Patna High Court
Commissioner Of Customs, Patna vs Mohan Kumar @ Mohan Prasad on 28 September, 2011
Author: Ahsanuddin Amanullah
Bench: Sudhir Kumar Katriar, Ahsanuddin Amanullah
Miscellaneous Appeal No.197 of 2008
Against judgment and order dated 19.9.2007, passed by the Customs
Excise & Service Tax Appellate Tribunal, Eastern Regional Bench,
Kolkata, in Custom Appeal No.82 of 2005.
Commissioner of Customs , Patna, C R Building, Birchand Patel
Path, Patna - 800001 ..... Appellant (Respondent)
Versus
Ratan Prasad, son of late Jagdish Sah, Resident of Village Mauje,
PS Raxaul, District East Champaran .... Respondent (Appellant)
with
Miscellaneous Appeal No. 190 of 2008
Against judgment and order dated 19.9.2007, passed by the Customs
Excise & Service Tax Appellate Tribunal, Eastern Regional Bench,
Kolkata, in Custom Appeal No.80 of 2005.
Commissioner of Customs, Patna, C R Building, Birchand Patel
Path, Patna - 800001 .... Appellant (Respondent)
Versus
Mohan Kumar @ Mohan Prasad, Son of Late Shivajee Prasad,
Sonarpatti, Raxaaul, District East Champaran, Bihar
.... .... Respondent(Appellant)
with
Miscellaneous Appeal No. 196 of 2008
Against judgment and order dated 19.9.2007, passed by the Customs
Excise & Service Tax Appellate Tribunal, Eastern Regional Bench,
Kolkata, in Custom Appeal No.81 of 2005.
Commissioner Of Customs, Patna, C R Building, Birchand Patel
Path, Patna - 800001 .... Appellant (Respondent)
Versus
Shri Lal Prasad, son of late Jagdish Sah, Resident of Village Mauje,
PS Raxaul, District East Champaran .... Respondent (appellant)
*******
For the Appellant : Ms. Archana Meenakshee, Advocate
Ms. Archana Sinha, Advocate
For the Respondents: Mr. Birju Prasad
********
PRESENT
HON'BLE MR. JUSTICE SUDHIR KUMAR KATRIAR
and
HON'BLE MR. JUSTICE AHSANUDDIN AMANULLAH
Ahsanuddin Amanullah, J. These appeals have been preferred
against the common order dated 19.9.2007, passed by the Customs
2
Excise & Service Tax Appellate Tribunal (hereinafter referred to as
CESTAT), Eastern Regional Bench, Kolkata, in Custom Appeal
nos.80-82 of 2005 under section 130 of the Customs Act, 1962
(hereinafter referred to as `the Act'), and are being disposed of by
this common judgment.
2. A brief statement of facts essential for the disposal of
the present appeals may be indicated hereinbelow. By the order
under appeal the order of the original authority which was over-
turned by the first appellate authority has been set aside. In
substance, the order has gone against the Revenue, i.e. the
appellant before this Court.
The case of the Revenue is that the preventive team of
Customs stationed at Raxaul intercepted a black LML Energy
Motorcycle bearing registration no.BR-06D 2450 on 12.6.2003 at
12.00 hrs. at Indo-Nepal border check post, Raxaul, with two
persons sitting on it. On specific information received by the Deputy
Commissioner, LCS, Raxaul, the said two persons were carrying the
sale proceeds of gold earlier smuggled from Nepal to India. The said
two persons were Ratan Prasad and Sree Lal Prasad both brothers.
Two independent witnesses were called for and in their presence the
said two persons sitting on the motorcycle were thoroughly
examined. On examination, three bundles wrapped in the
newspaper were recovered. On opening the bundles, Nepali currency
of different denomination worth Rs.13,50,000 (Thirteen lacs and fifty
thousand -Nepali currency) equivalent to Rs.8,43,750/- (Eight lacs,
forty-three thousand and seven hundred fifty) -Indian currency was
3
recovered from them. The certificate of registration of the motorcycle
and private documents showing transaction of Nepali currency and
Indian currency (three sheets) were recovered from their possession.
