Proof required for confiscating currency as smuggled-gold proceeds; suspicion and uncorroborated statements cannot replace evidence.

Confiscation of Indian currency as alleged sale proceeds of smuggled gold was held unsustainable because the Customs Act requires legal evidence linking the money to contraband. The Department had to establish a reasonable belief and prove the nexus under Section 121, but there was no seizure of gold, the respondent's statement was promptly retracted, supporting documents were produced, and no corroborative evidence showed that the currency represented sale proceeds of smuggled goods. Mere suspicion and conflicting statements were insufficient to justify confiscation, so the Revenue appeal failed.

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Issues: Whether the confiscation of the seized Indian currency as alleged sale proceeds of smuggled gold was justified.

Analysis: The proceedings under the Customs Act are penal in nature, and confiscation of currency under Section 121 requires legal evidence, direct or circumstantial, showing that the currency represented the sale proceeds of contraband gold. The currency was not a notified item, and the Department had to establish a reasonable belief and prove the nexus between the seized currency and smuggled goods. The statement of the respondent was promptly retracted, supporting documents were produced, and there was no seizure of gold or other evidence proving that the currency was sale proceeds of smuggled gold. Mere suspicion and conflicting statements were insufficient to sustain confiscation.

Conclusion: The confiscation was not justified, and the Revenue appeal failed.

Ratio Decidendi: For confiscation of currency as sale proceeds of smuggled goods under Section 121 of the Customs Act, 1962, the Department must prove by legal evidence that the currency represents such sale proceeds, and suspicion or an uncorroborated statement cannot substitute for proof.

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