TaxTMI 
TaxTMI 
2026 (9) TMI 832
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....reby the Commissioner (Appeals) set aside the Order-in-Original dt.05.07.2023 relating to confiscation of Rs.1,68,95,000/- under section 121 and imposed penalty of Rs.10,00,000/- upon the respondent under section 112(a) and 112(b) of the Customs Act, 1962. 2. The Respondent has filed memorandum of cross objection. He supports the categorical findings recorded by the Commissioner (Appeals) against confiscation of the Indian currency and imposition of penalties but challenge the directions remanding the matter for denovo adjudication. 3. The brief facts are that during the search conducted on 17/18.10.2022 at the residential and business premises of Shri Varun Donthamsetty at Nellore, Indian currency of Rs.84,95,000/- was recovered from....
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....1962. The adjudicating authority also drew adverse inference from another proceeding concerning seizure of gold from certain carriers at Bollapalli toll plaza. Being aggrieved, the respondent filed appeal before the Commissioner (Appeals). 7. The Commissioner (Appeals) recorded, inter alia, the following findings: a) Section 123 applies to gold but not to Indian currency; b) The burden of establishing that the seized currency represented sales proceeds of smuggled gold rested upon the department; c) The essential ingredients of section 121 had not been established; d) There was no evidence to an identified sale of smuggled gold by a person having knowledge or reason to believe that the gold was smuggle....
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..... Reliance has been placed on the following case laws. a) KV Kunhimohammed Vs CC (Prev.), Kochi [2025 (3) TMI 857 - CESTAT Bangalore] b) Tulsi Das Agarwal Vs CC, Kanpur [2003 (158) ELT 725 (Tri-Del)] c) Ramchandra Vs CC [1992 (60) ELT 277 (Tri-Del)] d) Hem Raj Soni Vs CCE, Jaipur [2014 (308) ELT 600 (Tri-Del)] e) Ratan Kumar Saha Vs CC [2021 (375) ELT 435 (Tri-Kolkata)] f) Ghissihibhai Pravinkumar Vs CC, Mumbai [2001 (137) ELT 1311 (Tri- Mum)] 13. We have considered the submissions and examined the records. 14. The following questions arise for determination and adjudication. a) Whether section 123 of the Customs Act, 1962, applies to the seized Indian currency; b....
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....elieve that they are smuggled. The provision, therefore, requires proof of the following cumulative ingredients: a) Existence of goods having a legally established smuggled character; b) Sale of those goods; c) Knowledge or reason to believe on the part of the seller that the goods were smuggled; and d) A direct and identifiable nexus between such sale and the currency sought to be confiscated. 18. Mere possession of a substantial amount of cash may give rise to suspicion or justify enquiry. It does not, by itself, establish that the currency represents sale proceeds of smuggled goods. The Customs Act does not authorize confiscation under section 121 merely because the source of cash is considered doub....
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....both the smuggled character of the gold and the evidentiary link between its sale and the recovered currency. Applying these principles, the basic statutory requirements of section 121 remain unproved in this case. 20. We are unable to accept the proposition that the initial statements, read in isolation, establish the entire case of the department. In this case, the business records, GST returns, bill books and customer details were furnished. Three customers were examined by the department, who confirmed that they had made payment towards bullion purchases or booking advances. Their statements could not be rejected merely because they appeared pursuant to the summons on the same day. In such circumstances, without contrary evidence, th....
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....ents in the present case. Once the allegations that the currency constitute sale proceeds of smuggled gold fails, the factual foundation for penalties under section 112(a) and section 112(b) also disappears. The penalties imposed upon the respondent are consequently unsustainable. 23. The department's principal grievance is that the Commissioner (Appeals) lacks power under section 128A to remand the matter after amendment of that provision. The department has not raised any specific and substantive ground challenging the findings that section 123 was not applicable; that the burden rested upon the department and that the requirements of section 121 has not been proved. Even otherwise, we have independently examined the entire material an....