The owner of the motorcycle was one Mohan Kumar @ Mohan
Prasad. Ratan Prasad and Sree Lal Prasad in their voluntary
statements recorded under section 107 of the Act confessed that the
said money was given to them by Mohan Kumar Saraf @ Mohan
Prasad Saraf of Sonarpatti, Raxaul, District East Champaran,
dealing in gold and silver. Three sheets which were recovered from
the possession of Ratan Kumar contained transaction of private
amount in Nepali currency as well as Indian currency which was
being dealt with by Mohan Kumar Saraf. This led to the
presumption that such type of business of sale of smuggled gold was
being indulged in by said Mohan Kumar Saraf, and the money so
collected was transmitted to Nepal by the two persons arrested on
the motorcycle. Thus on this reasonable belief that the amount was
liable for confiscation under section 121 of the Act, the currencies
along with the motorcycle were ultimately seized under section 110
of the Act after observing all necessary formalities, i.e. after issuing
notice to all three concerned and after giving them an opportunity to
put up their defence before the authority concerned. Interrogatory
statement under section 108 of the Act was also recorded in which
the two persons travelling on the motorcycle confessed that they
used to receive amounts of Rs.3-4 lacs to Rs.13-14 lacs after every
3-4 days from Mohan Kumar Saraf to deal in gold and silver at
Raxaul and deliver the amount to one Nandu Babu at Birganj,
4
Nepal, who in turn also deals with gold and silver, through
Mahalaxmi Exchanger. The private account showed transaction of
Nepali currency and Indian currency to the tune of Rs.10-25 lacs.
Since there was no satisfactory explanation of carrying the huge
amount, on the basis of the information received it was believed that
the amounts were from the sale proceeds of gold earlier smuggled
from Nepal to India.
During the course of interrogation, Ratan Prasad had also
revealed that Mohan Kumar Saraf was using some other person not
known to Ratan Prasad for bringing gold from Nepal. This also
corroborated the fact that the amount recovered was the sale
proceeds for such smuggled gold. Both the persons travelling on the
motorcycle were arrested under section 104 of the Act on 13.6.2003.
Upon search at the shop premises of Mohan Kumar Saraf and
the residential premises of Ratan Prasad and Sree Lal Prasad
nothing incriminating was found. Though Mohan Kumar Saraf was
summoned under section 108 of the Act before the Superintendent
(Prevention) to appear on a particular date, the elder brother Dhruv
Prasad who had also received summons, prayed for time. Time was
also given till 25.6.2003, but still Mohan Kumar Saraf did not
appear. In the meantime, Mohan Kumar Saraf through his Advocate
submitted a request letter dt. 19.6.2003 for provisional release of
the LML motorcycle in which he denied all the allegations to the
effect that the Nepali currency was sale proceeds of the gold
smuggled from Nepal. The request letter also mentioned the
Government of India Notification No. CSR 389(F), dated 3.5.2000,
5
issued under the Foreign Exchange Management Act (FEMA in
short), bearing regulation No.8(iii) which states, "notwithstanding
anything contained in these Regulations, a person may take out of
India to Nepal or Bhutan, or bring into India from Nepal or Bhutan,
currency notes being the currency of Nepal or Bhutan". A copy of
the same was also enclosed. Taking into consideration all these
facts, the Joint Commissioner, Customs, Patna, by his order dated
29.9.2003 provisionally released the motorcycle on deposition of
cash security of Rs.8000/- and on execution of a bond for the full
seizure value of Rs.30,000/- before the Deputy Commissioner, LCS,
Raxaul.
In his defence reply Ratan Prasad on 10.3.2004, inter alia,
submitted that he had been working in M/s Shivam Infotech, a
school for teaching computer at Raxaul on a monthly salary of
Rs.1500/-. The proprietor of the firm was Mohan Kumar Saraf, and
on his instruction on 12.62.2003 he was going to Birganj with the
Nepali currency worth Rs.13,50,000/- for changing them into Indian
currency from M/s Mahalaxmi Money Changers at Birganj, and for
this purpose he was also provided one motorcycle by Mohan Kumar.
