2025 (10) TMI 1044 - AT - Customs

Appeal allowed under s.114 Customs Act: Rs 15,00,000 released; confiscation and penalty set aside for lack of proof

CESTAT, Kolkata AT allowed the appeal, setting aside the order of absolute confiscation and penalty under s.114 Customs Act. The Tribunal found reasonable ... Absolute confiscation of Indian currency - Levy of penalty u/s 114 of the Customs Act, 1962 - smuggled goods or not - Indian currency seized from a person intercepted near Rabindranagar unfenced border area of Bangaldesh - reasonable doubt exists or not that the seized currency transported for illegal export - HELD THAT:- Admittedly the Rabindranagar is 3 km away from the border of Bangladesh border. In that circumstances, also the benefit of doubt goes in favour of the appellant. The Revenue has failed to prove that the appellant were involved in the activity of transportation of Indian currency illegally to Bangladesh. Therefore, the Indian currency seized from Shri Ali Hossain is not liable for confiscation as the Indian currency seized is not liable for confiscation, therefore, no penalty can be imposed on the appellant. The impugned order qua absolute confiscation of Indian currency and imposing penalty under Section 114 of the Customs Act, 1962 on the appellant is set aside - the release is ordered of Indian currency of Rs. 15,00,000/- which is deposited to SBI seized from Shri Ali Hossain to the appellant as Shri Ali Hossain in his statement stated that the impugned Indian currency belongs to the appellant. Appeal allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether the Indian currency seized from a person intercepted near Rabindranagar was liable to absolute confiscation under the Customs Act, 1962 and whether penalty under Section 114 could be imposed. 2. Whether the Revenue proved beyond reasonable doubt that the seized currency was being transported for illegal export to Bangladesh across an unfenced border area. 3. Whether internal contradictions in the Show Cause Notice and contemporaneous records undermine the case for confiscation and penalty. 4. Whether the appellant's assertion of ownership and production of a map showing distance from the international border affects the entitlement to release of the seized currency. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Liability to absolute confiscation under the Customs Act, 1962 and imposition of penalty under Section 114 Legal framework: Confiscation and imposition of penalty under the Customs Act, 1962 require the Revenue to establish that the property seized is liable to confiscation because it is being used in contravention of the Act or for illicit export; Section 114 penalizes persons engaged in unauthorized export of Indian currency. Precedent Treatment: No specific precedent was cited or relied upon in the adjudication or appeal record before the Tribunal. Interpretation and reasoning: The Tribunal examined the material on record - Show Cause Notice, panchnama, inventory, statements and map - to determine whether the essential elements required for confiscation and penalty (possession with intent to export illegally, nexus to border activity) were proved. The Tribunal found the evidence deficient for the necessary causal and temporal link establishing illegal export to Bangladesh. Ratio vs. Obiter: Ratio - where the Revenue fails to prove the requisite nexus between possession and illicit export activity and when material records contain contradictions, confiscation and penalty cannot be sustained. Obiter - none relevant beyond the direct finding on proof. Conclusions: Confiscation and penalty under Section 114 were not sustainable on the record; the impugned order of absolute confiscation and penalty is set aside. Issue 2 - Proof of intent and nexus to illegal export across unfenced border Legal framework: Proof of intent to export currency illegally requires reliable contemporaneous evidence of movement toward the border, interception at or proximate to the border, or other facts establishing an intention to export contraband; evidence must be coherent and consistent. Precedent Treatment: No authorities distinguished or followed in the judgment. Interpretation and reasoning: The Tribunal assessed the sequence of events as recorded in the Show Cause Notice and related documents. The Show Cause Notice contained internally inconsistent timings and descriptions (recovery recorded at differing times and locations - e.g., references to recovery at 17:45 near unfenced border and to apprehension at 18:40 while moving towards the border). The Tribunal treated these contradictions as material because they relate to the core fact of where, when and how the alleged export activity occurred, undermining the reliability of the Revenue's narrative. Ratio vs. Obiter: Ratio - material contradictions in the Revenue's own notice and records relating to time and place of interception negate proof of intent to export and support benefit of doubt to the accused. Obiter - emphasis on the sensitivity of operations and use of armed assistance as contextual - not determinative. Conclusions: The Revenue failed to prove the requisite nexus and intent to illegally export Indian currency; benefit of doubt favors the appellant and precludes confiscation. Issue 3 - Effect of contradictions in Show Cause Notice and contemporaneous records on burden of proof Legal framework: The Revenue bears the onus to establish contravention; internal contradictions in official records relating to core facts diminish probative value and may shift benefit of doubt to the person against whom confiscation/penalty is sought. Precedent Treatment: No precedent cited. Interpretation and reasoning: The Tribunal identified direct contradictions within the Show Cause Notice (conflicting times: 17:45 vs. 18:40 and differing accounts of location). These contradictions go to the heart of the allegation (possession while attempting to cross the border). The Tribunal applied the principle that such material inconsistencies undermine the credibility of the prosecution case and warrant giving the appellant the benefit of doubt. Ratio vs. Obiter: Ratio - material inconsistencies in the Revenue's own pleadings and records justify rejecting confiscation and penalty where those inconsistencies concern essential elements of the offence. Obiter - procedural recommendations for clearer recording in sensitive interception operations. Conclusions: Contradictory recordings in the Show Cause Notice fatally weakened the case for confiscation and penalty; the benefit of doubt was rightly accorded to the appellant. Issue 4 - Effect of distance from international border and asserted ownership on entitlement to release Legal framework: Physical proximity to the border and credible evidence of lawful ownership or source of funds are relevant to whether seized currency is being used for illicit export; if the Revenue cannot rebut claimed ownership or intent, release is appropriate. Precedent Treatment: No authorities referenced. Interpretation and reasoning: The appellant produced a map and contention that the place of seizure (Rabindranagar) is approximately 3 km from the international border. The Tribunal treated the map and the admitted distance as corroborative of the appellant's submission that the currency was not being transported to the border for illegal export. Coupled with the internal contradictions in the Revenue's narrative and the lack of conclusive evidence of export intent, the appellant's claim of ownership and lawful source remained unrebutted. Ratio vs. Obiter: Ratio - where the Revenue fails to displace a credible claim of ownership and cannot prove proximate border activity or intent to export, seized currency must be released. Obiter - the court's reference to voluntary presence of local witnesses as panchas is factual and not determinative of legal liability. Conclusions: The distance from the border and unrefuted ownership claim, together with failure of proof by the Revenue, warranted release of the seized Indian currency to the appellant; no penalty could be imposed. Remedial Disposition (Conclusive Findings) 1. The impugned order of absolute confiscation of the seized Indian currency and imposition of penalty under Section 114 of the Customs Act, 1962 is set aside. 2. The seized Indian currency (Rs. 15,00,000) deposited in bank is to be released to the appellant as claimant, since Revenue failed to prove illicit export or requisite culpability.