Verification of returned goods under bond: absence of inspection made the duty demand and penalty unsustainable.

Duty demand and penalty for goods returned to the factory under bond were held unsustainable because Rule 173M required verification of the goods, not the container. The goods were stated to be lying intact in drums, and there was no material showing diversion elsewhere. As the departmental officers failed to verify the goods upon intimation, the demand could not be justified and the penalty also failed.

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Issues: Whether duty demand and penalty were sustainable in respect of goods returned to the factory under bond under Rule 173M of the Central Excise Rules, 1944.

Analysis: The proviso to Rule 173M required verification of the particulars of the goods, not of the container. The goods were stated to be lying intact in drums and there was no material showing diversion elsewhere. In these circumstances, the departmental officers ought to have verified the goods on receipt of intimation, and the absence of such verification made the duty demand unsustainable.

Conclusion: The demand of duty was not justified and the penalty could not be sustained.

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