Confiscation and penalty cannot stand without clandestine removal or duty demand where small-scale exemption applies.

Departmental appeals against setting aside confiscation and penalty failed where the record showed only simple production and clearance maintenance by a small-scale unit, with no material of clandestine removal. Confiscation was treated as unwarranted for a mere procedural lapse, and penalty could not be sustained because the essential ingredients for penal action were absent. The absence of any duty demand, together with the fact that the goods remained within the applicable small-scale exemption limit, left no basis for interference, and the appeals were rejected.

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Issues: Whether the departmental appeals against the order setting aside confiscation and penalty were liable to be interfered with, in the absence of any duty demand and where the goods were within the small scale exemption limit.

Analysis: The respondents were found to have maintained only simple production and clearance records as a small scale unit and there was no material to show clandestine removal of goods. The order under challenge had already held that confiscation was unwarranted for a mere procedural lapse and that penalty could not be sustained because the essential ingredients for invoking the penal provisions were absent. The adjudicating authority also noted that there was no duty demand against the respondents and that the goods were within the exemption limit applicable to the unit.

Conclusion: The departmental appeals were not liable to succeed and were rejected.

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