Confiscation of alleged smuggled proceeds fails without disclosed evidence and timely notice under Customs law

Confiscation of seized currency as alleged sale proceeds of smuggled goods must rest on cogent evidence disclosed in the show cause notice; reliance on extraneous material or prior proceedings is impermissible, and the adverse confiscation finding was set aside. Section 110(2) of the Customs Act, 1962 requires notice within six months of seizure, subject to lawful extension; on the facts stated, the delayed notice was held invalid and the seizure unsustainable. The seized currency was directed to be returned to the recorded owner, and the chits to the other claimant, while bullets were left to be dealt with separately under the Arms Act.

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Issues: (i) Whether the confiscation of the seized Indian currency and connected articles was sustainable when the adjudicating authority relied on material not disclosed in the show cause notice and on prior proceedings; (ii) Whether the show cause notice and seizure were vitiated for non-compliance with the six-month period under Section 110(2) of the Customs Act, 1962; (iii) Whether the seized currency and chits were liable to be returned to the appellants.

Issue (i): Whether the confiscation of the seized Indian currency and connected articles was sustainable when the adjudicating authority relied on material not disclosed in the show cause notice and on prior proceedings.

Analysis: The confiscation could not stand because the finding that the currency represented sale proceeds of smuggled goods rested on extraneous material, including earlier proceedings and answers not forming part of the show cause notice. An adjudicating authority must confine itself to the allegations and material disclosed in the notice and cannot shift into the role of an investigating agency. In the absence of cogent evidence connecting the currency with smuggling activity, the adverse finding was unsupported.

Conclusion: The confiscation finding was unsustainable and is set aside.

Issue (ii): Whether the show cause notice and seizure were vitiated for non-compliance with the six-month period under Section 110(2) of the Customs Act, 1962.

Analysis: Section 110(2) requires notice within six months of seizure, subject to permissible extension. Since the currency could not be treated as proceeds of smuggled goods on the evidence before the authority, the seizure itself failed to sustain the departmental case. On that footing, the notice issued after the six-month period was held to be bad in law.

Conclusion: The show cause notice was invalid and the seizure was held unsustainable.

Issue (iii): Whether the seized currency and chits were liable to be returned to the appellants.

Analysis: The currency was found to belong to Sushanta Haldar and not to be liable to confiscation, while the chits were not relied upon for the proceedings and had no consequential evidentiary value. The seized bullets were not interfered with in the order as they were directed to be dealt with separately under the Arms Act.

Conclusion: The currency was directed to be returned to Sushanta Haldar and the chits to Srikanta Haldar.

Final Conclusion: The departmental action failed for want of sustainable evidence linking the seized currency to smuggling and for non-compliance with the statutory notice requirement, resulting in restoration of the seized currency and chits to the respective owners.

Ratio Decidendi: Confiscation of currency as alleged sale proceeds of smuggled goods requires cogent evidence and must rest only on the material disclosed in the show cause notice, and notice under Section 110(2) of the Customs Act, 1962 must be issued within the prescribed time.

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