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Rajesh Kumar Soni and Shri Krishna Vs. Cc - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Judge
Reported in(2003)(90)ECC541
AppellantRajesh Kumar Soni and Shri Krishna
RespondentCc
Excerpt:
.....two nepali nationals namely s/shri dil prasad sapkota and gyan hari sapkota on the premis that the gold biscuits had been smuggled into india from nepal. the officers seized the goods under a panchnama. the two sapkotas, in their statements recorded by the officers, stated that the gold biscuits were meant for delivery to one shri r.c. jaiswal. in a follow-up action at the residence of shri jaiswal, the officers recovered a telephone diary as well as certain goods which were believed to be meant for packing gold biscuits. during the search operation on 19.4.99, shri k.p. keshari (one of the present appellants) turned up at jaiswal's premises. the customs officers searched his person and recovered indian currency of rs. 2.5 lakhs. shri keshari stated that he was an employee of one shri.....
Judgment:
1. These appeals are against the order of the Commissioner (Appeals) rejecting the order of the original authority whereby a penalty of Rs. 25,000 had been imposed under Section 112 of the Customs Act on Krishna Prasad Keshari (appellant in A. No. C/290/2002) and Indian currency of Rs. 2.5 lakhs on which a claim of ownership had been staked by Shri Rajesh Kumar Soni (Appellant in A. No. C/289/2002) was confiscated under Section 121 of the Act.

2. Examined the records and heard both the sides. The relevant facts of the case are as under: Officer of Customs recovered 14 gold biscuit of foreign origin valued at over Rs. 7 lakhs from the possession of two Nepali nationals namely S/Shri Dil Prasad Sapkota and Gyan Hari Sapkota on the premis that the gold biscuits had been smuggled into India from Nepal. The officers seized the goods under a panchnama. The two Sapkotas, in their statements recorded by the officers, stated that the gold biscuits were meant for delivery to one Shri R.C. Jaiswal.

In a follow-up action at the residence of Shri Jaiswal, the officers recovered a telephone diary as well as certain goods which were believed to be meant for packing gold biscuits. During the search operation on 19.4.99, Shri K.P. Keshari (one of the present appellants) turned up at Jaiswal's premises. The customs officers searched his person and recovered Indian currency of Rs. 2.5 lakhs.

Shri Keshari stated that he was an employee of one Shri A.K. Verma's readymade shop and that the currency had been given to him by Shri Verma for delivery to Shri Jaiswal as consideration for 5 foreign gold biscuits which had been delivered a week ago by Shri Jaiswal to Shri Verma. The currency was seized under Section 110 of the Customs Act on the basis of Keshari's statement that the same was sale proceeds of foreign origin gold/Show cause notices were issued to K.P. Keshari and others including Jaiswal, Verma and the two Sapkotas. The original authority absolutely confiscated the 14 gold biscuits under Section 111(d) of the Act and the Indian currency under Section 121 of the Act. Penalties were imposed on the five persons including Keshari on whom a penalty of Rs. 25,000 was imposed.

During the investigative stage of the case, Shri R.K. Soni had staked ownership over the currency; but apparently he was not accepted as a party to the proceedings. Alongwith Kesari, R.K. Soni also preferred appeal to the Commissioner (Appeals), aggrieved by the confiscation of the currency. The appeals were rejected. Hence the present appeals.

3. The learned Counsel for the appellants submits that the order of confiscation of currency behind the back of R.K. Soni who had claimed ownership at the very initial stage of investigation is bad in law. In this connection, he referred to the provisions of Section 124 of the Customs Act. Arguing on behalf of K.P. Keshari, the Counsel submits that the appellant had nothing to do with the gold biscuits seized and confiscated and therefore, no penalty was liable to be imposed on him.

It has been the contention of the appellant that the currency of Rs. 2.5 lakhs was being taken from Verma to Jaiswal as consideration for 5 gold biscuits delivered a week ago by Jaiswal to Verma. There is no evidence to controvert this contention of the appellant, nor is there any seizure/confiscation of those gold biscuits which were allegedly sold by Jaiswal to Verma a week ago. In this connection, the learned Counsel relies on the Tribunal's judgment in Ramchandra v. Collector of Customs, 1992 (60) ELT 277 wherein the necessary requisites for imposition of penalty on the ground of violation of Section 121 were laid down. Counsel submits that none of these requisites was fulfilled in this case and therefore, the penalty imposed on Keshari cannot be sustained.

4. The learned DR submits that the circumstances of the case would justify the finding recorded by the original authority that the currency was the sale proceeds of the gold biscuits sold by Jaiswal to Verma. He refers to the packing materials recovered from Jaiswal's residence as also the latter's statement given at the residence. The learned DR also seeks to defend the other findings recorded by the original authority and the first appellate authority.

5. I have examined the records and submissions. It was claimed by Shri K.P. Keshari in his statement under Section 108 of the Customs Act that the currency was being taken from Verma to Jaiswal as sale price of certain gold biscuits which Jaiswal had delivered to Verma a week ago.

However, in reply to the show cause notice, he claimed that the money was meant for purchase of a mini bus from one Shri Om Parkash Rao by Soni through Jaiswal as mediator. Keshari's position has, thus, been contradictory before and after the issuance of the show cause notice.

Nevertheless, the Department's case, as brought out in the impugned order and reiterated today by the DR, is that the currency of Rs. 2.5 lakhs was the sale proceeds of certain gold biscuits other than those confiscated under the order. In this context, the Tribunal's decision cited by the Counsel has a say. In that case, this Tribunal explained the legal requirements for a penalty to be imposed under Section 112 of the Customs Act on a person from whom Indian currency is seized and confiscated under Section 121 of the Customs Act on the ground that the currency is the sale proceeds of contraband gold. The ingredients to be satisfied for such penalty are as under: 3. The sale must be by a person having knowledge or reason to believe that the goods were of foreign origin; 4. The seller and purchaser and the quantity of gold must be established by the Customs authorities.

Insofar as the gold biscuits allegedly sold by Jaiswal to Verma at a price of Rs. 2.5 lakhs is concerned, the impugned proceedings do not bring out the above ingredients to support a penalty under Section 112 on Keshari on the ground of violation of Section 121 of the Customs Act. The Department has never had a case that the seized currency or any part thereof was sale proceeds of the 14 gold biscuits confiscated under the impugned order. The necessary nexus is missing in this case.

Accordingly, I have to vacate the penalty imposed on Shri Keshari.

6. Insofar as the other appellant is concerned, he has never been recognized as a party to the proceedings. Nevertheless, it has been found by the lower appellate authority that the appellant had claimed ownership over the currency at the very initial stage of investigation.

Section 124 of the Act contains a mandate that no confiscation of goods (including Indian currency) shall be made without a show cause notice to the owner of the goods. In the instant case, no such notice was issued to the appellant who had claimed ownership over the currency.

The departmental authorities proceeded to confiscate the currency in violation of the above mandate. The law obligated them to hear a claimant of ownership before confiscating the seized goods. It was open to the department at least to issue a separate show-cause notice to R.K. Soni under Section 124 of the Act and proceed to adjudicate the same together with the subject show cause notice. This was not done.

Accordingly, I have to hold that the confiscation of the currency itself is in violation of law. The impugned Order in so far as it relates to confiscation of currency and imposition of penalty on Shri Krishna Prasad Keshari is set aside and the appeals are allowed.


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