TaxTMI 
TaxTMI 
2013 (4) TMI 540
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....ct of genuine transactions but not encashed represented sale proceeds of smuggled goods, when in respect of an identical transaction pay orders encashed were held to be as a result of a genuine transaction of foreign currency and thus not sale proceeds of smuggled goods in the case of LKP Merchants Finance Ltd. v. Commissioner of Customs (P) by an order No. A/1687/WZD/2004/C-1 in the Appeal No. C/50/99-MUM, dated 25th November, 2004 [2005 (180) E.L.T. 233 (Tribunal)]? 3. Whether the appellants and persons similarly situated would have no locus standi to claim the amounts representing pay orders merely because such amounts have not been transferred to their account though such amounts were in the "pay order account" of the issuing Bank and not in the account of the person who is alleged to have deposited sale proceeds of smuggled goods? 4. Whether payment by way of Bank draft/pay order is as good as payment of cash and in the circumstances once a Bank draft/pay order is issued (which is honoured by the Bank from the Bank's own pay order account and not the accounts of its client) by the Bank the same represents sale proceeds in the goods of the person to whom the pay orders ar....
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....ers lying in the bank issuing the pay orders represented the sale proceeds of the foreign currencies smuggled out of India and hence its confiscation is justified. The Larger Bench following its decision in the case of Wall Street Finance Ltd. v. Commissioner of Customs (Prev.), Mumbai reported in 2002 (147) E.L.T. 112 (Tri.-Mumbai) held that the assessee had no locus standi to claim the currency under the pay orders seized from the assessee and encashed by the Customs Department. Subsequently, the Tribunal following the Larger Bench's decision disposed of both the appeals filed by the assessee by its common order dated 21st October, 2005 by holding that the amounts under the pay orders represented the sale proceeds of the smuggled-out foreign currency and its confiscation was justified and that the assessee has no locus standi to claim the currency. Challenging the aforesaid order these two appeals are filed by the appellant/assessee. 6. Ms. Chandurkar, learned Counsel appearing on behalf of the appellant assessee submitted that the impugned order of the CESTAT is liable to be quashed and set aside as the issues raised in the appeals are concluded in favour of the assessee by t....
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.... amounts under the pay orders seized from the custody of the assessee and secondly, whether the customs authorities are justified in confiscating the amounts specified in the pay orders under Section 121 of the 1962 Act. 9. As regards the locus standi of the assessee to claim the amounts under the pay orders is concerned, the Tribunal following its decision in the case of Wall Street Finance Ltd., (supra), has held that the assessee does not have any locus standi. It is not in dispute that the decision of the Tribunal in the case of Wall Street Finance Ltd., (supra) has been overruled by this Court in O.S. Writ Petition No. 493 of 2000 [2006 (202) E.L.T. 776 (Bom.)] (M/s. Wall Street Finance Ltd. v. Union of India & Ors.) decided on 25th April, 2006. Hence, the decision of the Tribunal that the assessee does not have locus standi to claim the amount under the pay orders cannot be sustained. 10. The question then to be considered is whether the Customs authorities are justified in confiscating the amounts under the pay orders by invoking Section 121 of the 1962 Act ?. 11. In the present case, it is not in dispute that on receiving the pay orders the assessee has sold the fo....
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.... the pay orders were received by the assessee as sale proceeds of the foreign currency sold by the assessee in the ordinary course of business without the knowledge that the amounts in the bank account of the purchasers represented the sale proceeds of the smuggled goods. 13. Apart of the above, confiscation under Section 121 of the 1962 Act can be made only if the conditions specified therein are fulfilled. Section 121 of the Customs Act reads thus : "121. Confiscation of sale-proceeds of smuggled goods. - Where any smuggled goods are sold by a person having knowledge or reason to believe that the goods are smuggled goods, the sale-proceeds thereof shall be liable to confiscation" 14. On plain reading of Section 121 of the 1962 Act, it is clear that the confiscation of the sale proceeds under Section 121 would be permissible, provided, firstly, there must be sale of smuggled goods, and secondly, the person selling the said goods must have knowledge or reason to believe that the goods are smuggled goods. In the present case, the finding of fact recorded by the adjudicating authority is that the foreign currencies were sold by the assessee in the normal course of the b....