1. The present appeal is filed against the impugned Order-in-Original No. Kol/Cus/Commissioner/Port/19/2017, dated 4-5-2007 passed by Commr. of Customs (Port), Kolkata.
2. Brief facts of the case are that on the basis of Intelligence Report on 2-1-2013, a search and seizure operation was conducted at the business premises of the appellant, from where the cash currency was recovered and seized.
3. It is the allegation of the Department that another Company known as M/s. Kalpena Industries Ltd. Had imported plastic granules without paying proper duty, but sold the same in the open market at a higher price with the help of the assessee-company and it is the sale consideration of plastic granules. About the cash seized, the Department has also reported the matter to the Enforcement Directorate (E.D.) also to the Incom
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e Tax Department. By the impugned order, the Indian Currency has been seized. Later, the same was deposited in the Bank by the Department. Being aggrieved, the appellant has filed the present appeal.
4. With this background, we have heard Ms. Voomika Verma, Ld. Counsel for the appellant; and Shri S.K. Naskar, Ld. DR, assisted by Shri Ranjan Sen, Sr. Intelligence Officer, for the Department.
5. From the record, it appears that a Writ Petition No. 46/2013 was filed by the appellant before the Hon'ble Calcutta High Court challenging the said search [and] seizure operation, but the same is still pending.
6. Further, the appellant has also filed another Writ Petition No. 162 of 2017 before the Hon'ble Calcutta High Court, where a request is being made for provisional release of the seized currency. According to the Ld. Counsel for the appellant, the Hon'ble Calcutta High Court was of the view that an alternative remedy may be exhausted first, so, the present appeal is before CESTAT.
7. On merit, it is the submission of the Ld. Counsel for the appellant that M/s. Kalpena Industries Ltd. and the appellant company, are the different legal identities, which are duly registered under the Companies Act. Their assessments for the purposes of income tax, service tax etc. are different. They filed independent return. She further submits that the appellant company is not dealing with the plastic granules at all. The amount recovered is the sale proceed or advance received by the appellant company pertaining to the Real Estate, which is the main business of the appellant company. She submits that the cash seized is fully explained, so there is no justification to seize the cash. No other incriminating document was found during the search of operation. Lastly, she made a request to set aside the impugned order and to release the amount along with interest.
8. On the other hand, Shri S.K. Naskar, Ld. DR for the Department, assisted by Shri Ranjan Sen, Sr. Intelligence Officer, supported the impugned order. They submit that during search operation, Indian genuine currency was seized. No imported currency or valuable material was recovered during the search of operation. Shri S.K. Naskar, Ld. DR for the Department, admits that the matter is also under consideration before the Enforcement Directorate as well as Income Tax Department. It is the submission of the Ld. DR for the Department that both the Companies are closely associated with each other as a few Directors are common. He also informs that the recovered amount has been deposited in the Bank as "Fixed Deposit".
9. After hearing both sides and on perusal of record, we are of the view that when the matter is pending before the Enforcement Directorate (E.D.) and Income Tax Department, then the matter cannot be considered by the Customs Department, as no imported item has been seized/recovered.
10. Needless to mention, the Government of India functions on the basis of "Business Conduct Rules", where the work has been distributed to various Department. In the instant case, recovery of the money, may be unaccounted money, primarily, is the subject matter of Income Tax Department and certainly, not of the Customs Department as no imported item was recovered during search.
11. Regarding allegation of sale of plastic granules in the market, action may be taken against M/s. Kalpena Industries Ltd., who had imported the plastic granules. M/s. Kalpena Industries Ltd. is an independent legal identity. The assessee company cannot be penalized, especially, when the appellant is engaged in an independent business of Real Estate.
12. It is pertinent to mention that the ingredients as laid down under Section 121 of the Customs Act, 1962 stand unfulfilled in this case. In the case of Ramachandra v. Collector of Customs : 1992 (60) E.L.T. 277, the Delhi Tribunal opined that before holding that the seized currency indeed represents the sale proceeds of smuggled goods, the following conditions are to be satisfied:
"Para 6 : (i) there must be a sale.
(ii) the sale must be of smuggled goods.
(iii) the sale must be by a person having knowledge or reason to believe that the goods were of smuggled origin.
(iv) the seller and purchaser and quantity of gold must be established by the Customs authorities."
In the case of appellant, none of the above requisites stand fulfilled. No sale has been established, the identity of the buyer and the seller have not been established, and thus as a consequence - the currency cannot be considered to represent the sale proceeds of smuggled goods.
The statutory requirement to establish a causal link/nexus between the "alleged" smuggled goods and the sale proceeds, has also been judicially upheld in K.P. Basheer v. CCE, Cochin : 1999 (109) E.L.T. 247 (Tribunal), which opined the following:
"Para 12. The Ld. Consultant had also cited the following judgments in his favour:
(i) Malar v. Collector of Central Excise, Tiruchy : 1988 (14) ECR 94 (T) : 1988 (33) E.L.T. 444 (T);
(ii) Ramachandra v. Collector of Customs : 1992 (39) ECR 155 (T) : 1992 (60) E.L.T. 277 (T);
(iii) IOL Ltd. v. Collector of Customs : 1992 (59) E.L.T. 477 (T);
(iv) Manindra Chandra Dey v. CEGAT : 1992 (58) E.L.T. 192 (Cal.);
(v) AMCO Electronics v. Collector of Customs : 1993 (46) ECR 44 (T) : 1992 (61) E.L.T. 650 (T);
(vi) A.K. Agarwal v. Collector of Customs (Prev.) : 1991 (52) E.L.T. 565 (T).
On a perusal of the judgments, it is seen that the Tribunal has taken a view that there has to be a nexus between the seized currency and the contraband goods. It has also been held that the burden to prove that the seized currency are the sale proceeds of contraband gold is on the Revenue."
13. In the light of the above observation and by considering the totality of the facts and circumstances of the case, we find no justification to detain the cash amount and the same is directed to be released of course, provisionally by the Customs Department as per C.B.E. & C. Circular No. 686/2/2003-CX, dated 2-1-2003 as amended from time to time.
14. It may be mentioned that the jurisdictional Hon'ble Calcutta High Court in the case of Priyanka Maurya v. Commr. of Customs (Preventive), Kolkata (W.P. No. 1114 of 2014) reported in : 2017 (345) E.L.T. 91 (Cal.), observed that in respect of seizure under Section 110 of the Customs Act, 1962, it would be better for the respondent authorities to take security from the writ petitioner in accordance with the regulation read with circular, as a bond which has also to be furnished in accordance with the regulation.
In this regard, also refer Malar v. Collector of Customs & Central Excise, Tiruchy : 1988 (14) ECR 94 (T) : 1988 (33) E.L.T. 444 (Tri.), wherein the Court has opined that:
"Para 6. The mere possession of currency and an unsatisfactory explanation with reference to acquisition of the same may possibly engender suspicion in the mind of an authority. But suspicion however grave it might be, cannot take place of proof."
15. With the above discussions and by considering the totality of the facts and circumstance of the case, we direct the authorities to release the refund provisionally, in favour of the appellant within a period of three months. For the purpose, the impugned order is modified accordingly.
16. In the result, the appeal filed by the appellant is disposed of as stated above