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Issues Involved:
1. Levy of excise duty. 2. Confiscation of excisable goods. Detailed Analysis: 1. Levy of Excise Duty: The Department proceeded under Rule 33(2) and Rule 9(2) of the Central Excise Rules, 1944. Rule 9(1) mandates that no excisable goods shall be removed from any place where they are produced, cured, or manufactured until the excise duty leviable thereon has been paid. Rule 9(2) states that if any excisable goods are removed in contravention of sub-rule (1), the producer or manufacturer shall pay the duty and be liable to a penalty, and such goods shall be liable to confiscation. Rule 19 stipulates that duty becomes chargeable as soon as the products are cured and fit for sale, and the curer remains liable for payment until the liability is transferred to another person duly licensed, as provided in Rule 29. Rule 24(2) allows the sale of unmanufactured products to a person duly licensed to carry on business or warehouse such products without payment of duty. Rule 29 continues the curer's liability for payment of duty until the transfer of ownership is reported and acknowledged by the proper officer. The Central Government Pleader argued that under Rule 29, both the purchaser (Ibrayi) and the respondent (into whose possession the coffee seeds passed) are liable for the duty. However, the respondent's Counsel contended that Rule 29 must be read in conjunction with Rule 24, which allows sales only to licensed persons. Since there was no evidence that Ibrayi was licensed, the respondent is not liable for the duty. The judgment found merit in the respondent's argument, concluding that without evidence of Ibrayi being licensed, the respondent is not liable to pay the duty on the coffee seeds, although Ibrayi might be. 2. Confiscation of Excisable Goods: The power to confiscate excisable goods is derived from Section 120(1) of the Customs Act, as adapted by Notifications under Section 12 of the Central Excises and Salt Act. The adapted Section 120(1) states that excisable goods removed in contravention of the Central Excise Rules may be confiscated notwithstanding any change in their form. The Central Government Pleader argued that this provision allows for the confiscation of all excisable goods removed in contravention of the rules. The respondent's Counsel contended that Section 120(1) only allows for the confiscation of smuggled goods that have changed their form. The judgment sided with the Central Government Pleader, stating that Section 120(1) provides a general power to confiscate all excisable goods removed in contravention of the rules, not just those that have changed form. Conclusion: The appeal was allowed in part. The order of confiscation of the coffee seeds was upheld, but the order appropriating the excise duty from the respondent was dismissed. The Department has no right to collect the excise duty from the respondent, and the appeal was dismissed to that extent. No order regarding costs was passed.
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