Clandestine removal of fabrics sustained, with confiscation and duty demand upheld but penalty reduced.

Seized man-made fabrics found without valid GP 1 or gate pass documents were treated as part of clandestine removal, so confiscation and duty demand were sustained because the goods were not accounted for in statutory records and no duty had been paid. The contention that the duty liability should fall on the processors was rejected. As the goods had already been redeemed on payment of duty and redemption fine, the penalty was found excessive and reduced to Rs. 3,500.

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Issues: Whether the seized man-made fabrics, not covered by valid gate passes, were liable to confiscation and duty demand on the basis of clandestine removal, and whether the penalty imposed on the appellants required reduction.

Analysis: The fabrics were admittedly sent for processing and were found without valid GP 1 documents. The finding that they formed part of the quantity clandestinely removed without accountal in statutory records, without issue of gate passes and without payment of duty was upheld. The contention that duty liability should fall on the processors was rejected. Since the goods had already been redeemed on payment of duty and redemption fine, the penalty was considered excessive and was reduced.

Conclusion: The confiscation, duty demand, and redemption fine were sustained, but the penalty was reduced to Rs. 3,500.

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