(a) to demand duty of Rs. 33,404/- from the appellants under Section 11A (1) of the Central Excise Act and appropriate the amount already paid, towards such demand;

(b) to confiscate the above goods under Rule 25 of the Central Excise Rules, 2002; and

(c) to impose penalty on the party under Section 11AC of the Act read with Rule 25 ibid.

(ii) The above proposals were contested by the party in their reply to the show-cause notice. They resisted confiscation on the ground that the goods were not physically available for confiscation. It was submitted that, for confiscation of any goods, it must be in the department's possession or must have been released at the request of the assessee against bond supported by bank guarantee. On this basis, the assessee contended that the goods in question could not be confiscated and, for that matter, redemption fine could not be imposed. These and other arguments of the party were not acceptable to the adjudicating authority, with the result that confiscation of the goods was ordered under Rule 25 (1) (d) of the Central Excise Rules, 2002 and a fine of Rs. 40,000/- was imposed in lieu of confiscation, apart from confirmation of the demand of duty and imposition of penalty equal to duty. The appeal filed by the party against the Assistant Commissioner's order came to be dismissed by the Commissioner (Appeals). Hence the above appeal before this Tribunal.

(iii) A learned Member of the Tribunal, sitting singly, considered the appeal and found a conflict of decisions on the question whether goods which were not available for confiscation (except where the goods were provisionally released after seizure) could be confiscated and redemption fine imposed in lieu of confiscation. That issue was referred to larger bench and accordingly the issue is before us. The issue as framed by the referring bench reads as under:

"Whether the goods can be confiscated and redemption fine imposed even if they are not available for confiscation (excluding the cases where the goods are initially seized and provisionally released) as held by the Tribunal in the case of Venus Enterprises Vs. Commissioner, 2006 (199) ELT 662 (Tri.-Chennai) or the same cannot be confiscated and fine in lieu of confiscation cannot be imposed as held by the CESTAT in the case of Ram Khazana Electronic, 2003 (156) ELT 122 (Tri.-Del.), Shiwalya Spinning & Weaving Mills (P) Ltd., 2002 (146) ELT 610 (Tri.-Del.), Prudential Pharmaceuticals Ltd., 2001 (136) ELT 1057 (Tri.-Chennai)".

3.Facts of the Customs Appeal:

(i) The respondent in this appeal of the department imported an old/used vessel along with 193.685 MTs of Remnant Oil on Board (ROB) comprising 87.345 MTs of Fuel Oil, 98 MTs of Diesel Oil and 8.3 MTs of Lube Oil, for breaking/scrapping. They filed a Bill of Entry on 31.05.2002 for clearance of the goods totally valued at over Rs. 4.7 crores (CIF). The ship with spares and other machinery/accessories were assessed under CTH 8908.00 and the ROB was assessed under CTH 2710.90 as declared by the importer. Upon payment of the duty assessed, the vessel was allowed out of customs charge a