Clandestine removal and record-keeping lapse: delivery documents defeated confiscation, and no separate partner penalty was justified.

Goods accompanied by delivery challan, with the corresponding invoice found at the factory, were treated as insufficiently supported by any concrete finding of clandestine removal or duty evasion to justify confiscation, redemption fine, or a harsh penalty. In an SSI context, mere non-maintenance of separate excise records was treated as a procedural lapse that did not, by itself, warrant confiscation where private records were said to be adequate for excise purposes and no duty demand had been confirmed. On the same footing, a separate personal penalty on the partner was found unsustainable because no independent basis remained once deliberate evasion was not established.

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Issues: (i) whether confiscation of the goods and the imposition of redemption fine and penalty were justified when the goods were accompanied by delivery challan and the dispute turned primarily on alleged non-maintenance of statutory records; (ii) whether a separate penalty on the partner of the unit was sustainable.

Issue (i): Whether confiscation of the goods and the imposition of redemption fine and penalty were justified when the goods were accompanied by delivery challan and the dispute turned primarily on alleged non-maintenance of statutory records.

Analysis: The goods recovered from the transport premises were covered by delivery challan, and the corresponding invoice was found in the factory premises. No duty demand had been confirmed on the clearances, and there was no concrete finding that the unit had crossed the exemption limit or that the goods were being clandestinely removed. The record also did not establish any attempt to clear the goods outside the statutory framework. In the context of an SSI unit, the absence of separate excise accounts, by itself, did not justify confiscation where private records were indicated to be sufficient for excise purposes and the departmental material did not show evasion.

Conclusion: Confiscation and the heavy penalty were not sustainable. The confiscation was set aside and the penalty on the unit was reduced to a nominal amount.

Issue (ii): Whether a separate penalty on the partner of the unit was sustainable.

Analysis: The basis for penal action against the partner was the same alleged lapse regarding records. Once the confiscation was held unwarranted and the circumstances did not establish deliberate evasion, no independent basis remained for fastening a separate personal penalty.

Conclusion: The separate penalty on the partner was not sustainable and was set aside.

Final Conclusion: The appeals succeeded in substance to the extent that confiscation and the partner's penalty were annulled, while the penalty on the unit was substantially reduced in view of the procedural lapse regarding the excise code number.

Ratio Decidendi: Where goods are supported by delivery documents and there is no finding of clandestine removal or duty evasion, mere non-maintenance of statutory excise records by an SSI unit does not justify confiscation and harsh penalty, particularly when only a procedural lapse is shown.

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