Non-accountal in RG-1 without clandestine removal supports only limited penalty, not confiscation or redemption fine.

Short-accounting of manufactured goods in the RG-1 register, without evidence of mala fide intention or clandestine removal, was treated as a statutory lapse rather than a basis for confiscation. Goods meant for supply to the Indian Railways had been inspected and were not shown to have been tampered with or removed without duty payment. On those facts, confiscation, redemption fine, and penalty under Rule 173Q(1) lacked legal foundation and were set aside. The omission remained punishable only as non-accountal, so the limited penalty under Rule 226 was sustained.

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Issues: Whether the goods could be confiscated and redemption fine and penalty imposed under Rule 173Q(1) for non-accountal in RG-1 register when there was no evidence of mala fide intention or clandestine removal, and whether only penalty under Rule 226 was leviable.

Analysis: The goods were found short-accounted in the RG-1 register, but the record did not establish any intention to clear them without payment of duty. The goods were manufactured for supply to the Indian Railways, were subjected to inspection by the Railways, and were not shown to have been tampered with or cleared clandestinely. In these circumstances, the omission to enter the goods in the statutory record was treated as a lapse, but not as proof of mala fide intention. Confiscation and penalty under Rule 173Q(1) therefore lacked legal foundation, while the misconduct remained punishable for non-accountal under Rule 226.

Conclusion: Confiscation, redemption fine, and penalty under Rule 173Q(1) were set aside; only a penalty under Rule 226 was sustained.

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