Confiscation and penalty require proof of duty evasion; marginal stock variation and defective Rule 173Q invocation were insufficient.

Confiscation and penalty were found unsustainable where copper coils were recorded in statutory books, linked to duty-paid purchases, and supported by invoices and the proprietor's statement, with no evidence of clandestine removal or duty evasion; the absence of the specified sub-rule under Rule 173Q also rendered the action defective. A separate stock discrepancy case failed because the variation was only marginal, the stock was maintained by weight, and the explanation showed different categories of goods, with no allegation or proof of evasion; on that basis, confiscation and penalty, including the Section 11A demand-related penalty, were set aside.

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Issues: (i) Whether confiscation of copper coils and penalty against the dealer were justified where the goods were shown as duty paid and sold to another concern without being accompanied by invoices. (ii) Whether confiscation of goods found in the factory and penalty were justified on the basis of a small stock discrepancy.

Issue (i): Whether confiscation of copper coils and penalty against the dealer were justified where the goods were shown as duty paid and sold to another concern without being accompanied by invoices.

Analysis: The goods were entered in the dealer's statutory records, were traced to purchases from the manufacturer, and the sale to the purchasing concern was corroborated by the proprietor's statement and the dealer's invoices. The record showed duty-paid character and no evidence of clandestine removal or duty evasion. The proceeding also suffered from failure to specify the sub-rule under Rule 173Q under which confiscation was ordered, rendering the action unsustainable.

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

Issue (ii): Whether confiscation of goods found in the factory and penalty were justified on the basis of a small stock discrepancy.

Analysis: The discrepancy was only marginal in a stock position maintained by weight, and the explanation offered showed that the goods fell into different categories. In the absence of any allegation or proof of duty evasion, a minor variation in stock did not constitute an offence warranting confiscation or penalty. Penalty under Section 11A could not be sustained in such circumstances.

Conclusion: The confiscation and penalty against the factory concern were not justified and were set aside.

Final Conclusion: Both appeals succeeded, and the impugned order was set aside with consequential relief.

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