1996 (2) TMI 297 - AT - Customs

Customs Act penalty overturned for lack of evidence; confiscation of seized funds reversed. Burden of proof emphasized.

The penalty imposed on the appellant under Section 112(b) of the Customs Act, 1962 was set aside due to lack of evidence connecting him to smuggling ... Confiscation of currency - Penalty Issues:1. Penalty imposed on the appellant Sunder Sah under Section 112(b) of the Customs Act, 1962.2. Confiscation of the amount of Rs. 10,75,000/- seized from the residence of Shri Somasundaram under Section 121 of the Customs Act, 1962.Analysis:Issue 1: Penalty on Sunder SahThe case involved the imposition of a penalty on Sunder Sah for his alleged involvement in smuggling activities. The appellant contended that he had no knowledge of the contraband goods found in the van he was traveling in and should not be penalized. The adjudicating officer noted that while Sah booked a room for Somasundaram, he denied knowledge of the contents of the van. The officer found the plea of ignorance acceptable, highlighting that booking a room did not prove conscious knowledge of the contraband. Lack of evidence connecting Sah to the smuggling activities led to the penalty being set aside, emphasizing that suspicion cannot replace proof in penalizing under Section 112(b) of the Customs Act, 1962.Issue 2: Confiscation of Seized AmountRegarding the confiscation of Rs. 10,75,000/- seized from Somasundaram's residence, the appellants claimed ownership of the amount. The adjudicating officer raised doubts due to the absence of the claimants during the search, suggesting lack of genuineness. However, the appellants had informed the Income Tax Department about the amount, supporting its legitimacy. The officer's reasoning that the claimants should have been present during the search was deemed unreasonable. The burden of proof was on the Department to establish the amount as proceeds of smuggled goods. The lack of concrete evidence connecting the seized amount to smuggling activities led to the decision to set aside the confiscation, emphasizing that the Department failed to discharge its initial burden of proof. The appellants' non-explanation of the acquisition of the amount was insufficient to prove it as proceeds of smuggled goods, warranting the return of the confiscated amount.In conclusion, the appellate tribunal set aside the penalty imposed on Sunder Sah and ordered the return of the confiscated amount of Rs. 10,75,000/-, highlighting the necessity for concrete evidence to establish proceeds as smuggled goods and emphasizing the burden of proof on the Department in such cases.