Confiscation of unaccounted factory goods upheld, but penalty and redemption fine were reduced as excessive.

Unaccounted goods found in the factory, not reflected in the prescribed records and without dispute on that factual position, were treated as liable to confiscation. The assessee was also held liable to penalty, and the penalty under Rule 226 of the Central Excise Rules, 1944 was upheld. However, the quantum of both the penalty and the redemption fine was considered excessive on the facts, so both were scaled down in the interest of justice.

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Issues: Whether goods found unaccounted in the factory premises were liable to confiscation and whether the penalty and redemption fine imposed on the assessee required reduction.

Analysis: The goods were not reflected in the prescribed records, and that factual position was not disputed. On that basis, the goods were held liable to confiscation and the assessee liable to penalty. The penalty under Rule 226 of the Central Excise Rules, 1944 was also upheld. However, considering the facts and circumstances, the quantum of penalty and redemption fine was found excessive and was scaled down in the interest of justice.

Conclusion: The liability to confiscation and penalty was upheld, but the penalty and redemption fine were reduced to Rs. one lakh each.

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