Currency can't be confiscated if it is not Proceeds Of Goods Cleared Clandestinely: CESTAT

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the seized currency during the course of an investigation cannot be confiscated without proving that the said seized currency is the sale proceeds of excisable goods cleared clandestinely.

The two-member bench of Ramesh Nair (Judicial Member) and Raju (Technical Member) has ordered that the confiscation of the seized currency of Rs. 17,50,000 is not sustainable; the cash of Rs. 17,50,000 is to be released.

The CESTAT held that the onus to show that the Indian currency was the sale proceeds of the clandestinely removed goods was upon the department, which is required to be discharged by the production of affirmative evidence.

The intelligence gathered by the DGCEI, Ahmedabad, showed that the appellant/assessee indulged in clandestine manufacture and removal of their finished products, particularly "Flavoured Tobacco" and "Gutkha" under the brand name "Patidar". It was alleged that the assessee floated a fictitious firm to cover up illegal transactions.

During the search proceeding at the factory premises of the assessee, it was observed that one mini-truck was lying loaded with finished goods. No documents/records of finished goods were found in the factory premises or were produced. The said finished goods as well as the said mini truck were placed under seizure. During the search operation on 13.07.2011 at the residential premises of Shri Anil Govindbhai Metaliya, proprietor of M/s Patidar, cash amounting to Rs. 17,50,000 was recovered. On being asked, Smt. Gibeon Anil Metaliya could not give any satisfactory reply on all the matters. The cash was placed under seizure under panchanama.

The appellants submitted that the Principal Commissioner has denied the cross examination of witnesses and recorded his findings that it is a settled position that cross-examination of witnesses is not necessarily required to be allowed in all cases. The witnesses have not been examined in the adjudicating proceedings. An opportunity to cross-examine them has not been given to the appellant. Consequently, their statements have no evidentiary value for establishing the alleged clandestine removal. The approach of the adjudicating authority in denying the cross examination was contrary to the law laid down by the courts and tribunals in various judgments.

The Tribunal held that the adjudicating authority had also failed to prove that the cash recovered was the sale proceeds of clandestinely removed goods.

Case Title: Patidar Products Versus C.C.E. & S.T.-Bhavnagar

Citation: Excise Appeal No.11756 of 2017

Date: 18.10.2022

Counsel For Appellant: CA Sarju Mehta

Counsel For Respondent: Jeetesh Nagori, Prabhat Rameshwaram

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