Unaccounted removal of excisable goods attracts duty, confiscation, and penalty, but sanctions must remain proportionate to the facts.

Unaccounted removal and storage of excisable goods attract duty demand, penalty, and confiscation when statutory records do not reflect receipt or clearance and the lapse indicates evasion. The duty demand was sustained because the goods were removed without proper accounting and without duty payment, but the penalty under Section 11AC was reduced as duty had been paid before the show cause notice. Confiscation of excess processed and grey fabrics was upheld under Rule 25, yet the redemption fine and company penalty were reduced for excessiveness on the facts, and the personal penalty on the company officer was set aside for lack of supporting material.

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Issues: (i) Whether duty demand and penalty under Section 11AC were sustainable for removal of excisable goods without accounting them in statutory records and without payment of duty; (ii) Whether confiscation of excess goods found in the factory and the consequential redemption fine and penalties under Rule 25 were justified, including the penalty on the company officer.

Issue (i): Whether duty demand and penalty under Section 11AC were sustainable for removal of excisable goods without accounting them in statutory records and without payment of duty.

Analysis: The statement of the authorised signatory showed receipt of the fabrics prior to the relevant date and their removal after processing without necessary entries in the statutory records and without payment of duty. The adverse findings recorded below were not effectively controverted. The conduct evidenced deliberate non-accountal and evasion, making the penal provision applicable. Since the duty had already been paid before the show cause notice, the maximum penalty was not warranted.

Conclusion: The duty demand was sustained, but the penalty under Section 11AC was reduced.

Issue (ii): Whether confiscation of excess goods found in the factory and the consequential redemption fine and penalties under Rule 25 were justified, including the penalty on the company officer.

Analysis: The excess processed and grey fabrics were found in the factory premises and were not satisfactorily accounted for in the statutory records. Rule 25 authorises confiscation and penalty where excisable goods produced, manufactured, or stored are not properly accounted for. However, the redemption fine and the penalty on the company were considered excessive in the facts, and there was no material to sustain the penalty on the company officer for the same lapse.

Conclusion: Confiscation was upheld, the redemption fine and the company penalty were reduced, and the penalty on the company officer was set aside.

Final Conclusion: The adjudicatory findings on duty liability and confiscability were affirmed, but the monetary consequences were substantially moderated and one personal penalty was annulled.

Ratio Decidendi: Where excisable goods are removed or stored without being accounted for in statutory records, penalty and confiscation are attracted, but the quantum of penalty and redemption fine must be proportionate to the facts and supported by material showing culpability.

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