Clandestine removal and confiscation issues turn on documented clearances, export proof, and limits on fresh confiscation grounds.

Clandestine removal was not established where clearances were made under departmental correspondence, RT-12 returns and pre-authenticated customs vouchers, but proof of actual export utilisation was still required before final relief on duty and penalty. The note records that the duty demand and penalty were set aside and the matter remanded for fresh verification after evidence of export use. Confiscation of 43 bags of yarn seized from the bonded store room was found unsustainable because the goods were accounted for in the records and prospective apprehension of later removal could not justify seizure. Confiscation of plant and machinery was also set aside because the addendum introduced a fresh basis not covered by the original notice and the extreme penalty was considered disproportionate.

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Issues: (i) Whether duty demand, penalty and invocation of the extended period were sustainable on the allegation of clandestine removal and wilful suppression of facts where clearances were made under departmental correspondence and customs transport vouchers; (ii) whether confiscation of the 43 bags of yarn seized from the bonded store room was sustainable; (iii) whether confiscation of plant and machinery could be sustained on the basis of an addendum issued during de novo proceedings.

Issue (i): Whether duty demand, penalty and invocation of the extended period were sustainable on the allegation of clandestine removal and wilful suppression of facts where clearances were made under departmental correspondence and customs transport vouchers.

Analysis: The record showed repeated correspondence with the excise authorities, filing of RT-12 returns, and removal under pre-authenticated customs vouchers. The departmental officers themselves had proceeded on a mistaken understanding of the export scheme and the applicable procedure. On that footing, the Court held that deliberate suppression or clandestine removal was not established merely from the mode of clearance. At the same time, since the clearances were shown as meant for export, the appellants had to establish by acceptable evidence that the yarn was actually used in export goods and such goods were exported. In the absence of such proof, the matter required fresh factual verification.

Conclusion: The duty demand and penalty were set aside and the issue was remanded to the Collector for fresh determination after the appellants produced proof of export utilisation.

Issue (ii): Whether confiscation of the 43 bags of yarn seized from the bonded store room was sustainable.

Analysis: The goods were seized from the bonded store room and were accounted for in the statutory records. The seizure was justified only on the assumption that such goods would also have been removed later in the same manner. Such prospective apprehension did not justify confiscation of accounted goods that had not yet been cleared.

Conclusion: The confiscation of the 43 bags of yarn was not sustainable and the goods were directed to be released in accordance with law.

Issue (iii): Whether confiscation of plant and machinery could be sustained on the basis of an addendum issued during de novo proceedings.

Analysis: The addendum introduced a fresh basis for confiscation after the case had already been remanded only for compliance with natural justice. The original notice did not specifically cover that liability. In any event, the alleged procedural lapse arose substantially from the departmental misunderstanding of the export procedure, which made the extreme penalty disproportionate.

Conclusion: The confiscation of plant and machinery was set aside.

Final Conclusion: The appeal succeeded in respect of confiscation of goods and machinery, while the duty and penalty aspects were remanded for fresh adjudication on proof of actual export use.

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