Central Excise record lapses can justify duty and penalty, but transporters need a link to the irregularity before confiscation.

Non-maintenance of Central Excise records and failure to debit duty in disputed invoices were treated as a violation of the Central Excise Rules, justifying confirmation of duty and civil penalty against the assessee on the facts stated. The commentary also notes that a departmental circular was binding on the department but not on the Tribunal. By contrast, penal action against drivers and confiscation of vehicles was not warranted where they were only transporting goods and there was no material showing knowledge of the excise irregularity, so release of the vehicles was directed.

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Issues: (i) Whether non-maintenance of Central Excise records and non-debit of duty in respect of the disputed invoices justified confirmation of duty and penalty against the assessee; (ii) Whether the drivers could be penalised and the vehicles confiscated when they had no knowledge of the excise irregularity.

Issue (i): Whether non-maintenance of Central Excise records and non-debit of duty in respect of the disputed invoices justified confirmation of duty and penalty against the assessee.

Analysis: The records were found not to have been properly maintained and the duty relatable to the three invoices was not reflected in the Central Excise records. On those facts, there was violation of the Central Excise Rules. The Board's circular was held to be binding on the department and not on the Tribunal. The explanation offered by the assessee was found unacceptable, and the imposition of civil penalty was treated as justified in the circumstances.

Conclusion: The confirmation of duty and penalty against the assessee was upheld.

Issue (ii): Whether the drivers could be penalised and the vehicles confiscated when they had no knowledge of the excise irregularity.

Analysis: The drivers were found to be merely transporting the goods and there was nothing to show that they could have known of the alleged violation in the excise records. On that basis, penal consequences against them were not warranted, and release of the vehicles was directed.

Conclusion: The appeals of the drivers were allowed and the vehicles were ordered to be released.

Final Conclusion: The assessee's challenge failed, but the drivers obtained relief and the confiscation of the vehicles was set aside.

Ratio Decidendi: A departmental circular does not bind the Tribunal, and where excise records are not properly maintained, confirmation of duty and civil penalty may follow; however, penal action against transporters requires some basis to connect them with the underlying irregularity.

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