Misdeclaration and confiscation: rejected exemption claim alone cannot justify redemption fine or penalty when goods were wrongly shipped.

Where goods were wrongly shipped and re-export was permitted, confiscation and consequential redemption fine or penalty could not be sustained in the absence of proof of misdeclaration. Rejection of the exemption claim, by itself, did not establish deliberate misdeclaration or an attempt to clear prohibited goods. The prompt request for re-export, accepted by the authorities, supported the factual position that the shipment was not as ordered. Applying the principle that confiscatory action requires proof of misdeclaration, the adverse penal consequences were set aside.

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Issues: Whether confiscation, redemption fine, and penalty were sustainable when the goods were found to have been wrongly shipped, re-export was permitted, and the Revenue failed to establish misdeclaration.

Analysis: The benefit of the exemption notification was denied for the impugned goods, but that circumstance by itself did not establish any deliberate misdeclaration or attempt to clear prohibited goods. The importer had promptly sought re-export on noticing that the goods supplied were not as ordered, and that request had been accepted. In the absence of proof of misdeclaration, the factual basis necessary to sustain confiscation and consequential fine and penalty was not made out. The ratio of the cited Supreme Court decision on absence of misdeclaration was applied to the facts.

Conclusion: Confiscation, fine, and penalty were not sustainable and were set aside in favour of the assessee.

Final Conclusion: The appeals succeeded, and the adverse penal consequences were annulled because the Revenue failed to prove misdeclaration in respect of the wrongly shipped goods.

Ratio Decidendi: Where misdeclaration is not proved and the goods are found to have been wrongly shipped, confiscation and consequential fine or penalty cannot be sustained merely because the exemption claim is rejected.

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