Conditional permission under excise rules must be proved by compliance; unsupported defence and contravention justified confiscation and penalty.

Conditional permission for sending sub-assemblies to a neighbouring concern was not shown to have been complied with, because the goods were neither brought back nor cleared on payment of duty, so the duty demand was sustained. The plea of denial of natural justice failed, as inspection of documents had been allowed and no specific request for cross-examination was shown to have been refused. The defence that the goods had been sent by another sister concern also failed for want of supporting gate passes, clearance records, or a statement from that concern. Confiscation and penalty were upheld because the contravention was established, but the redemption fine was reduced as excessive.

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Issues: (i) Whether there was denial of natural justice in relation to inspection of documents and cross-examination; (ii) whether removal of sub-assemblies to a neighbouring concern was covered by the permission granted under Rule 57F(2); (iii) whether the claim that the goods were sent by another sister concern was proved by the appellants; and (iv) whether the confiscation, penalty and redemption fine required interference.

Issue (i): Whether there was denial of natural justice in relation to inspection of documents and cross-examination.

Analysis: The record showed that inspection of the relevant documents had been afforded, further opportunity to complete inspection had been given, and requests for inspection during hearing had been allowed. There was also no material to show that any specific request for cross-examination of the officers had been made and refused.

Conclusion: The plea of violation of natural justice was rejected.

Issue (ii): Whether removal of sub-assemblies to a neighbouring concern was covered by the permission granted under Rule 57F(2).

Analysis: Permission had been granted only for sending goods for finishing work under the premises of the neighbouring concern. That permission did not dispense with the obligation to receive the goods back or clear them on payment of duty. No material showed compliance with either requirement.

Conclusion: The transfer was not justified under the permission granted, and the duty demand was sustained.

Issue (iii): Whether the claim that the goods were sent by another sister concern was proved by the appellants.

Analysis: The assertion was unsupported by gate passes, clearance documents, or any statement from the alleged sending concern. The burden of proving the defence lay on the appellants, and no evidentiary basis was produced.

Conclusion: The claim was held to be merit and was rejected.

Issue (iv): Whether the confiscation, penalty and redemption fine required interference.

Analysis: Confiscation and penalty were upheld as the contravention stood established. The penalty was not considered excessive. However, the redemption fine was found to be disproportionate to the duty involved and the circumstances of the case.

Conclusion: Confiscation and penalty were sustained, while the redemption fine was reduced.

Final Conclusion: The appeals succeeded only to the limited extent of reduction of redemption fine, while the demand of duty, confiscation and penalty remained intact.

Ratio Decidendi: When compliance with a conditional permission under Rule 57F(2) is not established and the assessee fails to prove its factual defence, confiscation and penalty can be sustained, though redemption fine may be reduced if found excessive.

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