2006 (11) TMI 448

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....r the manufacture of final products under notification No. 13/81-Cus. dated 9-2-1981 as amended from time to time. Officers of the Central Excise HQ, Raipur visited the factory premises of the appellant and on physical stock verification found an excess quantity of input 'Polywool Yarn' and seized the same. A show cause notice was issue to the appellant proposing confiscation of the said seized yarn and also for imposition of penalty. Appellant resisted the show cause notice on the ground that they being a 100% E.O.U. were under the physical control of the Customs officers and hence there cannot be any movement of the inputs or finished goods from or to their factory without being in knowledge of the department, that the excess input was du....

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....cluded from application of provisions of Chapter VIIA which incorporates the penalty provisions under Rule 173Q. On merits it is his submission that the appellant being a 100% E.O.U. is under the physical supervision of a Customs officer round the clock, hence there cannot be any inflow or outflow of material without being recorded. Further it was his submission that the appellant has given a total reconciliation of the inputs received and consumed in their factory, which would indicate that there are no excess inputs received in the appellant's factory. 4. The learned DR on the other hand submits that it was for the appellant to maintain the accounts properly in their unit and having not maintained the same it was for the appellant....

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....ods imported can be ordered under Section 111(o) only if they are violating the conditions of exemption notification or any other law for the time being in force. It is noticed from the orders of the lower authorities that there are no findings as to that the appellant having violated any of the conditions of the Notification No. 13/81-Cus. as amended in respect of the seized inputs and hence the said goods are not liable for confiscation. The confiscation has been ordered only on the ground that  there is a variation between the book stock and physical stock. To my mind for confiscation under Section 111(o) of the Customs Act, 1962, it has to be shown that there was violation of the exemption notification. It was the contention of the....