Proper notice and reliable evidence are essential for Customs confiscation; a materially different basis and weak proof cannot sustain penalty.

Confiscation and penalty under the Customs Act were held unsustainable where the authority shifted from the basis stated in the show-cause notice to a materially different case in the final order, because proper notice must clearly disclose the grounds of proposed action and a departure causes prejudice and denies fair defence. The record also did not contain reliable evidence that the seized currency represented sale proceeds of prohibited goods, as the crucial factual foundation rested on an improved later statement rather than cogent proof. The confiscation and penalty were quashed, and the seized amount was ordered to be returned.

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Issues: (i) Whether the confiscation order and penalty could stand when the basis stated in the show-cause notice differed from the basis finally relied upon by the Collector; (ii) Whether the material on record established that the currency represented the sale proceeds of prohibited goods so as to justify confiscation under the Customs Act.

Issue (i): Whether the confiscation order and penalty could stand when the basis stated in the show-cause notice differed from the basis finally relied upon by the Collector.

Analysis: The notice proceeded on the footing that the currency was the sale proceeds of smuggled foreign-origin goods, whereas the order was ultimately founded on an entirely different case, namely, that the currency represented the sale proceeds of silver allegedly taken to Daman for unauthorised export. A person sought to be proceeded against must be informed clearly and precisely of the grounds on which confiscation or penalty is proposed, and a departure from the stated basis deprives the person of a fair opportunity of defence and causes prejudice.

Conclusion: The confiscation order and penalty could not be sustained and were invalid for breach of the requirement of proper notice and opportunity.

Issue (ii): Whether the material on record established that the currency represented the sale proceeds of prohibited goods so as to justify confiscation under the Customs Act.

Analysis: The finding rested substantially on an improved later statement, while the earlier statement did not support the allegation. The record did not provide reliable evidence that silver had been carried from Bombay to Daman for export or that the seized currency was the sale proceeds of such goods. In the absence of cogent evidence, the essential factual foundation for confiscation under the Customs Act was not proved.

Conclusion: The evidentiary basis for confiscation was not established.

Final Conclusion: The confiscation and penalty were quashed, and the seized amount was directed to be returned to the petitioner.

Ratio Decidendi: A confiscation or penalty order under the Customs Act cannot stand where the authority proceeds on a basis materially different from the show-cause notice and the record does not furnish reliable evidence to establish the essential facts justifying confiscation.

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