Confiscation and penalty fail where excise contravention is unproved and seized goods belong to the true purchaser.

Seized goods purchased from an SSI unit within the exemption limit could not be treated as confiscable goods of that unit where there was no evidence that the unit had manufactured branded goods or that branded goods were found in its premises. The sticker bearing the brand name was affixed only after purchase by the trader, so the goods were to be released to the trader and the direction to release them to the SSI unit on redemption fine was unsustainable. Penalty was also unsustainable because the department failed to prove any contravention of excise law or rules by either appellant. The impugned order was set aside and consequential relief followed.

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Issues: (i) Whether the seized goods were liable to confiscation and release to the trader or to the SSI unit; (ii) Whether penalty was sustainable in the absence of violation of excise law or rules.

Issue (i): Whether the seized goods were liable to confiscation and release to the trader or to the SSI unit.

Analysis: The goods had been purchased by the trader from the SSI unit within the exemption limit, and there was no evidence that the SSI unit had manufactured branded goods or that branded goods were found in its premises. The sticker bearing the brand name was affixed only after purchase by the trader. As the SSI unit had not claimed the goods, the direction to release them to that unit on payment of redemption fine could not be sustained.

Conclusion: The goods were entitled to be released to the trader and the confiscation-related direction against the SSI unit was unsustainable.

Issue (ii): Whether penalty was sustainable in the absence of violation of excise law or rules.

Analysis: In the facts found, the SSI unit had not crossed the prescribed limit and was not liable to duty at the time of clearance. The department failed to establish that the goods were branded goods manufactured by the SSI unit. In the absence of proved contravention of excise law or rules, penalty could not be imposed on either appellant.

Conclusion: The penalty was not sustainable against either appellant.

Final Conclusion: The impugned order was set aside and both appeals were accepted with consequential relief.

Ratio Decidendi: Confiscation and penalty cannot be sustained where the department fails to prove the alleged excisable infraction, and seized goods must be released to the true owner on the basis of the proved facts rather than on conjecture about branding or manufacture.

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