He explained that there was no prohibition of taking Nepali currency
to Nepal and denied all other allegations as enumerated in the show
cause notice. Similar reply to the show cause notice was also
received from Sree Lal Prasad. In his defence reply on 11.3.2004,
Mohan Kumar stated that he was engaged in the business of
readymade silver ornaments and has a shop in the name of his
father Late Shivjee, located at Sonarpatti, Raxaul. He was looking
6
after the activities of the said shop and was also running business
under the proprietorship named M/s Shivam Infotech, for teaching
computer. Regarding the amount of Nepali currency, he had stated
that it was received from his uncle Mahabir Sah, resident of Ward
no.3, Chakahlia, Birganj, Nepal. The money was taken as loan from
his uncle for the purpose of extension of his computer school. He
could not deposit the Nepali currency in bank in Raxaul and,
therefore, sent Ratan Prasad to the money exchanger at Birganj to
get it exchanged into Indian currency so that he could deposit the
same in the bank. He also alleged that the statement recorded from
Ratan Prasad and Sree Lal Prasad was after severe assault,
compulsion and threat for making out a false case. He denied rest of
the allegations and also referred to the Govt. of India Notification dt.
3.5.2000. After hearing the concerned parties, the Joint
Commissioner, Customs, Patna, by order dt. 17.6.2004 passed the
following order:-
"Taking into consideration all the facts as discussed
above and in exercise of the powers conferred upon me
under section 122 of the Customs Act, 1962
(i) I hereby order for release of the seized Nepalese
currency amounting to Rs.13,50,000/- equivalent
to Rs.8,43,750/-(IC) to the owner of the goods.
(ii) I also order for release of the seized LML Energy
motorcycle bearing registration no.BR-06D-2450
for the reason discussed supra. As the same has
been released provisionally on deposition of cash
security of Rs.8000/- and execution of bond for the
full value of the vehicle. The cash security is hereby
returned to the party and bond stand discharged
accordingly.
(iii) I drop penal proceedings against the noticees."
7
Pursuant to passing of the above order in favour of the respondent,
the Commissioner of Customs, Patna, by order dated 26.10.2004 in
Review No.59 under section 129D(2) of the Act, found that the order
in original was not legal, proper and correct, and accordingly
directed the Joint Commissioner, Customs, i.e. the adjudicating
authority to apply to the Commissioner (Appeal) Customs and
Central Excise, Patna, for determination of the following points
arising out of the said order:-
"(i) Whether the said order of the J.C., Customs, Patna
for release of the seized Nepalese currency amounting
to Rs.13,50,000 (Rs. Thirteen lakhs fifty thousand) only
to Rs.8,43,750/- (Rs. Eight lakhs forty three thousand
seven hundred and fifty) only (IC) to the owner of the
goods is legal, proper and correct and whether noticees
deserved penalty under provisions of Customs Act,
1962.
(ii) The Commissioner(Appeal), Customs and Central
Excise, Patna may pass any such order as may deem fit
in fact and circumstances of the case and which is
according to law."
This led to filing of appeal by the appellant against Ratan Prasad,
Sree Lal Prasad, and Mohan Kumar @ Mohan Prasad, and by order
dated 25.2.2005 in Appeal No. 101/PAT/CUS/APPEAL/05, the
Commissioner (Appeals), Customs and Central Excise, Patna, held
that there was sufficient material available on record to indicate
that the Nepalese currency were the sale proceeds of smuggled gold
and the same were liable to confiscation under the provisions of
section 121 of the Act, and further that the concerned persons and
the conveyance are liable to penal action /confiscation. The
adjudicating authority was directed to pass appropriate order
accordingly.
8
The respondents being aggrieved by the same moved before
the CESTAT, East Regional Bench, Kolkata, which by order dated
19.9.2007 in Order No.A-1809-1811/KOL/07, in Customs Appeal
no.80-82/2005, set aside the order of the Commissioner (Appeals),
Customs and Central Excise, Patna. The appellant (Revenue) being
aggrieved by the said order passed by the CESTAT has preferred the
present appeals.
3. Learned counsel appearing for the appellant has
reiterated the facts as noticed above and has drawn our attention to
section 121 of the Act which provides for confiscation of sale
proceeds of smuggled goods. She submits that in view of the
statements under section 107 followed by statement under section
108 of the Act which were not retracted and also the fact that the
defence as set up by Mohan Prasad was found to be unsustainable,
the order of Commissioner (Appeals) was perfectly justified, and
thus the order under challenge cannot be sustained either on facts
or in law. She further submits that the adjudicating authority as
well as the Tribunal erroneously shifted the burden on the Revenue
with regard to corroboration which was neither under the scheme of
the Act nor required under law. In her submission, from the
statement of the respondent itself it was clear that there was no
justifiable defence available to them which could be independently
proved by them. She submits that such a huge amount of Nepalese
currency found from the possession of the persons concerned,
without any clearance from the Reserve Bank of India which was
required for possessing or dealing with the currency beyond a
9
certain limit, was liable to be confiscated.
