Confiscation under Central Excise Rules fails when the notice and order proceed on different provisions, and financiers are outside liability.

Confiscation and penalty under the Central Excise Rules could not be sustained where the show-cause notice proposed action under Section 9 of the Central Excise Act, 1944, but the order-in-original proceeded under Rule 173Q of the Central Excise Rules, 1944 and Rule 25 of the Central Excise Rules, 2001. The notice did not allege confiscation under those rules, so the proceedings travelled beyond the stated basis. The appellants were financiers under a hire-purchase arrangement, not manufacturers, purchasers, or registered dealers, and therefore did not fall within the class of persons liable under Rule 25. The confiscation and penalty were set aside.

---

---

Issues: Whether confiscation of machinery and imposition of penalty were sustainable when the show-cause notice proposed action under Section 9 of the Central Excise Act, 1944, but the order-in-original proceeded under Rule 173Q of the Central Excise Rules, 1944 and Rule 25 of the Central Excise Rules, 2001, and whether the appellants, being financiers and not manufacturers, purchasers, or registered dealers, were liable under the said rules.

Analysis: The appellants financed the machines under a hire purchase arrangement and took possession after default in payment, also informing the department. The notice did not allege confiscation under Rule 173Q or Rule 25, yet the order of confiscation was made under those provisions. Liability under Rule 25 is confined to the manufacturer, purchaser, or registered dealer, and the appellants did not fall within those categories. The proceedings, therefore, travelled beyond the basis stated in the notice and were not covered by the relevant Central Excise Rules.

Conclusion: The confiscation and penalty were unsustainable and were set aside.

---