JUDGMENT : M.R. Shah, J. 1. Feeling aggrieved and dissatisfied with the impugned judgment and order dated 11th February 2014 passed by the Customs, Excise & Service Tax Appellate Tribunal, West Zonal Bench, Ahmedabad [hereinafter referred to as, "the Tribunal"], the Revenue has preferred the present Appeal to considering the following substantial question of law: "Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law in holding that when the charge against the respondent, which is 100% EOU of diversion of imports and the goods are not available for confiscation, the question of confiscation of such goods and redemption under Section 125 of the Customs Act, 1962 does not arise?" 2. The facts leading to the present Appeal in nutshell are as under:- "2.1 That, the respondent herein M/s. Kay Bee Tex-Spin Limited, Surat is engaged as a 100% EOU in the manufacture of final products viz., Textured Yarn, Twisted Yarn, Knitted Fabrics, Sized Yarn, etc. The Unit was granted LOP vide letter dated 15th June 2009 and as 100% EOU by the Development Commissioner, KFTZ, Gandhidham [Kutch], and accordingly, the Unit was granted a license for private Bonded Warehouse under 100% Export Oriented Scheme under Section 58 of the Customs Act, 1962 by the Deputy Commissioner, Central Excise & Customs, Division V, Surat. That, it was found that the respondent-Unit diverted the goods illicitly into the open market and the raw-materials which were procured by forgoing the customs duty were not used for the purpose for which they were imported. Therefore, the Commissioner, Central Excise & Customs, Surat-II served a show cause notice upon the respondent, making the demand of Central Excise duty, Customs duty, etc., on the raw material, interest thereon and the penalties under various sections of the Customs Act, 1962 and the Central Excise Act, 1944. 2.2 At this stage, it is required to be noted that at the time of show cause notice/adjudication, the goods were not available which were already received by the Unit on furnishing the bond and necessary undertaking. That, the Adjudicating Authority confirmed the demand of Central Excise duty and the Customs duty etc., on the raw material, interest thereon and imposed the penalties under various sections of the Customs Act, 1962 and the Central Excise Act, 1944. That, the Adjudicating Authority confirmed the demand of Central Excise duty and the Customs duty etc., on the raw material, interest thereon and imposed the penalties under various sections of the Customs Act, 1962 and the Central Excise Act, 1944. The said dues were adjudged by the Adjudicating Authority on the ground that the respondent being a 100% EOU, had diverted the goods illicitly into the open market and the raw materials which were procured by forgoing the customs duty were not used for the purpose for which they were imported. The respondent accepted the order passed by the Adjudicating Authority. However, the appellant herein-Revenue preferred an Appeal before the learned Tribunal only for the reason that the Adjudicating Authority did not pass any order for confiscation of the raw materials and/or imposing the redemption fine in lieu of confiscation, despite there being a bond executed by the assessee. That, the Tribunal by the impugned judgment and order dismissed the said Appeal and confirmed the IOI and the order passed by the Adjudicating Authority in not confiscating the goods and/or imposing the redemption fine in lieu of confiscation on the ground that the goods were not there for confiscation, and therefore, the question of confiscation cannot arise. The learned Tribunal observed and held that once the goods were not available for confiscation, there is no question of imposing redemption fine in lieu of confiscation. Feeling aggrieved and dissatisfied by the impugned judgment and order dated 11th February 2014 passed by the learned Tribunal in holding that the Adjudicating Authority was justified in not confiscating the goods and/or not imposing the redemption fine, as the goods were not available for confiscation, the Revenue has preferred the present Tax Appeal to consider the following substantial question of law: "Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law in holding that when the charge against the respondent, which is 100% EOU of diversion of imports and the goods are not available for confiscation, the question of confiscation of such goods and redemption under Section 125 of the Customs Act, 1962 does not arise?" 3. Shri Sudhir Mehta, learned advocate appearing on behalf of the appellant-Revenue has vehemently submitted that in the facts and circumstances of the case, the learned Tribunal has materially erred in holding that as the goods were not available for confiscation at the time of issuance of the show cause notice for adjudication, the redemption fine in lieu of confiscation under Section 125 of the Customs Act cannot be imposed. 