Explained non-production of records cannot justify confiscation or Rule 25 penalty without proof of evasion intent.

Where statutory records were not produced at the time of inspection but were later produced and the delay was satisfactorily explained, confiscation and redemption fine were not sustainable absent evidence of clandestine removal or intent to evade duty. Penalty under Rule 25 of the Central Excise Rules, 2002 also could not stand because fraud, collusion, suppression of facts, misstatement, or similar culpable intent was neither alleged nor proved. The confiscation, redemption fine, and penalty were therefore set aside in favour of the assessee.

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Issues: (i) Whether confiscation of goods and redemption fine were justified when statutory records were not produced at the time of inspection but were later produced and the delay was explained. (ii) Whether penalty was leviable under Rule 25 of the Central Excise Rules, 2002 in the absence of fraud, collusion, suppression of facts, misstatement, or intent to evade duty.

Issue (i): Whether confiscation of goods and redemption fine were justified when statutory records were not produced at the time of inspection but were later produced and the delay was explained.

Analysis: The unavailability of the statutory records at the time of the visit was explained by the closure of the factory earlier and the absence of the concerned clerk. The records were later produced and examined, and the material on record did not establish any intention to remove the goods without payment of duty. Mere non-entry of a few days' production in the records, without evidence of clandestine removal, was insufficient to sustain confiscation.

Conclusion: The confiscation and redemption fine were not justified and were set aside in favour of the assessee.

Issue (ii): Whether penalty was leviable under Rule 25 of the Central Excise Rules, 2002 in the absence of fraud, collusion, suppression of facts, misstatement, or intent to evade duty.

Analysis: Penalty under Rule 25 requires culpable conduct such as fraud, collusion, suppression, misstatement, or similar intent to evade duty. The record did not contain any allegation or proof of such conduct. Since the lapse was explained and no mens rea was established, the basis for penalty was absent.

Conclusion: No penalty was leviable and the penalty was set aside in favour of the assessee.

Final Conclusion: The appeal succeeded, and both the confiscation with redemption fine and the penalty were annulled.

Ratio Decidendi: Where the failure to produce statutory records is satisfactorily explained and there is no evidence of clandestine removal or intent to evade duty, confiscation and penalty under Rule 25 cannot be sustained.

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