Confiscation without notice is unsustainable; duty follows clearance of provisionally released goods, while stock irregularities may still attract penalty.

Confiscation and redemption fine were unsustainable where the show cause notice sought only duty and penalty and did not propose confiscation. Duty was not demandable before clearance of provisionally released goods, so an early demand was unjustified. However, excess stock and failure to maintain proper records established a contravention, and the presence of foam in molasses did not remove that irregularity. Penalty was therefore maintainable, but only on a reduced basis. The operative principle is that confiscation must be supported by the notice, duty follows clearance in such cases, and proven stock discrepancies can still attract a moderated penalty.

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Issues: (i) Whether confiscation of the seized goods and the consequential redemption fine were sustainable when the show cause notice did not propose confiscation. (ii) Whether duty could be demanded before clearance of the goods and whether penalty was justified in the facts of the case.

Issue (i): Whether confiscation of the seized goods and the consequential redemption fine were sustainable when the show cause notice did not propose confiscation.

Analysis: The notice proposed demand of duty and penalty, while the seized goods had been provisionally released. Since confiscation was not proposed in the notice, the basis for ordering confiscation and redemption fine was absent.

Conclusion: The confiscation of goods and the redemption fine were not sustainable and were set aside.

Issue (ii): Whether duty could be demanded before clearance of the goods and whether penalty was justified in the facts of the case.

Analysis: The goods had been provisionally released, so duty was payable at the time of clearance and not before. At the same time, the excess stock and the failure to maintain proper record of the quantity established a contravention of the rules. The presence of foam in molasses did not eliminate the irregularity, though the facts justified only a reduced penalty.

Conclusion: The demand of duty before clearance was not justified, but penalty was sustainable, subject to reduction.

Final Conclusion: The appeal succeeded in part by setting aside confiscation and redemption fine and by reducing the penalty, while sustaining the penal consequence on the contravention found.

Ratio Decidendi: A confiscation order cannot stand when confiscation was not proposed in the show cause notice, and where goods are provisionally released, duty is payable at the time of clearance; however, a proven stock irregularity can still justify a reduced penalty.

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