Confiscation and redemption fine cannot stand where duty demand fails and no mala fide intent to evade duty is found.

Confiscation of machinery and a corresponding redemption fine were held unjustified where the duty demand had been dropped and the Commissioner found no intent to evade duty, no material basis for penalty, and prior departmental knowledge of the activity. The article notes that, although the machinery was treated as excisable goods manufactured by a job-worker, the remaining lapses were only technical or procedural consequences of a bona fide belief that no duty was payable. In the absence of mala fides, and with the extended limitation period unavailable, confiscation and a fine equal to the duty amount could not be sustained.

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Issues: Whether confiscation of the machinery and the corresponding redemption fine were justified when the demand for duty had been dropped and the Commissioner had found absence of intent to evade duty or any basis for penalty.

Analysis: The machinery had been held to be excisable goods manufactured by the job-worker, but the Commissioner also recorded that the department had prior knowledge of the activity, that the extended period of limitation was unavailable, and that there was no material showing deliberate evasion or any basis for penalty on any of the concerned parties. In that situation, the remaining defaults were only technical or procedural consequences of the bona fide belief that no duty was payable. The imposition of confiscation and a redemption fine equal to the duty amount was therefore inconsistent with the absence of mala fides, especially when the department had failed to recover duty within time.

Conclusion: Confiscation of the machinery was not justified and the redemption fine could not be sustained.

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