Customs confiscation requires positive proof of illegal importation when no statutory presumption is invoked; natural justice was satisfied here.

Customs confiscation could not be sustained on mere suspicion where the department failed to invoke the statutory presumption under Section 178A of the Sea Customs Act and did not establish illegal importation by positive evidence. The High Court also held that natural justice was not breached merely because the adjudicating authority relied on statements recorded in the petitioners' absence, since copies were supplied and a real opportunity was given to produce and test those witnesses. As the order rested on suspicion rather than proof of smuggling, the confiscation was set aside with costs.

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Issues: (i) Whether the confiscation order was vitiated for breach of natural justice because the adjudicating authority relied on statements recorded in the absence of the petitioners. (ii) Whether the confiscation could be sustained on mere suspicion and without positive proof of illegal importation, especially when the burden under Section 178A of the Sea Customs Act was not invoked.

Issue (i): Whether the confiscation order was vitiated for breach of natural justice because the adjudicating authority relied on statements recorded in the absence of the petitioners.

Analysis: The statements were obtained from persons identified by the petitioners themselves as supporting their version. Copies of the statements were supplied to the petitioners, and they were repeatedly offered an opportunity to produce those persons and test their statements. The petitioners did not avail themselves of that opportunity. The procedure adopted did not amount to denial of a fair hearing or breach of the principles of natural justice.

Conclusion: The objection based on natural justice failed and was against the petitioner.

Issue (ii): Whether the confiscation could be sustained on mere suspicion and without positive proof of illegal importation, especially when the burden under Section 178A of the Sea Customs Act was not invoked.

Analysis: The adjudicating authority did not proceed on the footing that the burden under Section 178A was on the petitioners, and no presumption under that provision was raised. In the absence of such a presumption, the department had to establish by positive evidence that the sovereigns had been imported in contravention of the relevant notifications. The order rested only on suspicion and on material destructive of the petitioners' explanation, not on proof of smuggling.

Conclusion: The confiscation order was unsustainable for want of positive proof and was against the respondents.

Final Conclusion: The petition succeeded and the impugned confiscation order was set aside with costs.

Ratio Decidendi: In customs adjudication, where the statutory presumption under Section 178A is not invoked, confiscation must rest on positive proof of illegal importation, and reliance on statements adverse to the petitioners does not violate natural justice if the petitioners are given copies and a real opportunity to challenge them.

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