Confiscation of seized factory goods fails where the Department cannot prove they were fully manufactured and unaccounted for.

Confiscation of seized C.R. coils and the related penalty were held unsustainable because the Department did not prove that the goods were fully manufactured and unaccounted for. The record showed that the coils were found inside the factory, and the adjudicating authority failed to properly assess the assessee's reconciliation material, RG-1 records, and Chartered Accountant's certificate. In the absence of evidence that the goods were intended for removal without statutory accounting, the Department could not justify confiscation or penalty.

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Issues: Whether confiscation of the seized C.R. Coils and the consequential penalty were sustainable when the Department had not established that the goods were fully manufactured and unaccounted for.

Analysis: The only issue effectively decided was the sustainability of confiscation and penalty. The record showed that the Department relied on the goods being in finished form and not entered in the statutory register, but the adjudicating authority did not properly consider the assessee's reconciliation material, the RG-1 records, or the Chartered Accountant's certificate. The seized coils were found inside the factory premises, and there was no allegation that they were intended for removal without statutory accounting. On the facts, the Department failed to substantiate that the goods were fully manufactured and liable to confiscation.

Conclusion: The confiscation was not sustainable and the penalty was not imposable; the assessee succeeds on this issue.

Ratio Decidendi: Where the Department does not prove that seized goods are fully manufactured and unaccounted for, confiscation and penalty cannot be sustained.

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