Penalty for non-accountal does not automatically entail confiscation under Rule 226 when the notice and order do not so provide.

Non-accountal of finished excisable goods in the RG-I register attracted penalty under Rule 226, but confiscation was not treated as an automatic consequence of that penalty. The distinction between Rule 173Q and Rule 226 was central: Rule 173Q was understood to link confiscation and penalty together, whereas Rule 226 focused on penalty alone. Because the earlier final order had sustained only penalty for non-accountal and had not ordered confiscation under Rule 226, and because the show cause notice did not specifically propose confiscation under Rule 226, the proposed question of law was held not to arise from the final order.

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Issues: Whether, on facts where finished excisable goods were not entered in the RG-I register and penalty was sustained under Rule 226 of the Central Excise Rules, 1944, confiscation of the goods necessarily followed and the proposed question of law arose from the final order.

Analysis: The application was examined against the earlier final order, the scheme of the Central Excise law, and the distinction between Rule 173Q and Rule 226 of the Central Excise Rules, 1944. Rule 173Q was treated as a provision where confiscation and consequential penalty operate together, whereas Rule 226 was viewed as placing the emphasis on penalty, with confiscation not being a necessary consequence of the penalty. The earlier order had sustained only a penalty for non-accountal and had not ordered confiscation under Rule 226. The cited decisions were found inapplicable because they related to confiscation under Rule 173Q. The proposed question was also outside the scope of the show cause notice, which had proposed confiscation under Rule 173Q and penalty under Rule 173Q read with Rule 226, but not confiscation under Rule 226 specifically.

Conclusion: The suggested question of law was held not to arise from the final order, and the reference application was rejected.

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