Excise liability for processed fabrics follows the actual processor, and confiscation fails without proof the goods were non-duty-paid.

Confiscation and excise duty demand on seized processed fabrics were found unsustainable because the department failed to prove that the goods were non-duty-paid or to identify the actual processor. The reasoning applied the settled rule that excise liability for processed fabrics attaches to the person who undertakes the processing or manufacture, not merely to the trader in possession of the goods. In the absence of evidence linking the seized fabrics to a named processor and establishing their contraband character, redemption fine and penalties could not be imposed on the respondent firm. The Revenue appeal failed, and the respondent was left free from the duty and penal consequences sought.

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Issues: Whether confiscation of the seized processed fabrics, demand of duty, and penalties were sustainable when the department failed to establish that the goods were non-duty-paid and the legal liability rested on the actual processor.

Analysis: The seized goods were found in the trader's shop, but the department did not produce evidence connecting them to any identified processor or proving that they were processed without payment of duty. The reasoning accepted that, in excise law, the burden lay on the investigation to prove when and where the goods were processed and to establish their contraband character before confiscation or duty demand could follow. The decision also applied the settled principle that, in the case of processed fabrics, excise duty attaches to the person who undertakes the manufacturing or processing activity, not to the trader or recipient of the processed goods. In the absence of proof against the actual processor, liability could not be fastened on the respondent firm.

Conclusion: Confiscation, redemption fine, duty demand, and penalties were not sustainable, and the Revenue appeal failed.

Final Conclusion: The order under challenge was affirmed in substance, leaving the respondent free from the duty and penal consequences sought by the Revenue.

Ratio Decidendi: Excise duty on processed goods is recoverable from the person who actually carries out the processing or manufacture, and confiscation or duty demand cannot be sustained unless the department proves by evidence that the seized goods are non-duty-paid and traceable to that liability.

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