3.1 It is further submitted by Shri Mehta, learned advocate appearing on behalf of the Department that the learned Tribunal has materially erred in not properly appreciating the fact that the goods were released and as the possession of the goods were handed over/given to the importer on furnishing the necessary bond/undertaking. It is submitted that in that case, as the goods were released and/or possession of which was given to the respondent herein-importer on issuing the bond and necessary undertaking, as held by the Hon'ble Supreme Court in the case of Weston Components Limited v. Commissioner of Customs, New Delhi, 2000 [115] ELT 278 (SC), the redemption fine is imposable. 3.2 Shri Mehta, learned advocate appearing on behalf of the Department has also relied upon a decision of Karnataka High Court in the case of Commissioner of Customs, Bangalore Vs. Shilpa Trading Company, 2014 (309) ELT 641 [Kar.] in support of his submissions. 3.3 It is further submitted by Shri Sudhir Mehta, learned advocate appearing on behalf of the Revenue that in the present case, admittedly, the respondent-Unit cleared their final product to other 100% EOU as "inter unit transfer" on deemed export basis against CT-3 and no goods were warehoused, and therefore, the Unit was required to pay the Central Excise duty equivalent to aggregate of the Customs duty, after completion of 90 days from the date of such clearance; as stipulated in Chapter-X of CBEC's Excise Manual. However, the respondent-Unit did not make payment and therefore, the duty leviable was confirmed, which came to be accepted by the respondent-Unit. It is submitted that therefore, as the dues were adjudged by the Adjudicating Authority on the ground that the respondent being a 100% EOU, diverted the goods illicitly in the open market and the raw materials which were procured by forgoing Customs duty were not used for the purpose for which they were imported, the goods were liable to be confiscated under Section 125 of the Customs Act. However, as the goods were not available for confiscation and as the same were released by bond, redemption fine in lieu of confiscation was required to be imposed. It is submitted that therefore, the learned Tribunal has materially erred in holding that as the goods were not available for confiscation, the question of confiscation cannot arise and consequently, the redemption fine cannot be imposed. 3.4 Relying upon the aforestated decisions and submissions made, it was requested to allow the present Appeal and answer the question in favour of the Revenue and against the respondent-Unit. 4. Shri Hardik P. Modh, learned advocate appearing on behalf of the respondent-Unit submitted that in the facts and circumstances of the case, more particularly when even at the time of adjudication proceedings/show cause notice, the goods were not available for confiscation, and therefore, the learned Tribunal has rightly held that the redemption fine under Section 125 of the Customs Act is not imposable. 4.1 Shri Modh, learned advocate for the respondent has vehemently submitted that as per Section 110 of the Customs Act, if the proper officer has reason to believe that any goods are liable to confiscation under the Act, he may seize such goods. It is submitted that Section 110 of the Customs Act provides for provisional release of goods, documents or things seized pending adjudication. It is submitted that therefore, before the goods are confiscated, the seizure is sine quo non and Section 125 of the Customs Act shall be applicable in a case where goods are confiscated, but not available at the time of adjudication, and in that case, only redemption fine can be imposed. It is submitted that therefore in the present case, as the goods were neither seized and consequently not confiscated, there is no question of imposing redemption fine under Section 125 of the Customs Act, 1962. 4.2 Shri Modh, learned advocate appearing on behalf of the respondent-Unit has heavily relied upon a decision of Bombay High Court in the case of Commissioner of Customs [Import], Mumbai v. Finesse Creation Inc., 2009 [248] ELT 122 (Bom.) as well as in case of Commissioner of Customs, Export v. National Leather Cloth Mfg. Co., 2015 (321) ELT 135 [Bom.]. 4.2 Shri Modh, learned advocate appearing on behalf of the respondent-Unit has heavily relied upon a decision of Bombay High Court in the case of Commissioner of Customs [Import], Mumbai v. Finesse Creation Inc., 2009 [248] ELT 122 (Bom.) as well as in case of Commissioner of Customs, Export v. National Leather Cloth Mfg. Co., 2015 (321) ELT 135 [Bom.]. 4.3 It is further submitted by Shri Hardik Modh, learned advocate for the respondent that even otherwise, in the present case, the goods were released on furnishing the general bond in Form B-17 by the Unit and the same cannot be said to be a bond referred to under Section 125 of the Customs Act. It is submitted that there are different forms and under the Customs Law Manual, unless and until the goods are released on furnishing the bond, as per the Customs Manual, Section 125 of the Act shall not be applicable. 