Confiscation of raw material needs proof of clandestine removal; mere non-entry in records is not enough.

Confiscation of raw material under Rule 173Q of the Central Excise Rules, 1944 cannot rest on mere non-entry in records or suspicion of clandestine removal; supporting material showing unlawful intent or an actual attempt at removal is required. The raw material was procured for manufacturing purposes, no Modvat credit had been taken, and no clandestine clearance was proved. On those facts, the confiscation and consequential redemption fine were held unsustainable and were set aside.

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Issues: Whether confiscation of raw material seized in the factory and the consequential redemption fine under Rule 173Q of the Central Excise Rules, 1944 were sustainable when the goods were not entered in records but there was no Modvat credit taken and no proved attempt at clandestine removal.

Analysis: The raw material was admittedly procured for manufacturing purposes and was not shown to be Modvatable or covered by any credit entry. The confiscation was based only on the allegation that the goods were not entered in the records and were intended for clandestine clearance. The Tribunal accepted the view that confiscation of raw material cannot rest on mere presumption or assumption, and that seizure or confiscation is not justified unless there is material showing an attempt at clandestine removal. In the absence of such proof, the invocation of Rule 173Q for confiscation and redemption fine was not sustainable.

Conclusion: The confiscation of the raw material and the redemption fine were unsustainable and were rightly set aside. The appeal was therefore dismissed in favour of the assessee.

Ratio Decidendi: Confiscation of raw material under Rule 173Q of the Central Excise Rules, 1944 is not permissible on mere suspicion of clandestine removal without supporting evidence of unlawful intent or removal.

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