Personal penalty and clandestine removal demand require specific notice and tangible evidence; confiscation upheld only partly.

Personal penalty on a director cannot be sustained without a specific notice and a finding that the director was personally concerned in the alleged excise contravention; the penalty was set aside. A duty demand for alleged clandestine removal must rest on tangible direct or circumstantial evidence and not on presumption or suspicion; the demand was set aside. Confiscation was upheld only for the quantity received on 16 August 1983 and the excess found in the factory, while confiscation of the 2.156 MT received on 17 August 1983 was not justified. The redemption fine was reduced and excess security deposit ordered refunded.

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Issues: (i) Whether personal penalty on the Director was sustainable; (ii) whether the duty demand for alleged clandestine removal was legally supportable; (iii) whether confiscation of the seized materials and appropriation of the security deposit as redemption fine were in accordance with law.

Issue (i): Whether personal penalty on the Director was sustainable.

Analysis: The show cause notice was issued to the company and not to the Director in his personal capacity. Individual liability of a director for excise contraventions cannot be fastened without a specific notice and a finding showing how the particular director was personally concerned with the alleged evasion or contravention.

Conclusion: The personal penalty on the Director was not sustainable and was set aside.

Issue (ii): Whether the duty demand for alleged clandestine removal was legally supportable.

Analysis: A demand for duty based on clandestine removal must rest on tangible evidence, direct or circumstantial, and cannot be founded on presumption, suspicion, or inference alone. The material on record did not establish by reliable evidence that the disputed quantity had been removed without payment of duty.

Conclusion: The duty demand was not sustainable and was set aside in favour of the assessee.

Issue (iii): Whether confiscation of the seized materials and appropriation of the security deposit as redemption fine were in accordance with law.

Analysis: The records and working schedule showed that some of the ingots received on 16 August 1983 ought to have been entered by the opening of the next working day, while materials received on 17 August 1983 were not yet required to be entered forthwith. On the facts, confiscation of the quantity received on 16 August 1983 and the excess quantity found in the factory was upheld, but confiscation of the 2.156 MT received on 17 August 1983 was not justified. The redemption fine was therefore reduced and the security deposit could be appropriated only to that extent.

Conclusion: Confiscation was sustained only partly and the redemption fine was reduced, with refund of the excess security deposit directed.

Final Conclusion: The appeal succeeded in part: the director's penalty and the duty demand were annulled, while confiscation was sustained only to a limited extent and the redemption fine was reduced accordingly.

Ratio Decidendi: Personal penalty on a director requires a specific notice and an individual finding of personal responsibility, and a demand for excise duty on alleged clandestine removal must be supported by tangible evidence rather than mere presumption.

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