Confiscation and penalty fail where prior intimation exists and findings on processing premises are internally inconsistent.

Confiscation and penalty under the Central Excise framework were not justified where the record showed prior intimation that goods were being sent for filtration and some processing at the second premises, but the adjudication proceeded on mutually inconsistent findings about whether that premises was only storage or was being used for processing/job work. In the absence of a clear finding of unauthorised removal, any confirmed duty demand, or a consistent basis for alleging misuse of the Cenvat facility, the punitive order could not be sustained. The confiscation and penalty were set aside, with liberty to regularise the second premises for storage or processing and account for the goods lawfully.

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Issues: Whether confiscation of goods and imposition of penalty were justified where the department alleged misdeclaration of the second premises and misuse of the facility for sending goods for further processing, but the record also showed intimation for filtration and some processing at the second place.

Analysis: The show cause notice alleged contravention of Section 6 of the Central Excise Act and Rule 174 of the Central Excise Rules, along with misuse of the facility under Rule 57AC(5) of the Cenvat Credit Rules, 2000 and Rule 4(5)(a) of the Cenvat Credit Rules, 2001. The order, however, contained inconsistent findings: on one hand, the second premises was alleged to be only a storage place and misdeclared as a processing/job work unit, while on the other hand the order and the Chemical Examiner's report indicated that some processing had in fact taken place there. The prior intimation stated that the goods were being sent for filtration. In the absence of a clear finding of unauthorised removal, no duty demand having been confirmed, and no consistent basis for confiscation or heavy penalty being established, the punitive order could not stand.

Conclusion: The confiscation and penalty were not justified and were set aside.

Final Conclusion: The appeal succeeded and the appellant obtained consequential relief, with liberty to regularise the second premises for storage or processing and to account for the goods for lawful further processing or duty-paid clearance.

Ratio Decidendi: Where the record shows prior intimation and the adjudication rests on mutually inconsistent findings without a clear determination of contravention or duty evasion, confiscation and penalty cannot be sustained.

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