SSI exemption records and no discrepancy: confiscation and personal penalty under excise rules were unsustainable.

An SSI unit cannot be subjected to confiscation of finished goods and raw materials, or to personal penalty, merely because it lacked the statutory registration or records assumed by the department when there was no allegation that the exemption limit had been crossed. Where the seized stock, account and related records were examined and no discrepancy was found, the basis for treating the goods as liable to confiscation failed, and the foundation for penalty under the excise rules also disappeared. The confiscation and personal penalty were therefore unsustainable.

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Issues: Whether confiscation of finished goods and raw materials and the personal penalty could be sustained against an SSI unit which had not been alleged to have crossed the exemption limit and whose records showed no discrepancy.

Analysis: The appellants were accepted as a small scale industry unit, and there was no allegation in the notice that the exemption limit had been crossed. In that situation, the requirement to maintain statutory records for proving eligibility did not arise in the manner assumed in the impugned order. The record further showed that several documents, including stock and account records, were seized from the factory and no discrepancy was found in those records. On those facts, the basis for treating the goods as liable to confiscation was not made out, and the foundation for imposing penalty under the relevant excise rules also failed.

Conclusion: Confiscation and personal penalty were unsustainable and were set aside in favour of the assessee.

Ratio Decidendi: Where an SSI unit is not alleged to have crossed the exemption limit and its records do not reveal any discrepancy, confiscation of goods and penalty cannot be imposed merely for want of statutory registration or the particular records assumed by the department.

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