SSI unit records and exemption-limit findings barred confiscation and penalty where no discrepancy or excess clearance was proved.

An SSI unit could not be subjected to confiscation, redemption fine or personal penalty where the show cause notice did not allege that it had crossed the exemption limit and the record showed maintenance of simplified accounts. The authority noted that absence of statutory registration or declaration, by itself, did not justify adverse action when the seized registers and documents reflected proper record-keeping and no discrepancy or excess clearance was proved. As the factual foundation for confiscation was not established, the basis for penalty under Rule 173Q also failed. The impugned confiscation, fine and penalty were therefore set aside.

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Issues: Whether the confiscation of finished goods and raw material and the levy of redemption fine and personal penalty were sustainable against an SSI unit when there was no allegation that it had crossed the exemption limit and the record indicated maintenance of simplified accounts.

Analysis: The authority found that the assessee was an SSI unit and that the show cause notice did not allege crossing of the exemption limit. Once that conclusion was reached, the absence of statutory registration or declaration by itself did not justify adverse action for failure to prove eligibility. The seized documents, including ledger, cash book, stock papers, Modvat credit documents, attendance register and RG-1 register, showed that records were being maintained. No discrepancy in those records or excess clearances was established. In such circumstances, the factual basis for confiscation was not made out, and the foundation for imposing personal penalty under Rule 173Q also failed.

Conclusion: The confiscation, redemption fine and personal penalty were not sustainable and were set aside.

Final Conclusion: The appeal succeeded and the assessee obtained full relief against the impugned order.

Ratio Decidendi: Where an SSI unit is not ed to have crossed the exemption limit and the material on record shows maintenance of accounts without proven discrepancy, confiscation and penalty cannot be sustained merely for want of registration or declaration.

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