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Issues: (i) Whether the seized Indian currency could be confiscated as sale proceeds of clandestinely removed goods under the applicable confiscation provision; (ii) Whether the duty demand required recomputation on the basis of the correct tariff classification of the goods; (iii) Whether confiscation of goods seized from the factory and other places, and the connected personal penalties, were sustainable.
Issue (i): Whether the seized Indian currency could be confiscated as sale proceeds of clandestinely removed goods under the applicable confiscation provision.
Analysis: Confiscation of currency under the confiscation provision required proof that the cash represented the sale proceeds of non-duty-paid goods. The revenue was required to establish this by affirmative, tangible and positive evidence. The cash had been recovered from different places and from different persons, and no reliable material connected it to the alleged removals during the relevant period.
Conclusion: The confiscation of the Indian currency was not sustainable and its release to the assessee was directed.
Issue (ii): Whether the duty demand required recomputation on the basis of the correct tariff classification of the goods.
Analysis: The duty had been worked out on the footing that the goods fell under the higher-rated tariff entry. The classification dispute was later resolved in favour of the lower-rated entry, and the applicable rate had therefore to follow the correct classification for the relevant period.
Conclusion: The duty was directed to be recomputed on the basis of the correct classification under Heading 3303.00.
Issue (iii): Whether confiscation of goods seized from the factory and other places, and the connected personal penalties, were sustainable.
Analysis: The goods remained within the factory premises or were otherwise not shown to have been removed clandestinely, and no satisfactory basis was recorded for their confiscation. In view of the setting aside of the currency confiscation, the reduced duty exposure, and the fact that duty had already been deposited, the personal penalty also called for reduction.
Conclusion: The confiscation of the goods and the connected penalties were set aside, and the personal penalty was reduced.
Final Conclusion: The assessee obtained relief against confiscation of the seized currency and the seized goods, the duty liability was ordered to be recalculated on the correct classification, and the personal penalty was substantially reduced.
Ratio Decidendi: Currency can be confiscated as sale proceeds of clandestinely removed goods only when the revenue proves that nexus by affirmative and tangible evidence.
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