Freely importable goods cannot be confiscated for smuggling on foreign origin alone without proof of illicit import.

Confiscation of freely importable goods under Section 111(d) of the Customs Act, 1962 cannot be sustained on foreign origin alone where the goods are not notified under Chapter IV-A or covered by Section 123. In such cases, the burden remains on the Department to prove smuggled character or illicit import with reliable evidence. The mere fact that the seized nickel strips were of Canadian origin was insufficient without a proven link to unlawful import. On that basis, the commentary states that confiscation and penalty under Section 112(b)(ii) were unsustainable and consequential relief followed.

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Issues: Whether confiscation of the seized nickel strips under Section 111(d) of the Customs Act, 1962 and the penalty imposed under Section 112(b)(ii) of the Customs Act, 1962 could be sustained when the goods were stated to be freely importable and the Department had not established illicit import.

Analysis: The goods were not shown to be notified goods under Chapter IV-A or goods covered by Section 123 of the Customs Act, 1962, so the burden remained on the Department to prove smuggled character. The record did not establish a reliable link between the seized Canadian-origin goods and the appellants' transactions, and the mere foreign origin of the goods was insufficient by itself to prove illicit import. Since the goods were treated as falling within the open general licence regime, confiscation under Section 111(d) could not be sustained without evidence that their import was prohibited or otherwise unlawful.

Conclusion: The confiscation and penalty were unsustainable and the issue is answered in favour of the assessee.

Final Conclusion: The appeal succeeded, and the impugned order of absolute confiscation and penalty was set aside with consequential relief.

Ratio Decidendi: Where goods are not covered by the statutory burden-shifting provisions and are shown to be freely importable, confiscation for alleged smuggling cannot rest on foreign origin alone and must be supported by evidence of illicit import.

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