Limitation for concealed excise removals runs from departmental knowledge, and confiscation may rest on preponderance of probability.

For concealed clandestine removals under excise law, limitation under section 40(2) runs from the date the department first acquires knowledge, or could reasonably have discovered the offence with diligence, rather than necessarily from the date of the removal itself. On the facts described, notices issued within six months of departmental knowledge were treated as timely. In adjudication, confiscation and penalties may be sustained on a preponderance of probability, and the record of removals without gate passes, missing statutory entries, and unexplained discrepancies supported findings of clandestine removal and procedural contraventions.

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Issues: (i) whether the show-cause notice was barred by limitation under section 40(2) of the Central Excises and Salt Act, 1944, and (ii) whether the confiscation of goods and imposition of penalties were justified on the evidence of clandestine removal and procedural contraventions.

Issue (i): Whether the show-cause notice was barred by limitation under section 40(2) of the Central Excises and Salt Act, 1944.

Analysis: The relevant limitation did not necessarily run from the date of the alleged offence. Where clandestine removals were concealed from the department, the starting point could be the date on which the Central Excise officers first acquired knowledge of the offence or could reasonably have discovered it with diligence. On the facts, the department first came to know of the removals in January 1973, and the notices issued on 4-7-1973 were within six months of that knowledge.

Conclusion: The objection of limitation failed and the proceedings were held to be within time.

Issue (ii): Whether the confiscation of goods and imposition of penalties were justified on the evidence of clandestine removal and procedural contraventions.

Analysis: In adjudication proceedings the department was required to establish the allegations on the preponderance of probability, not beyond reasonable doubt. The record showed removal of excisable goods without proper gate passes, non-entry in statutory records, and unexplained discrepancies in production and clearance documents. The explanations of inadvertence, urgency, and clerical error were rejected as unsatisfactory. The Tribunal also found sufficient material to uphold the findings of clandestine removal in the second appeal and saw no reason to interfere with the penalties imposed under the relevant excise rules.

Conclusion: The confiscation and penalties were upheld.

Final Conclusion: The Tribunal sustained the departmental demands, confiscation, and penalties, and both appeals were rejected.

Ratio Decidendi: For clandestine removals concealed from excise authorities, limitation under section 40(2) runs from the date of knowledge or reasonable discoverability by the department, and in adjudication proceedings liability may be established on preponderance of probability.

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