4. Learned counsel for the respondents in all the three
appeals on the other hand submits that the order of the original
authority as well as the CESTAT is sound in law as well as on fact.
He submits that carrying of Nepalese currency is not prohibited
under the existing law, specially in view of the Govt. Notification, dt.
3.5.2000, and thus no liability much less that of confiscation can be
fastened on them for possessing Nepalese currency within the
border of India. He submits that the allegation of the money being
the sale proceeds of smuggled gold is also untenable since the
appellant has not been able to establish the said fact by any direct
or corroborated evidence. He submits that such stringent penal
action is not contemplated under the Act and also cannot be
permitted in view of their rights under various other laws which
make the possession of the Nepalese currency not illegal and
certainly not liable to confiscation under the Act in the
circumstances of the present case. He further submits that even if
the allegation of the appellant that carrying of the said amount was
without clearance from the R.B.I. as required for such transaction,
the Act did not empower the Customs authorities either to seize or
confiscate the said currency. He further submits that the defence
set out by the respondents was genuine and was in conformity with
the day-to-day affairs of their business and thus there was no
infirmity with their explanation. He lastly submits that in any view
of the matter, the appellant could not relate the currency to any
transaction resulting from sale of smuggled gold from Nepal.
10
Explaining the same, he stated that section 121 deals with
confiscation of sale-proceeds of smuggled goods. For this the first
requirement is that the sale-proceeds of the goods which have been
smuggled, that is, brought into Indian territory from foreign country
without the authority of law and without following the provisions of
the Act. In the present case, neither there was any seizure of gold
nor any incriminating document or material was recovered from the
search conducted against the respondent. He submits that the
second requirement is that the proceeds should relate to the sale on
this account. The appellant has absolutely not brought any evidence
to show that the money was the result of the sale of such smuggled
gold. In that view of the matter, he submits that the proceeding
against the respondents was untenable in view of the provisions of
the Act, and the original authority as well as the CESTAT were
justified in passing the order in favour of the respondent. He
wrapped up his arguments by submitting that, even if for
argument's sake it is presumed that the amount of currency
recovered was not in accordance with the RBI guidelines, it can at
best be a case for the Income Tax Department or other authorities
to take any action against the respondent, if any, but certainly not
for the Customs Department under the provisions of the Act.
5. These appeals are under section 130 of the Act which is
in para materia with section 260A of the Income Tax Act. A Division
Bench of this Court to which one of us (S.K. Katriar, J.) was a party,
had the occasion to deal with section 260A of the Income Tax Act
which was compared with section 100 of the Code of Civil
11
Procedure, in Deputy Commissioner of Income Tax vs. Sulabh
International Social Service Organization [2011(3) BBCJ 117]. It
has been held therein that appeals under the three provisions of the
three enactments lie only if the High Court is satisfied that the case
involves substantial question of law. In view of the discussions in
the reported judgment, we are of the view that no question of law,
much less a substantial question of law, arise for consideration in
these appeals. The issues are concluded by finding of facts.
6. We have considered the submissions of the learned
counsel for the parties and also perused the materials on record. We
are unable to accept the submission made by learned counsel for
the appellant in view of the factual matrix of the present case as
discussed above. There is only allegation based on statements of the
persons from whom the money has been recovered stating that they
used to carry the money from the person to whom it belonged, who
in turn, deals in the business of gold. This statement, in our view,
in no way can be sufficient proof of the fact that the said amount
was result of sale of gold, much less of smuggled gold, as required
under section 121 of the Act. There is no other ground by the
appellant justifying the confiscation under section 121 of the Act.
This being the sole ground, which we have held to be untenable and
unacceptable, we are constrained to observe and hold that the
appellant has not been able to justify the order of confiscation and
penalty against the respondents under the provisions of the Act.
12
There is no merit in these appeals and the same are accordingly
dismissed.
( Ahsanuddin Amanullah, J.)
S K Katriar, J.I agree.
( S K Katriar, J.) Patna High Court, Patna The 28th of September 2011 NAFR/mrl