Procedural lapse in bonded premises movement of goods did not justify duty demand, confiscation, or penalty.

Transfer of goods within the same factory premises from EOU to DTA for repair or maintenance, without prior intimation or permission, was treated as a procedural lapse rather than a removal outside the bonded premises. The record showed the materials remained within a single factory, were largely fragile or volatile, had been stored in the DTA area from the beginning with departmental knowledge, and were not diverted to any third party. Because the omission was technical and the expanded bonded area was later approved, demand of duty, confiscation, redemption fine, and penalty were found unwarranted and the assessee obtained consequential relief.

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Issues: Whether transfer of goods within the same factory premises from EOU to DTA for repair or maintenance, without prior intimation or permission, justified demand of duty, confiscation, redemption fine, and penalty.

Analysis: The goods and units were situated within a single factory premises, and the record showed that the disputed materials were largely fragile or volatile and had been stored in the DTA area since the beginning of operations with the knowledge of the authorities. The movement of goods was found to be within the bonded premises and not a removal outside the premises or diversion to any third party. The omission was confined to not taking prior permission or informing the proper officer. The decision treated this as a procedural lapse and a technical violation, particularly because the appellant had also paid duty on missing or misplaced goods and the expanded bonded area was later approved by the competent authorities. In these circumstances, the harsh consequences of duty demand, confiscation, redemption fine, and penalty were held to be unwarranted.

Conclusion: The issue was decided in favour of the assessee, and the impugned orders were set aside with consequential relief.

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