Duty liability must be adjudicated first before confiscation and penalties can be sustained under central excise law.

Confiscation, fine, interest and penalty under central excise law cannot be sustained where the order-in-original records no recovery of duty under section 11A and no finding that duty liability had arisen. The Tribunal noted that the alleged clandestine removal was inferred from packing slips, but the adjudication order did not confirm any duty demand or establish the legal basis for duty liability. Without a conclusive determination of duty, the foundation for confiscation and consequential penal action was missing, so the penal consequences were held unsustainable.

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Issues: Whether confiscation, fine, interest and penalty could be sustained when the order-in-original recorded no recovery of duty under section 11A of the Central Excise Act, 1944 and contained no finding that any duty liability had arisen.

Analysis: The dispute arose from alleged clandestine removal on the basis of packing slips and the department relied on the inference that the goods were cleared without proper invoices. The Tribunal found that the adjudication order did not contain any order confirming duty under section 11A of the Central Excise Act, 1944 and did not record a finding establishing duty liability. In the absence of a conclusive adjudication of duty demand, the foundation for confiscation and consequential penalties was missing.

Conclusion: The confiscation and penal consequences were not sustainable and the appeal was allowed.

Ratio Decidendi: Confiscation and penalty under the central excise law cannot be sustained unless duty liability is first adjudicated and found to have arisen.

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