Non-accountal of finished goods alone does not justify confiscation absent dutiability and intent to remove without duty.

Finished goods entering the RG 1 stage had to be accounted for in the prescribed register even though they were later rejected by the customer. The omission therefore amounted to non-accountal of finished pouches. However, special manufacture for a named customer, branding on the goods, and prolonged retention in the factory negatived any inference of clandestine removal or an intent to clear the goods without duty. As the record did not establish dutiability in the sense required for confiscation, nor any basis for marketable clearance without payment of duty, confiscation and penalty were not sustainable.

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Issues: Whether the excess stock of tailor-made printed pouches was liable to confiscation and penalty on the ground of non-accountal and alleged intent to remove the goods without payment of duty.

Analysis: The pouches were specially manufactured for a particular customer, bore its brand name and particulars, and had remained in the factory for nearly a year after manufacture. These circumstances negatived any inference of clandestine removal or intent to clear the goods without duty. However, the finished pouches had reached the RG 1 stage on completion of manufacture and were required to be entered in the register even though they were later rejected by the customer. The omission therefore amounted to non-accountal of finished goods, but the record did not show that the goods were dutiable in the sense necessary to justify confiscation for intended removal without payment of duty, nor was there any basis to infer a mode of marketable clearance.

Conclusion: The goods were not liable to confiscation and no penalty could be sustained against the assessee.

Ratio Decidendi: Mere non-accountal of finished goods does not justify confiscation and penalty unless the facts also establish liability of the goods to duty and an intention to remove them without payment of duty.

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