Confiscation of unrecorded EOU goods failed where nil-duty classification stood accepted and no DTA clearance was proved.

Goods found in a 100 per cent export oriented unit's factory could not be confiscated merely because they were not entered in the statutory records, where the classification dispute had already been settled in favour of Chapter Heading 0404 and nil duty, and the revenue had accepted that position. In the absence of any finding that the goods were actually cleared into the Domestic Tariff Area, the Commissioner (Appeals) was to set aside confiscation. Reliance on Section 3 of the Central Excise Act and Notification No. 13/98-C.E. did not alter the result on the facts found.

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Issues: Whether goods found in the factory of a 100 per cent export oriented unit, which were not shown in the statutory record, were liable to confiscation when the classification dispute had already been decided in favour of nil rate of duty and there was no finding of actual clearance to the Domestic Tariff Area.

Analysis: The goods were admittedly lying in the factory. The earlier order accepting the classification of the goods under Chapter Heading 0404 and the consequent nil rate of duty had already been accepted by the revenue. In that background, and in the absence of any established clearance of the goods into the Domestic Tariff Area, no infirmity was found in the order of the Commissioner (Appeals) setting aside confiscation. The revenue's reliance on Section 3 of the Central Excise Act and Notification No. 13/98-C.E. was not sufficient to disturb the impugned order on the facts found.

Conclusion: The confiscation was not justified and the revenue appeal was rejected.

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