Burden of proving illegal importation remained with the department where goods were not notified for burden shifting.

For goods not notified under the statutory burden-shifting provision, the department remained bound to prove illegal importation; the importer's bills of entry and local purchase records were not displaced by weak, unverified evidence, so the burden did not shift and illegal importation was not established. As the goods were claimed to be assembled from imported and locally procured components, and import was not shown to fall within the confiscatory clauses of the Customs Act, confiscation could not be sustained. The consequential penalty also failed, and the confiscation order and penalties were set aside.

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Issues: (i) Whether the burden of proving legal importation or lawful manufacture from imported components shifted to the importer in respect of the seized goods. (ii) Whether the goods were liable to confiscation and penalty under the Customs Act.

Issue (i): Whether the burden of proving legal importation or lawful manufacture from imported components shifted to the importer in respect of the seized goods.

Analysis: The goods were not goods notified under Section 123, so the statutory burden-shifting rule did not apply. In the absence of such notification, the department had to establish that the goods were not legally imported. The importer produced bills of entry for components and local purchase documents, and the rejection of that material was based on unverified and weak evidence. The evidence relied upon by the department was found insufficient, and no proper investigation was made to displace the importer's case.

Conclusion: The burden did not shift to the importer, and the department failed to prove illegal importation.

Issue (ii): Whether the goods were liable to confiscation and penalty under the Customs Act.

Analysis: The goods were found at the appellant's premises and were claimed to have been assembled from imported and locally procured components. Since import of the goods was not prohibited, and there was no evidence to bring the case within clauses (a), (b), or (d) of Section 111, confiscation could not be sustained. As the basis for confiscation failed, the consequential penalty also lacked support.

Conclusion: The confiscation and penalties were not sustainable.

Final Conclusion: The order of confiscation and the consequential penalties were set aside, and the appeals succeeded.

Ratio Decidendi: In the case of goods not notified under the statutory burden-shifting provision, the department must affirmatively prove illegal importation before confiscation or penalty can be imposed.

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