Penal excise proceedings fail without clear proof of tobacco substitution; inferred contravention cannot replace evidence.

Penal action under the Central Excise Rules, 1944 could not stand where the excise department failed to prove, with clear and convincing material, that biri pathi tobacco had been removed and replaced with inferior tobacco. The alleged substitution was inferred only from transport and register descriptions, without evidence of the normal stem or khandi content in biri pathi tobacco or the actual composition of the seized goods. As the invoked provisions were penal in nature, proof of each ingredient was required; the findings of contravention were therefore unsustainable and the penalty, duty demand and confiscation were set aside.

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Issues: Whether the penalty, duty demand and confiscation based on alleged removal of biri pathi tobacco and substitution of inferior tobacco were sustainable under the Central Excise Rules, 1944.

Analysis: The materials relied on by the excise authorities did not establish, with acceptable certainty, that the tobacco found on inspection was different from the tobacco originally warehoused. The conclusion of substitution was drawn only from the description in the transport permit and the consignor's register, without evidence of the normal content of stems or khandi in biri pathi tobacco or the actual extent of such content in the seized goods. Since the provisions invoked were penal in nature, the department was required to prove the ingredients of the rules by clear and convincing material, and no presumption could be substituted for proof.

Conclusion: The findings of contravention were unsustainable, and the orders imposing penalty, demanding duty and directing confiscation were set aside in favour of the assessee.

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