Postal transit protection bars confiscation of goods in continuous custody; inadequate notice and ignored defence also vitiated proceedings.

Goods booked by post from Hong Kong to Kabul and kept continuously in postal custody during transit through India were held protected by the saving clause for postal transit, so confiscation under the Customs Act and import control regime was not sustainable; Chapter VIII was treated as inapplicable to such postal articles, and the department's case failed for want of proof of smuggling or diversion in India. The proceedings were also found unfair because service of notice and hearing was not shown for one appellant, and the remaining defence replies and supporting material were not properly considered. The confiscation order was set aside, the appeals were allowed, and refund of the fine recovered was directed.

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Issues: (i) Whether goods booked by post from Hongkong to Kabul and throughout remaining in the custody of postal authorities during transit through India were liable to confiscation under the Customs Act and the Import Control regime; (ii) Whether the confiscation and proceedings were vitiated by breach of natural justice and by non-consideration of the appellants' reply and supporting material.

Issue (i): Whether goods booked by post from Hongkong to Kabul and throughout remaining in the custody of postal authorities during transit through India were liable to confiscation under the Customs Act and the Import Control regime.

Analysis: The goods were found to be in transit by post, booked for delivery outside India, and continuously under the custody of the postal authorities. On that footing, the saving clause for goods in transit through India by post applied, and the statutory scheme governing postal transit was not displaced. The ingredients of the prohibitory provisions relied upon by the department were not established. Chapter VIII of the Customs Act was also held inapplicable to postal articles. The department's case rested on assumption and presumption rather than proof of smuggling or intended diversion in India.

Conclusion: The confiscation was not sustainable and the invocation of the customs prohibition and transit-related confiscation provisions failed against the appellants.

Issue (ii): Whether the confiscation and proceedings were vitiated by breach of natural justice and by non-consideration of the appellants' reply and supporting material.

Analysis: In respect of one appellant, service of notice and opportunity of hearing were not shown. As regards the others, the order was found to be cursorily made and did not duly consider the submissions and objections raised in reply to the show cause notice. The absence of a reasoned consideration of the defence and the lack of proof supporting the department's allegations rendered the proceedings unfair.

Conclusion: The proceedings were vitiated by breach of natural justice and inadequate consideration of the appellants' defence.

Final Conclusion: The impugned confiscation order was set aside, the appeals were allowed, and refund of the fine recovered was directed as consequential relief.

Ratio Decidendi: Goods sent by post and continuously retained in postal custody during transit through India, where the applicable saving provision protects such transit, cannot be confiscated merely on suspicion or presumption; departmental action must be supported by proof and by a reasoned, fair consideration of the defence.

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