Non-notified goods and lack of proof of illegal import defeated confiscation and penalty under customs law.

Confiscation and penalty were unsustainable because the seized goods were non-notified and outside Chapter IVA and Section 123 of the Customs Act, so the burden did not shift to the importers. The record contained invoices and supporting material showing purchase and supply through identifiable channels, while the Revenue's inquiries did not conclusively prove illegal import. Mere foreign origin and incomplete verification of some upstream suppliers were insufficient to establish that the goods entered India unlawfully. The confiscation and penalties were therefore set aside.

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Issues: Whether confiscation of the seized goods and imposition of penalty could be sustained when the goods were non-notified and the Revenue had not established illegal import under the Customs Act.

Analysis: The goods were not covered by Chapter IVA or Section 123 of the Customs Act, 1962, and therefore the statutory burden did not shift to the appellants. The record showed invoices and supporting material indicating purchase and supply through identifiable channels, while the further inquiries relied upon by the Revenue did not conclusively establish that the goods were tainted or illegally imported. In the absence of proof from the Department that the goods had entered India through an unlawful route, mere foreign origin and incomplete verification of some upstream suppliers were insufficient to justify confiscation or penalty.

Conclusion: The confiscation and penalties were not sustainable and were set aside in favour of the appellants.

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