Bona fide amendment requests and uncorroborated stock discrepancies cannot sustain customs confiscation or duty demand without positive evidence.

Confiscation and penalty for alleged misdeclaration were unsustainable where the importer sought amendment of the bill of entry, excess quantity was plausibly explained as a supplier's error, and no deliberate misdeclaration or fraudulent intent was proved; the confiscation and penalties were set aside. Confiscation based on stock discrepancies and loose papers also failed because the records were not corroborated by independent evidence linking the goods to illegal import or removal; the redemption fine was set aside. Duty demand for alleged shortages, unbilled clearances, and expired beer cases was likewise unsustainable because clandestine removal was not proved and expiry of the approval period was not shown; the demand, interest, and consequential liabilities were set aside.

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Issues: (i) whether confiscation and penalty could be sustained for the alleged misdeclaration of 1329 cases and 11 wooden pallets when amendment of the bill of entry was sought; (ii) whether confiscation of 2328 cases could be upheld on the basis of stock discrepancies and loose papers; (iii) whether duty demand on the alleged shortages, unbilled clearances and 729 expired beer cases was sustainable.

Issue (i): whether confiscation and penalty could be sustained for the alleged misdeclaration of 1329 cases and 11 wooden pallets when amendment of the bill of entry was sought.

Analysis: The imported quantity was found to be more than what was declared, but the explanation on record was that the excess quantity arose from a supplier's mistake. The importer had applied for amendment of the bill of entry, and the record did not establish any deliberate misdeclaration or fraudulent intent. In such a situation, the power to permit amendment under Section 149 of the Customs Act, 1962 has to be given effect, and confiscation cannot rest merely on suspicion when no tangible evidence of wrongful intent is produced.

Conclusion: Confiscation of the 1329 cases and 11 wooden pallets and the connected penalties were not sustainable and were set aside.

Issue (ii): whether confiscation of 2328 cases could be upheld on the basis of stock discrepancies and loose papers.

Analysis: The disputed stock was found in the warehouse and ceiling area, but the adjudication did not establish concealment of the entire quantity or a nexus between the seized goods and any proven illegal import or removal. The shortage recorded in stock summary was separately acknowledged, while the loose sheets marked as "without bill" and "with bill" were not proved by authorship or corroborated by independent evidence. Without corroborative material, loose papers and stock variation by themselves were insufficient to justify confiscation under the Customs Act, 1962.

Conclusion: Confiscation of the 2328 cases and the redemption fine imposed on that basis were not sustainable and were set aside.

Issue (iii): whether duty demand on the alleged shortages, unbilled clearances and 729 expired beer cases was sustainable.

Analysis: The demand on the alleged unbilled removals and shortages was based on assumptions rather than proven clandestine clearance. The department did not produce positive evidence to establish actual removals, buyers, transport, or payment trail, and shortage alone could not sustain a duty demand for clandestine activity. As regards the 729 beer cases, the SEZ rules make duty payable on expiry of the Letter of Approval validity period, and no such expiry was shown. The duty demand therefore lacked legal foundation.

Conclusion: The duty demand, interest, and consequential demands were not sustainable and were set aside.

Final Conclusion: The entire adjudication was found unsustainable on the facts and law, as the alleged misdeclaration, stock-based confiscation, and duty demand were not supported by reliable evidence and the request for amendment ought to have been considered.

Ratio Decidendi: Confiscation and duty demand under the Customs Act, 1962 cannot be sustained on uncorroborated loose papers, stock discrepancies, or assumed clandestine removal when the record indicates a bona fide explanation and no positive evidence of fraudulent intent or actual illegal clearance is produced; amendment under Section 149 must be considered where the error is shown to be bona fide.

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