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TMI Blog2006 (11) TMI 448X X X X Extracts X X X X X X X X Extracts X X X X ..... /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 due to the fact that though the inputs were issued to the produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rates 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 to give a proper explanation. It was his submission that the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions 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 departmental representative that, the mismatch of the stock would get covered under the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch of the tribunal in the case of DSL Software India Ltd., (supra) have also held that: Confiscation (Customs) - Violation of exemption notification conditions - Only in such case Section 111(o) of Customs Act, 1962 can be invoked, and not in other cases. 9. In view of the facts and circumstances that there is no allegation of the violation of the conditions of the notification No. 13/81-Cus. as amended, respectfully following the ratio of the decision of the Hon ble Supreme Court and Tribunal, the confiscation of the inputs by the authorities under provisions of Section 111(o) of the Customs Act, 1962 is unsustainable. The confiscation is set aside. Since the confiscation is set aside the penalty imposed on the appellant is also liab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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