Clandestine removal of excisable goods supported confiscation, duty demand, and reduced penalty relief at the appellate stage.

Removal of excisable goods without statutory documents or a weighment pass, supported by statements from the driver and authorised signatory and by the intended delivery to another unit, justified confiscation and redemption fine. Admitted shortage of finished goods, together with the same documentary lapses and corroborating statements, supported a finding of clandestine clearance, so the duty demand and equal penalty were sustained. The appellate forum also extended the benefit of reduced penalty under the proviso to Section 11AC, allowing the penalty to be reduced to 25% if the stipulated payment was made within 30 days.

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Issues: (i) Whether the goods intercepted outside the factory without excise documents or weighment pass were liable to confiscation and redemption fine; (ii) Whether the duty demand and equal penalty were sustainable on account of admitted shortage and alleged clandestine clearance, and whether the benefit of reduced penalty under the proviso to Section 11AC could be extended at the appellate stage.

Issue (i): Whether the goods intercepted outside the factory without excise documents or weighment pass were liable to confiscation and redemption fine.

Analysis: The goods were intercepted without any statutory documents, and the driver and the authorised signatory confirmed that no documents were given for the consignment. The record also showed that the goods were intended for delivery to another unit. These facts established removal of the goods without proper cover, justifying confiscation. The redemption fine was found to be reasonable.

Conclusion: The confiscation of the goods and the redemption fine were upheld, against the assessee.

Issue (ii): Whether the duty demand and equal penalty were sustainable on account of admitted shortage and alleged clandestine clearance, and whether the benefit of reduced penalty under the proviso to Section 11AC could be extended at the appellate stage.

Analysis: The shortage of finished goods was admitted by the authorised signatory, who also stated that the shortage was attributable to clearance without documents. The circumstances, including interception of goods without duty documents, the statement of the driver, and the admission regarding shortages, supported the finding of clandestine clearance. The demand of duty and penalty were therefore upheld. The proviso to Section 11AC permits reduction of penalty where the duty and reduced penalty are paid within the stipulated time, and such option can be extended even at the appellate stage.

Conclusion: The duty demand and penalty were sustained, while the assessee was given the benefit of reduced penalty to 25% if the stipulated payment was made within 30 days.

Final Conclusion: The order was sustained on merits as to confiscation, duty demand, and penalty, but limited relief was granted by extending the option of reduced penalty under the proviso to Section 11AC.

Ratio Decidendi: Admitted removal of excisable goods without statutory documents, coupled with corroborated shortages and supporting statements, is sufficient to sustain a finding of clandestine clearance, and the statutory benefit of reduced penalty under Section 11AC may be extended at the appellate stage.

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