Confiscation and penalty were unwarranted where clearances stayed within exemption limits and no duty evasion was found.

Confiscation of stock and goods in transit, and the related penalty, were treated as unwarranted where a small scale unit's clearances remained below the exemption threshold and there was no allegation or finding of duty evasion. The article notes that clearance without a proper invoice was insufficient, on these facts, to justify confiscatory action or penalty. It also states that the unit remained bound to maintain basic production accounts under the trade notice, and that non-compliance with that record-keeping requirement could still be proceeded against under the applicable rules.

---

---

Issues: Whether confiscation of goods and imposition of penalty were justified when the unit was within the exemption limit and there was no case of duty evasion.

Analysis: The goods had been confiscated and penalty imposed on the premise that clearance had been made without proper invoice. The unit was a small scale manufacturer and its clearances up to the date of seizure were stated to be well below the exemption threshold. In the absence of any allegation or finding of duty evasion, confiscation of stock and goods in transit and the accompanying penalty were held to be unwarranted. At the same time, the unit was noted to be under an obligation to maintain basic production accounts in terms of the trade notice, and proceedings could be taken for non-compliance with that requirement under the relevant rules.

Conclusion: Confiscation and penalty were set aside as unjustified on the facts, with consequential relief to the assessee.

---