Burden of proof for unnotified goods and retracted section 108 statements cannot sustain penalty or confiscation without corroboration.

Goods not notified under section 123 of the Customs Act carried no statutory presumption, so the Customs department had to prove smuggled character. The case rested mainly on statements recorded under section 108, but those statements were later retracted before the Judicial Magistrate and were not corroborated by effective investigation. The record also indicated that some consignments were claimed by another courier concern and that bills of entry were produced for certain goods. On these facts, the department failed to establish illicit import or smuggling, so penalty and confiscation were not sustainable.

---

---

Issues: Whether, in respect of goods not notified under section 123 of the Customs Act, the burden lay on the Customs authorities to prove that the goods were of smuggled nature, and whether penalties and confiscation of the vehicle could be sustained on the basis of statements later retracted under section 108 of the Customs Act.

Analysis: The goods were not notified under section 123 of the Customs Act, so the burden of proving smuggled character remained on the department. The case against the appellants rested principally on statements recorded under section 108 of the Customs Act, but those statements were retracted when the appellants were produced before the Judicial Magistrate. The record also showed that some goods were claimed by another courier concern and released, while in respect of certain consignments bills of entry were produced and no effective investigation was made to determine whether the goods were covered by them. In these circumstances, the Customs authorities failed to discharge the burden of proving illicit import or smuggled character to justify penalty or confiscation.

Conclusion: The penalties imposed on the appellants and the confiscation of the vehicle were not sustainable and were set aside.

Ratio Decidendi: Where goods are not notified under section 123 of the Customs Act, the burden to prove that they are smuggled lies on the department, and retracted statements under section 108, without corroboration, are insufficient to sustain penalty or confiscation.

---