Confiscation and penalty under excise law fail where no duty demand or proved contravention supports seizure-based action.

Confiscation of packing materials and chewing tobacco, and penalty under Rule 25 read with section 11AC, were held unsustainable because no central excise duty was proposed or confirmed and the alleged contraventions were not established. Packing materials were not excisable goods in the appellant's hands, so confiscation and penalty could not stand on that basis. The chewing tobacco seized from the godown was partly supported by records, while the remaining goods were not shown to have been clandestinely cleared or removed without duty. Goods seized from third-party premises also lacked verified ownership and proper notice to the custodians. The order was set aside and the appeals were allowed.

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Issues: Whether confiscation of seized packing materials and chewing tobacco, and penalty under Rule 25 read with section 11AC, were sustainable when no central excise duty was proposed or confirmed and the alleged violations were not duly established.

Analysis: The proceedings did not propose or confirm any central excise duty against the appellant. Rule 25 applies to contravention relating to excisable goods and violations committed with intent to evade duty. Packing materials are not excisable goods liable to duty in the appellant's hands, so confiscation and penalty on that basis could not stand. As regards the chewing tobacco found in the duty-paid godown, part of the stock was supported by records and the remaining goods were not shown to have been clandestinely cleared or removed without duty. For the goods seized from the premises of third parties, the ownership and transactions were not properly verified, and notices were not issued to the persons from whose custody the goods were seized.

Conclusion: Confiscation and penalty were held unsustainable; the order was set aside and the appeals were allowed.

Final Conclusion: The impugned order could not survive because the alleged contraventions were not established in law or on facts, and no duty demand had been determined against the appellant.

Ratio Decidendi: In the absence of a duty demand or proved contravention attracting Rule 25, confiscation and penalty for seized goods cannot be sustained.

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