4.4 By making the above submissions and relying upon the above decisions, it was requested to dismiss the present Tax Appeal. 5. Heard learned advocates appearing on behalf of the respective parties at length. At the outset, it is required to be noted and it is not in dispute that as such, the Adjudicating Authority has confirmed the demand of Central Excise and Customs duty, etc. on the raw materials, interest thereon and imposed penalties under various sections of the Act, which has not been disputed by the respondent-Unit. It is an admitted position that the respondent being a 100% EOU, diverted the goods illicitly into the open market and the raw materials which were procured by forgoing the Customs duty were not used for the purpose for which they were imported. From the material on record, it appears that when the respondent-Unit imported the goods and was permitted to ware house the goods in the private bonded warehouse without payment of the duty, the respondent-Unit furnished the Bond in form B-17. In the said form, the respondent-Unit also agreed to abide by the conditions mentioned in the written Bond. The relevant conditions are reproduced as under:- "10. In the said form, the respondent-Unit also agreed to abide by the conditions mentioned in the written Bond. The relevant conditions are reproduced as under:- "10. We, the obligor, shall fulfill the export obligations and conditions stipulated in Customs/Central Excise Notifications, as amended, under which the specified goods have been imported/sources, as well as the Import-Export Policy for April, 1997 to 2002, as amended from time to time and to pay on demand an amount equal to the Customs and Central Excise Duties leviable on the goods as are not proved to the satisfaction of Assistant/Deputy Commissioner of Customs/Central Excise to have been used in the manufacture of articles for export and any penalty imposed under the Customs Act, 1962 of the Central Excise Act, 1944 and rules or regulations made thereunder, as the case may be. 11. We, the obligors, shall discharge all dues whether Central Excise duty or the lawful charge which shall be demandable on the goods obtained by us without payment of duty from the domestic tariff area and transported from the place or procurement to our premises for use in special Industrial purpose and shall also pay after final assessment by the proper officer/Assistant Commissioner of Central Excise or such other delegated authority, as the case may be which were assessed on provisional basis under Rule 9B of the Central Excise Rules, 1944 all dues within 10 days of the date of demand thereof being made in writing by such officers. 12. We, the obligor, shall if the articles so manufactured are and are allowed to be sold in India in such quality and subject to such other limitation and conditions as may be specified in this behalf by the Director General of Foreign Trade, pay duty of Excise leviable on such articles under Section 3 of the Central Excise Act, 1944 and duty of Customs & Central Excise leviable on the raw materials/components parts used in the manufacture of such articles as are not allowed to be sold in India in accordance with the provision of Exim policy. 13. 13. We, the obligors, shall comply with the conditions and limitations stipulated in the said Import and Export Policy as amended from time to time or the Assistant/Deputy Commissioner of Customs/Central Excise permitting the goods imported into India or sourced indigenously for the purpose of aforesaid or the articles manufactured or package therefrom to be taken outside the undertaking temporarily, without payment of duty, for testing repairs, reconditioning, processing or display, etc." 5.1 In the said form, the respondent-Unit had also declared that the said written bond shall continue to be in force, notwithstanding the transfer of goods to any other person or removal of goods from one warehouse to another. The said bond was also backed by an undertaking. On execution of such bond and the conditions mentioned in the bond, the respondent-Unit was permitted to warehouse the goods without payment of any duty. 5.2 It is an admitted position that thereafter, the respondent-Unit clandestinely removed the goods and thereby committed breach of condition by diverting the goods illicitly into the open market and the raw materials which were procured by forgoing Customs duty have not been used for the purpose for which they were imported, and therefore, the goods were liable to be confiscated. 5.3 Section 125 of the Customs Act, 1962 provides that whenever confiscation of any goods is authorized by the Act, the Officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under the Customs Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods, an option to pay in lieu of confiscation such fine, as the said Officer thinks fit. 5.4 As observed hereinabove, on the respondent-Unit diverting the goods illicitly into the open market and the raw materials which were procured by forgoing the Customs duty were not used for the purpose for which they were imported, the Customs authorities were authorized to confiscate such goods which are illicitly diverted. 