Exemption claim and unconfirmed duty demand cannot justify confiscation of factory stock or penalty.

Confiscation of stock lying in factory premises was found unjustified where the goods were covered by an exemption claim already disclosed to the department and reflected in monthly returns. Mere apprehension that the goods might later be cleared under exemption did not, by itself, justify seizure, confiscation, or penalty. The absence of any confirmed duty demand in the impugned order further weakened the basis for penal action. On those facts, the Tribunal treated both confiscation and penalty as unwarranted and returned relief to the assessee.

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Issues: Whether confiscation of goods seized from the factory premises and imposition of penalty were justified where the goods were covered by the exemption claim and no duty demand had been confirmed.

Analysis: The dispute before the Tribunal was confined to the confiscation of the seized stock and the penalty imposed thereon. The goods were lying in the factory premises, the exemption was being claimed under the notification already availed before the department, and the monthly returns reflected clearance under the said claim. On those facts, mere apprehension that the goods might be cleared under exemption did not justify seizure, confiscation, or penal action, particularly when no duty demand had yet been confirmed in the impugned order.

Conclusion: The confiscation and penalty were held to be unjustified and unwarranted, in favour of the assessee.

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