Non-accountal of factory stock alone did not justify confiscation; penalty was reduced for the limited default.

Excess stock of processed man-made fabrics found inside the factory, without entry in the statutory register, did not by itself justify confiscation where the goods were not shown to have been intended for removal. The explanation that the stock represented same-day production was rejected because the partner's statement admitted non-accountal and did not establish manufacture on the date of seizure. On that limited default, confiscation was set aside, and the penalty was reduced under Rule 226 of the Central Excise Rules, 1944.

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Issues: Whether confiscation of excess stock of processed man-made fabrics was sustainable when the goods were found within the factory premises and the case involved only non-accountal, and whether the penalty required reduction under Rule 226.

Analysis: The excess goods were found in the factory and were not entered in the statutory register. The explanation that they represented same-day production was rejected as an afterthought because the partner's statement admitted non-accountal and did not show manufacture on the date of seizure. However, the goods remained in the premises and there was no attempt to clear them. On that footing, mere non-accountal did not justify confiscation. The penalty was therefore required to be reconsidered in the light of the limited nature of the default and the Tribunal's earlier view relied upon by the order.

Conclusion: Confiscation of the goods was set aside, and the penalty on the assessee was reduced to Rs. 2,000/- under Rule 226 of the Central Excise Rules, 1944.

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