5.4 As observed hereinabove, on the respondent-Unit diverting the goods illicitly into the open market and the raw materials which were procured by forgoing the Customs duty were not used for the purpose for which they were imported, the Customs authorities were authorized to confiscate such goods which are illicitly diverted. It is required to be noted that the respondent-Unit was permitted to deposit the goods in a bonded warehouse without making payment of the Customs duty, on certain terms and conditions and one of the condition was that the finished product was required to be exported, meaning thereby the goods which were permitted to be imported and thereafter deposited in a warehouse without payment of customs duty, were not required to be sold in the open market in India. Thus, once the confiscation of such goods was authorized, Section 125 of the Customs Act shall be applicable. However, as the goods were not available for confiscation at the time of adjudication, as the same were already released on bond and/or permitted to be warehoused without payment of duty on furnishing the bond and undertaking, redemption of fine in lieu of confiscation was imposable. 5.5 Under the circumstances, considering the decision of Apex Court rendered in case of Weston Components Limited [Supra] and the decision of Karnataka High Court in the case of Shilpa Trading Company [Supra], the Tribunal ought to have held that the Adjudicating Authority ought to have imposed redemption fine in lieu of confiscation of the goods which were illicitly diverted in the open market, which were permitted to be warehoused on certain terms and conditions; including without making payment of Customs duty. 5.6 Now, so far as reliance placed upon a decision of Bombay High Court rendered in case of Finesse Creation Inc. [Supra] and the subsequent decision of the said High Court in the case of National Leather Cloth Mfg. Company [Supra] are concerned, on facts, the same shall not be applicable to the facts of the case on hand, since in the matters before the Bombay High Court, there was no bond/legal undertaking executed. [Supra] and the subsequent decision of the said High Court in the case of National Leather Cloth Mfg. Company [Supra] are concerned, on facts, the same shall not be applicable to the facts of the case on hand, since in the matters before the Bombay High Court, there was no bond/legal undertaking executed. The submission made on behalf of the respondent-Unit that unless and until the goods are first seized, there is no question of confiscation and consequently, there is no question of imposing the redemption fine in lieu of confiscation is concerned, considering the language used in Section 125 of the Customs Act, we do not agree with the same. As observed hereinabove, Section 125 of the Act shall be applicable in a case where confiscation of any goods is authorized by the Customs Act. If it is found that there is breach of any of the provisions of the Customs Act and/or even the Export/Import Policy, and/or there is a breach of any of the terms and conditions on which goods were permitted to be imported without payment of duty and permitted to be deposited in the Warehouse, confiscation of such goods can be said to be authorized thereafter, when it is found that the goods are not available for confiscation as the same were illicitly diverted to the open market, and the purpose for which the goods were permitted to be imported without payment of duty is frustrated, in lieu of such goods, redemption fine is imposable. 6. For the reasons stated above, as the goods were not available for confiscation, as the goods were already diverted/permitted to be warehoused without payment of duty, on furnishing the bond and the undertaking and thereafter, the respondent-Unit clandestinely and illicitly diverted the goods to the open market, the goods which otherwise were liable to be confiscated, in lieu of confiscation, redemption fine was imposable. 7. In view of the above and for the reasons aforestated, the present Tax Appeal succeeds. The impugned Order dated 11th February 2014 passed by the Customs, Excise & Service Tax Appellate Tribunal, West Zonal Bench, Ahmedabad in Appeal No. E/435/2007-DB is hereby quashed and set-aside. 7. In view of the above and for the reasons aforestated, the present Tax Appeal succeeds. The impugned Order dated 11th February 2014 passed by the Customs, Excise & Service Tax Appellate Tribunal, West Zonal Bench, Ahmedabad in Appeal No. E/435/2007-DB is hereby quashed and set-aside. The matter is remanded to the Adjudicating Authority for imposition of redemption fine in lieu of confiscation with respect to the goods which were illicitly diverted into the open market, which were permitted to be imported and deposited in the warehouse without payment of duty. 8. Tax Appeal is allowed to the aforestated extent. In the facts and circumstances of the case, there shall be no order as to costs.