Confiscation of raw material and director penalty fail when open-market purchase is shown and illicit manufacturing intent is unproven.

Excess raw material found in factory premises was not liable to confiscation where evidence showed open-market purchase and the Director's statement supported that position, while the Revenue produced no proof that the material was intended for use in manufacturing duty-evading goods; the confiscation was therefore set aside. For the same reason, the personal penalty on the Director also failed because it rested on the same unproven allegation of improper procurement and intended misuse, and was likewise set aside. The impugned order was set aside in full.

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Issues: (i) whether the excess raw material found in the factory premises was liable to confiscation; (ii) whether the personal penalty on the Director was sustainable.

Issue (i): whether the excess raw material found in the factory premises was liable to confiscation.

Analysis: The raw material was found to have been purchased from the open market without duty-paid excise invoices, and the Director's statement supported that position. The Revenue did not bring on record evidence that the material had been procured for use in manufacturing goods intended to be cleared without payment of duty. On these facts, confiscation was not justified.

Conclusion: The confiscation of the excess raw material was not sustainable and was set aside.

Issue (ii): whether the personal penalty on the Director was sustainable.

Analysis: Since the basis for penal action rested on the alleged improper procurement and intended misuse of the raw material, and no supporting evidence was produced to establish such use, the penalty could not stand independently.

Conclusion: The personal penalty on the Director was not sustainable and was set aside.

Final Conclusion: The impugned order was set aside in full and the appeals succeeded.

Ratio Decidendi: Confiscation and penalty cannot be sustained merely because raw materials are found without duty-paid invoices when the evidence shows open-market purchase and the Revenue fails to prove intended illicit use in manufacture of duty-evading goods.

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