Transporter liability and jurisdictional competence govern confiscation and penalties where no knowledge is proved and the authority lacks power.

Penal and confiscatory action against a transporter cannot be sustained where the tempo owner and driver acted in the ordinary course of carriage, obtained delivery challans, and no overt act, concert, or knowledge of alleged non-duty-paid clearance was recorded. The confiscation direction was also unsustainable after rescission of Rule 173Q(2). Separately, proceedings against the EOU, the DTA unit, and connected individuals were void because the Commissioner of Central Excise lacked jurisdiction over an EOU administratively under the Commissioner of Customs, Mumbai. The demand, confiscation, and penalties were therefore set aside, and the adjudication was quashed.

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Issues: (i) Whether penalty and confiscation could be sustained against the tempo owner and conveyance used for transport of the goods. (ii) Whether the Commissioner of Central Excise had jurisdiction to confirm duty demand, confiscation and penalties against the EOU, the DTA unit and the connected individuals.

Issue (i): Whether penalty and confiscation could be sustained against the tempo owner and conveyance used for transport of the goods.

Analysis: The tempo owner and driver were found to have acted in the ordinary course of transportation after obtaining delivery challans. The order did not record any overt act, concert, or knowledge on their part regarding alleged non-duty-paid clearance. The conveyance was only a means of transport and not a plant or machine of the manufacturer. In addition, the confiscation direction could not be sustained in view of the rescission of Rule 173Q(2) by Notification No. 38/2000-C.E. (N.T.) dated 12-5-2000.

Conclusion: The penalty and confiscation against the tempo owner were set aside.

Issue (ii): Whether the Commissioner of Central Excise had jurisdiction to confirm duty demand, confiscation and penalties against the EOU, the DTA unit and the connected individuals.

Analysis: The EOU was under the administrative jurisdiction of the Commissioner of Customs, Mumbai, and the impugned proceedings were initiated and decided by the Commissioner of Central Excise, Mumbai-II. On that basis, the adjudicating authority lacked jurisdiction over the EOU-related demand and consequential proceedings. The same jurisdictional defect extended to the connected demand, confiscation and penalties against the DTA unit and the individuals.

Conclusion: The demand, confiscation and penalties against the EOU, the DTA unit and the connected individuals were set aside for want of jurisdiction.

Final Conclusion: The appeals succeeded and the entire adjudication was quashed, with relief granted on both the merits against the transporter and on jurisdiction against the remaining appellants.

Ratio Decidendi: Penal and confiscatory action cannot be sustained against a transporter acting in the normal course without proved knowledge or participation in the alleged evasion, and proceedings by an authority lacking jurisdiction are void.

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