Exemption threshold and no intent to evade duty defeated confiscation for unaccounted stock in paper clearances.

Where unaccounted goods are found but the assessee's clearances remain within the exemption threshold even after adding the excess quantity, non-accountal by itself does not establish intent to evade duty. The paper manufacturer continued to fall within the exemption limit under Notification No. 3/2001-C.E., and the disputed stock did not push clearances beyond that limit. On those facts, confiscation was not justified, while the reduced penalty was upheld because the record did not support an inference of evasion.

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Issues: Whether confiscation of the goods and the reduced penalty were sustainable when the assessee's clearances, even after adding the excess found goods, remained within the exemption limit and no intent to evade duty was established.

Analysis: The assessee was manufacturing writing and printing paper and was availing exemption under Notification No. 3/2001-C.E. dated 01.03.2001 for clearances up to 3500 MT. On the date of visit, excess unaccounted stock of 15.517 MT was found, but the recorded clearances were only 2882.582 MT. Even after including the excess quantity, the exemption limit was not crossed. In these circumstances, the non-accountal of the goods could not be treated as an attempt to evade duty. The order of the Commissioner (Appeals) was also consistent with the earlier view relied upon in similar facts.

Conclusion: Confiscation was not justified and the reduction of penalty was upheld in favour of the assessee.

Final Conclusion: The Revenue's challenge failed because the disputed goods did not take the clearances beyond the exemption threshold and the facts did not support an inference of evasion.

Ratio Decidendi: Where even after inclusion of the unaccounted goods the clearances remain within the exemption limit, non-accountal by itself does not establish intent to evade duty and confiscation cannot be sustained on that basis.

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