RG-1 non-entry for export goods: confiscation and penalty failed where materials were not fully finished for home consumption.

Goods forming part of an export consignment, and not shown to be fully finished for home consumption, were not required to be entered in RG-1 on the facts recorded. The correspondence with the foreign buyer, the company officer's statement, and the subsequent export supported the explanation that omission from RG-1 was not with intent to clear the goods domestically. Assumptions about possible domestic sale or scrap clearance were insufficient to sustain confiscation. Confiscation and penalty under Rule 25 of the Central Excise Rules, 2001 were therefore held not sustainable, and the appeal was allowed.

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Issues: Whether confiscation of the goods and penalty under Rule 25 of the Central Excise Rules, 2001 was justified on the ground that the goods were not entered in RG-1, when the goods formed part of an export consignment and were not in fully finished condition.

Analysis: The goods were found packed in wooden cases and the record showed that they were part of an export order, with part of the consignment already exported earlier and the balance intended for export. The correspondence with the foreign buyer, the statement recorded from the company officer, and the subsequent export of the goods supported the explanation that non-entry in RG-1 was not with an intent to clear the goods for home consumption. The conclusion of the adjudicating authority was based on assumptions about possible domestic sale or scrap clearance, without a categorical denial that the goods were manufactured for a specific foreign buyer or that subsequent operations were carried out before export. On these facts, the goods were not shown to be fully finished goods required to be accounted in RG-1.

Conclusion: Confiscation and penalty under Rule 25 of the Central Excise Rules, 2001 were not sustainable and the appeal was allowed.

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