Contraband sale proceeds and confession evidence justified confiscation, but penalty was reduced on custodial facts and leniency grounds.

Currency proved to be the sale proceeds of contraband gold was held liable to absolute confiscation, as the seizure was supported by the mahazar and the appellant's voluntary confessional statement was accepted; the belated retraction and unsupported claim that the money belonged to his sister were rejected. The penalty was nonetheless reduced because the appellant's role was limited to custody of the articles, the gold and currency had already been absolutely confiscated, and the surrounding circumstances warranted leniency. The confiscation was sustained, while the penalty was scaled down with refund of the excess.

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Issues: (i) Whether the seized Indian currency was liable to absolute confiscation as the sale proceeds of contraband gold; (ii) whether the penalty imposed on the appellant required reduction.

Issue (i): Whether the seized Indian currency was liable to absolute confiscation as the sale proceeds of contraband gold.

Analysis: The seizure of currency was admitted and the seizure was supported by the mahazar. The appellant's confessional statement was accepted as voluntary and true, and the belated retraction was rejected as an afterthought. The plea that the currency belonged to the appellant's sister was not supported by documentary evidence or particulars. On the evidence, the currency was held to represent the sale proceeds of contraband gold and was therefore liable to confiscation.

Conclusion: The confiscation of the currency was upheld against the assessee.

Issue (ii): Whether the penalty imposed on the appellant required reduction.

Analysis: The appellant's own statement indicated that he was only entrusted with the gold by his son-in-law and had no role in procuring it. The gold and currency had already been absolutely confiscated, and the circumstances, including the appellant's custody of the articles, prior incarceration, and criminal prosecution, were taken into account. In these circumstances, the penalty under the Customs Act was considered excessive and liable to be reduced.

Conclusion: The penalty was reduced to Rs. 1,000, with refund of the excess, in favour of the assessee.

Final Conclusion: The order of confiscation was sustained, while the penalty was substantially reduced, leaving the appeal dismissed except for the modification in penalty.

Ratio Decidendi: A belated and unsubstantiated retraction does not displace a voluntary confessional statement, and currency proved to be the sale proceeds of contraband is confiscable; however, penalty may be moderated on the facts where the appellant had only custodial involvement and the circumstances justify leniency.

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