SSI exemption and duty-free goods: confiscation, redemption fine and major penalties were unsustainable, leaving only a nominal invoice penalty.

An SSI unit covered by an exemption notification could not be subjected to duty demand, confiscation, redemption fine or major penalty where the record showed no effective enquiry on the nature of the goods and the accepted facts indicated that the goods were also exempt. On those facts, no duty was payable and the adverse penal consequences could not be sustained. The only surviving lapse was failure to issue a covering invoice while clearing the goods, for which only a nominal penalty was justified.

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Issues: Whether duty demand, confiscation, redemption fine and substantial penalty could be sustained where the assessee was an SSI unit covered by an exemption notification and the goods were also found exempt, and whether only a penalty for non-issuance of a covering invoice was warranted.

Analysis: The assessee was found to be an SSI unit working under the exemption notification and had not crossed the prescribed limit. The record did not show any effective enquiry by the Revenue to determine the exact nature of the goods. On the facts accepted in the order, even the goods described as copper ingots were exempt from duty under the notification. In these circumstances, no duty was payable and confiscation of the goods, imposition of redemption fine, and the confirmed penalty could not be legally sustained. The lapse remained only the failure to issue the covering invoice while clearing the goods.

Conclusion: The duty demand, confiscation, redemption fine and major penalties were not sustainable, and only a nominal penalty for non-issuance of the covering invoice was justified.

Final Conclusion: The assessee obtained substantially favourable relief, with the impugned order set aside except for a reduced penalty.

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