Confiscation for alleged clandestine removal requires proof of intent and nexus; mere excess stock or cash possession is insufficient.

Mere excess stock of sponge iron, without affirmative evidence of deliberate non-accountal or clandestine removal, does not justify confiscation; the recorded stock discrepancy and the alleged removal were not corroborated, so confiscation was set aside. Cash recovered from residential premises also could not be treated as sale proceeds of clandestine clearances without proof of nexus to duty evasion, and the absence of a notice to the person from whom it was seized further undermined the case. Because the foundation for confiscation failed, the associated penalty also could not survive, and the confiscatory and penal consequences were annulled.

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Issues: (i) Whether excess stock of sponge iron found in the factory could be confiscated in the absence of evidence of deliberate non-accountal and clandestine removal. (ii) Whether cash recovered from the residential premises could be confiscated as sale proceeds of clandestinely removed goods and whether penalty was sustainable.

Issue (i): Whether excess stock of sponge iron found in the factory could be confiscated in the absence of evidence of deliberate non-accountal and clandestine removal.

Analysis: Mere excess stock, by itself, does not justify confiscation unless the Revenue establishes that the goods were deliberately kept out of statutory records with the intention to remove them clandestinely. The record did not show that the goods were in the process of removal, and the stock verification itself was disputed. In the absence of corroborative evidence showing mala fide intent or clandestine removal, confiscation of the goods could not be sustained.

Conclusion: The confiscation of the excess stock was not sustainable and was set aside.

Issue (ii): Whether cash recovered from the residential premises could be confiscated as sale proceeds of clandestinely removed goods and whether penalty was sustainable.

Analysis: Cash seized from the residential premises of the General Manager's family could not be treated as sale proceeds of clandestinely removed goods without evidence linking the currency to any duty evasion or clandestine clearances. No notice had been issued to the person from whose possession the cash was seized, and the Revenue failed to discharge the burden of proving the necessary nexus. Once the basis for confiscation failed, the penalty imposed on the appellant also could not survive.

Conclusion: The confiscation of cash and the penalty were not sustainable and were set aside.

Final Conclusion: The appeal succeeded, with all confiscatory and penal consequences annulled for want of proof of clandestine removal and the required evidentiary nexus.

Ratio Decidendi: Confiscation of excess stock or seized currency requires affirmative evidence of clandestine removal or a proved nexus with such removal; mere non-accountal or possession, without corroborative proof, is insufficient.

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