Confiscation based on mere suspicion fails when non-duty-paid character is not verified at the source of clearance.

Confiscation of processed fabrics could not be sustained where the Department had no verification or investigation from the processing houses to establish that the goods were non-duty-paid. The fabrics were seized from a trader on suspicion that they had been cleared without payment of duty, but the duty demand and penalty had already been set aside on appeal. In the absence of material from the source of clearance, confiscation could not rest on conjecture or suspicion, and the order of confiscation with redemption fine was set aside in favour of the assessee.

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Issues: Whether confiscation of processed fabrics seized from a trader was justified when there was no verification or investigation from the processing houses to establish that the goods were of non-duty-paid character.

Analysis: The goods were seized from the trader on the basis of a belief that they had been cleared from the processing houses without payment of duty. The demand of duty and penalty had already been set aside by the appellate authority. For sustaining confiscation, there had to be some verification from the processing houses or investigation at their end showing that the fabrics were non-duty-paid. In the absence of such material, confiscation could not rest only on conjecture or suspicion.

Conclusion: Confiscation was not justified and the order of confiscation with redemption fine was set aside in favour of the assessee.

Ratio Decidendi: Confiscation of goods cannot be sustained on mere suspicion where the non-duty-paid character of the goods is not established by investigation or verification from the source of clearance.

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