Non-accountal alone cannot justify confiscation; prior KVS penalty also bars ? further punishment for the same lapse

Mere non-accountal of finished goods in RG-1 and related records, without evidence of preparation for removal, loading for delivery, or intention to clear goods clandestinely without duty, was treated as insufficient to justify confiscation under Rule 173Q. The commentary also notes that where the same lapse had already attracted penalty under the KVS Scheme, further penal action was not warranted for the identical default. On that reasoning, confiscation and redemption fine were held unsustainable and set aside in favour of the assessee.

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Issues: Whether confiscation of finished goods was sustainable merely because the goods were not entered in the statutory records, and whether penalty could again be imposed for the same lapse after payment under the KVS Scheme.

Analysis: Mere non-accountal of goods in the RG-1 and connected records, without any material showing preparation for removal, loading for delivery, or intention to clear the goods clandestinely without payment of duty, was held insufficient to attract Rule 173Q of the Central Excise Rules, 1944. The reasoning followed the Larger Bench view that non-accountal by itself does not justify confiscation under that rule. Since the appellants had already suffered the consequences and paid penalty under the KVS Scheme for the same lapse, further penal action was not warranted.

Conclusion: Confiscation was not legally sustainable, and the order confirming confiscation and redemption fine was set aside in favour of the assessee.

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