962, was contingent on proving the goods were smuggled. Since the Revenue failed to establish this, the penalty imposed on the respondent was set aside.

Conclusion:
The Tribunal upheld the order of the Commissioner (Appeals) and dismissed the Revenue's appeal, ruling that the confiscation of Silver Boondi, Silver Jewellery, and Indian Currency, as well as the imposition of a penalty, were not justified. The respondent was entitled to the return of the seized goods and currency.

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