Confiscation and penalty in excise matters depend on intent to evade duty, while unavailable goods bar redemption fine.

Non-entered excisable goods were not liable to confiscation or penalty merely because they were omitted from statutory records, absent proof of intent to evade duty; the text also notes that penalty under Rule 226 required mens rea. Goods removed to nearby premises were held liable to confiscation because contradictory explanations supported an inference of suppression and evasion, so penalty was sustained, but redemption fine was not payable because the goods were not available for confiscation. Duty paid on provisionally released goods was not refundable, and the security deposit was required to be adjusted against lawful departmental dues.

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Issues: (i) Whether the non-entered goods found in the factory premises were liable to confiscation and penalty in the absence of proof of intention to evade duty; (ii) Whether the goods removed to the nearby premises were liable to confiscation, redemption fine, and penalty; (iii) Whether the duty paid on provisionally released goods was refundable or the security deposit was required to be adjusted against departmental dues.

Issue (i): Whether the non-entered goods found in the factory premises were liable to confiscation and penalty in the absence of proof of intention to evade duty.

Analysis: Mere non-entry of goods in the statutory register, by itself, was treated as insufficient to justify confiscation when there was no evidence of an intention to evade payment of duty. For penalty under Rule 226 of the Central Excise Rules, 1944, mens rea was required and no such material was found. The goods had also been provisionally released and were not available for confiscation.

Conclusion: The goods were not liable to confiscation and the penalty was not sustainable, in favour of the assessee.

Issue (ii): Whether the goods removed to the nearby premises were liable to confiscation, redemption fine, and penalty.

Analysis: The explanation regarding those goods was contradictory, as one version described them as finished goods stored for want of space while another described them as semi-finished goods removed for further processing. This contradiction supported an inference of an attempt to suppress the truth and evade duty. The goods were therefore liable to confiscation. However, since they were not available for confiscation, redemption fine could not be imposed. Penalty was upheld as justified.

Conclusion: The goods were liable to confiscation and the penalty was justified, but redemption fine was not payable, partly against the assessee and partly in favour of the assessee.

Issue (iii): Whether the duty paid on provisionally released goods was refundable or the security deposit was required to be adjusted against departmental dues.

Analysis: Clearance of provisionally released goods in contravention of the bond conditions did not entitle the assessee to refund of duty. Where the goods were not available for confiscation, the security deposit had to be adjusted towards lawful dues. As duty had already been paid, refund of that amount did not arise.

Conclusion: The duty paid was not refundable and the security deposit was liable to adjustment, against the assessee.

Final Conclusion: The impugned order was sustained with modification removing the redemption fine, and the appeal succeeded only to that limited extent with consequential relief.

Ratio Decidendi: Confiscation and penalty for excise violations require proof of intention to evade duty and, for penalty, mens rea where the statute so demands; redemption fine cannot be imposed when the goods are not available for confiscation, and a provisional security deposit may be adjusted against lawful dues.

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