Customs adjudication must independently prove allegations; untested assertions in a show cause notice cannot sustain confiscation or penalty.

Customs penalty and confiscation cannot stand where the adjudicating authority fails to independently assess the evidence and merely repeats unproved allegations from the show cause notice. The record did not cogently link the appellants to the shipping firms, the reserved ship space, or the attempted unauthorised export, and a later-referred letter could not cure the defect because it was not part of the notice or confrontation process. An ex parte proceeding did not relieve the authority of the duty to examine each issue and record findings. On that basis, the impugned order was held unsustainable and set aside.

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Issues: Whether the penalty and confiscation order could be sustained when the customs authority failed to properly appreciate the evidence and failed to establish the appellants' connection with the attempted unauthorised export.

Analysis: The show cause allegations were not supported by cogent evidence linking the appellants to the shipping firms, the reserved ship space, or the attempted shipment. The adjudicating authority, even while proceeding ex parte, was required to examine the material on record and record findings on each issue, but instead substantially reproduced the allegations in the notice without evaluating the evidence. A later-referred letter was not part of the notice or confrontation process, and after a long lapse of time a remand was found unjustified. In these circumstances, the impugned order was held unsustainable.

Conclusion: The penalty and confiscation order could not be sustained and was set aside in favour of the appellants.

Ratio Decidendi: An ex parte customs adjudication is unsustainable where the authority fails to independently assess the evidence and the allegations remain unproved; mere assertions in a show cause notice cannot substitute for proof.

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