Documented inter-unit transfers between registered units defeated penalty and redemption fine, though duty demand and interest remained intact.

Penalty under Section 11AC of the Central Excise Act was held inapplicable where fabricated columns were moved between two registered units of the same assessee under prescribed challans, because the movement was documented, not clandestine, and reflected a bona fide belief rather than mens rea. The duty demand and interest remained undisturbed, but the penal consequence was removed. On the confiscated goods, the redemption fine was also set aside because the inter-unit transfer was treated as a technical infraction linked to a bona fide, documented transaction rather than deliberate evasion.

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Issues: (i) Whether penalty under Section 11AC of the Central Excise Act, 1944 was sustainable on the inter-unit movement of fabricated columns between two registered units of the same assessee; (ii) Whether the redemption fine imposed on confiscated goods was sustainable.

Issue (i): Whether penalty under Section 11AC of the Central Excise Act, 1944 was sustainable on the inter-unit movement of fabricated columns between two registered units of the same assessee.

Analysis: The goods were moved from one registered unit to another under challans prescribed for such movement. The duty demand and interest were not disputed, but the movement was not clandestine and was supported by documents. In these circumstances, the assessee's bona fide belief that such inter-unit movement could be made without payment of duty was accepted, and the element of mens rea was held absent.

Conclusion: Penalty under Section 11AC of the Central Excise Act, 1944 was not justified and was set aside.

Issue (ii): Whether the redemption fine imposed on confiscated goods was sustainable.

Analysis: The confiscated goods had been moved between the assessee's registered units under documentation and the underlying movement was treated as a technical infraction rather than a deliberate evasion.

Conclusion: The redemption fine was set aside.

Final Conclusion: The duty demand and interest were left undisturbed, but the penal consequences were removed because the inter-unit movement was treated as a documented and bona fide transaction without fraudulent intent.

Ratio Decidendi: Where goods are moved between registered units of the same assessee under proper documents and the conduct reflects a bona fide belief rather than deliberate evasion, penalty provisions requiring culpable conduct are not attracted.

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