SSI exemption requires prescribed declaration; undeclared clearances can justify confiscation and firm penalty, without duplicative proprietor penalty.

SSI exemption was not available automatically and had to be opted for by filing the prescribed declaration. Where no declaration was filed, no lawful production or clearance records were maintained, and clearances were made on kacha slips later destroyed, confiscation of seized finished goods and penalty on the firm were justified. A separate penalty on the proprietor was not warranted on the same facts once the firm had already been penalised, so the proprietor's relief remained undisturbed.

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Issues: (i) Whether the assessee could claim Small Scale Industry exemption without filing the required declaration, and whether confiscation of the seized finished goods and penalty on the firm were sustainable; (ii) whether a separate penalty could be imposed on the proprietor in addition to the penalty on the firm.

Issue (i): Whether the assessee could claim Small Scale Industry exemption without filing the required declaration, and whether confiscation of the seized finished goods and penalty on the firm were sustainable.

Analysis: The goods manufactured were excisable goods. The proprietor's statements showed that no intimation or declaration had been filed to opt for the exemption, no production or clearance records were maintained, and clearances were made on kacha slips which were destroyed. The exemption was not available automatically; it depended on exercise of the option in the manner prescribed. In the absence of such declaration and in view of the deliberate non-maintenance and destruction of records, the seizure, confiscation, and penalty on the firm were justified.

Conclusion: The confiscation of the seized goods and the penalty on the firm were upheld, and the contrary order was set aside.

Issue (ii): Whether a separate penalty could be imposed on the proprietor in addition to the penalty on the firm.

Analysis: Once penalty had been imposed on the firm, a separate penalty on the proprietor for the same conduct was not warranted on the facts of the case.

Conclusion: The setting aside of the penalty on the proprietor was upheld.

Final Conclusion: The Revenue succeeded only to the extent of restoring the confiscation and penalty against the firm, while the relief granted to the proprietor remained undisturbed.

Ratio Decidendi: SSI exemption requiring a prescribed declaration is not automatic, and where the assessee fails to opt for the exemption and maintains no lawful production or clearance records, confiscation and penalty on the firm are sustainable, but a duplicative penalty on the proprietor may not be imposed on the same facts.

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