Confiscation and penalty fail where exempt clearances stay within limit and no duty evasion is found on facts.

Confiscation and penalty under Central Excise law are unsustainable where the record shows clearances remained within the small-scale exemption limit and no duty evasion was established. The commentary emphasises that such findings are purely factual and, in an appeal under Section 35G of the Central Excise Act, 1944, do not give rise to a substantial question of law. On those facts, clandestine removal could not be inferred, and penal consequences could not be maintained.

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Issues: Whether confiscation of goods and imposition of penalty were justified when the unit claimed small scale exemption, the clearances remained within the exemption limit, and no evasion of duty was established.

Analysis: The Tribunal recorded a finding of fact that the assessee's production and clearances were below the exemption threshold and that the revenue had no case of duty evasion. On that factual basis, the order of confiscation and the penalty were held to be unsustainable. In an appeal under Section 35G of the Central Excise Act, 1944, no substantial question of law arose from such factual findings.

Conclusion: Confiscation and penalty were not justified and the appeal failed.

Final Conclusion: The decision affirms that where exempted clearances remain within the prescribed limit and no duty evasion is found, penal consequences based on clandestine removal are unsustainable on the facts found.

Ratio Decidendi: A pure finding of fact that clearances were within the exemption limit and that there was no duty evasion does not raise a substantial question of law and cannot sustain confiscation or penalty under the Central Excise law.

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