Clandestine removal inferred from unauthorised machinery use and non-accountal, sustaining confiscation while reducing penalties.

Clandestine removal may be inferred from surrounding circumstances, including unauthorised use of a sealed stenter machine, delayed entry of processed fabrics in statutory records, and supporting statements from a partner. On those facts, the goods were liable to confiscation and penalty because the matter was not treated as a mere procedural lapse. The Tribunal, however, reduced the redemption fine and the unit penalty in light of the facts and circumstances, and held that a separate personal penalty on the partner was unwarranted where penalty had already been imposed on the partnership unit.

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Issues: (i) whether the excess processed fabrics found in the premises were liable to confiscation and penalty on the finding of intended clandestine removal without payment of duty; (ii) whether the redemption fine and penalties required interference, including the separate penalty on the partner.

Issue (i): whether the excess processed fabrics found in the premises were liable to confiscation and penalty on the finding of intended clandestine removal without payment of duty.

Analysis: The sealed stenter machine had been opened and used without intimation to the department, the processed goods were not entered in the statutory records for several days, and the partner's statement supported the department's case. The Tribunal held that the matter was not a mere procedural lapse, and the surrounding circumstances established intention to clear the goods without payment of duty.

Conclusion: The goods were liable to confiscation and penalty; the finding of clandestine removal was sustained against the assessee.

Issue (ii): whether the redemption fine and penalties required interference, including the separate penalty on the partner.

Analysis: While upholding the confiscation, the Tribunal considered the facts and circumstances sufficient to reduce the quantum of redemption fine and the penalty on the unit. It further held that since penalty had already been imposed on the partnership unit, a separate penalty on the partner was not warranted.

Conclusion: The redemption fine and the unit penalty were reduced, and the separate penalty on the partner was set aside.

Final Conclusion: The appeal succeeded only to the extent of reduction in monetary penalties and setting aside of the partner's personal penalty, while the confiscation and finding of intended clandestine removal were maintained.

Ratio Decidendi: Clandestine removal may be inferred from surrounding circumstances, including unauthorised use of sealed machinery and non-accountal in statutory records, and a separate personal penalty is unnecessary where penalty is already imposed on the partnership unit.

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