Excise confiscation needs proof of non-accountal and intent to evade duty before penalties can be sustained.

Excise confiscation provisions require the Revenue to establish the factual basis for non-accountal before penalties can follow. Where finished goods are found during proceedings on the same day, confiscation depends on proof that the goods existed before the officers began action; absent such material, confiscation and the related personal penalty lack support. For excess raw materials, mere omission from the stock register is insufficient where the notice does not allege and prove intent to evade duty, because the statutory mens rea element is essential under the invoked clause. Personal penalty on a partner is also linked to the goods being liable to confiscation, and falls away if that foundation is absent.

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Issues: (i) Whether 50 Kms. of finished goods could be confiscated and penalty imposed when the Revenue failed to establish that the stock was manufactured before the commencement of the officers' proceedings on the same day; (ii) Whether excess raw materials could be confiscated and penalised under the confiscation provisions in the absence of an allegation and proof of intent to evade duty; (iii) Whether the penalty on the partner could survive once confiscation of the goods was set aside.

Issue (i): Whether 50 Kms. of finished goods could be confiscated and penalty imposed when the Revenue failed to establish that the stock was manufactured before the commencement of the officers' proceedings on the same day.

Analysis: The stock-taking record did not disclose the time when the finished goods were measured, while the assessee had specifically pleaded that the quantity represented production of the same day. In the absence of material showing that the goods existed prior to the commencement of the proceedings, non-accountal of the finished goods stood unproved. The factual foundation necessary for confiscation and the connected penalty was therefore lacking.

Conclusion: Confiscation of the finished goods and the related penalty on the assessee could not be sustained.

Issue (ii): Whether excess raw materials could be confiscated and penalised under the confiscation provisions in the absence of an allegation and proof of intent to evade duty.

Analysis: Although the raw materials were not entered in the prescribed stock register, the show-cause notice did not allege that they were kept unaccounted with intent to evade duty on those materials. The confiscation provision invoked required that element of intent for action under the relevant clause. Mere non-accountal in a register, without the requisite mens rea, was insufficient. The attempt to sustain penalty under a different provision was also rejected because no such proposal had been made in the notice.

Conclusion: Confiscation of the raw materials and the penalty on the assessee were unsustainable.

Issue (iii): Whether the penalty on the partner could survive once confiscation of the goods was set aside.

Analysis: The partner's liability under the personal penalty provision depended upon the goods being liable to confiscation. Once confiscation of both the finished goods and raw materials failed, the basis for penal action against the partner also disappeared.

Conclusion: The penalty on the partner could not survive.

Final Conclusion: The impugned order was set aside, and the appellants obtained relief against confiscation as well as all consequential penalties.

Ratio Decidendi: Confiscation and penalty under the excise confiscation provisions require the statutory ingredient of intent to evade duty where that element is built into the rule, and the Revenue must establish the factual basis for non-accountal before penal consequences can follow.

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