Accounting lapse in inter-unit transfers: confiscation relief and penalty deletion upheld for same-manufacturer goods movements.

Confiscation, redemption fine and penalties were not justified where finished goods moved between units of the same manufacturer under returnable challans and the records showed only an accounting lapse. The facts did not support clandestine removal or any intention to evade duty, and the reduced redemption fine and penalty under Rule 25 were therefore sustained. A separate penalty on the second unit was also rejected because the two premises were treated as part of the same manufacturer, not distinct legal entities for penalty purposes. The appellate challenge was accordingly unsuccessful and the relief granted to the assessee was upheld.

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Issues: Whether confiscation of goods, redemption fine and penalties were justified where finished goods were transferred from one unit of the same manufacturer to another unit under returnable challans and the records reflected only an accounting lapse, and whether a separate penalty on the second unit was warranted.

Analysis: The goods were found entered in the daily stock register and were moved under returnable challans from one unit to the other for painting, packing and export. The facts showed improper maintenance of accounts rather than clandestine removal or an intention to evade duty. The two premises were treated as part of the same manufacturer and not as separate legal entities for the purpose of fastening penalty on the second unit. In the absence of evidence contradicting the finding that there was no intention to evade duty, the reduced redemption fine and reduced penalty under Rule 25 were justified, and no penalty could be sustained against the second unit.

Conclusion: The department's challenge to the relief granted by the Commissioner (Appeals) failed; the confiscation-related relief and deletion of penalties, including the penalty on the second unit, were upheld.

Final Conclusion: The appellate challenge was rejected and the order in favour of the assessee was sustained.

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