Excise stock register compliance and job-work return conditions: unentered finished goods face confiscation, while duty fails if return is proved.

Finished excisable goods found in the factory but not entered in the statutory RG-I register were treated as offending goods, attracting confiscation and penalty because daily stock-account entries were mandatory. The redemption fine was considered excessive and reduced. Inputs sent out for job work could not be subjected to duty demand where their return and use in manufacture was shown, even though the department relied on a 60-day return condition. Procedural non-compliance could still justify penalty, and the penalty was sustained but reduced.

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Issues: (i) whether finished excisable goods found in the factory but not entered in the statutory RG-I register were liable to confiscation and penalty; and (ii) whether duty demand and penalty could be sustained on inputs sent for job work on the ground that they were not received back within 60 days.

Issue (i): whether finished excisable goods found in the factory but not entered in the statutory RG-I register were liable to confiscation and penalty.

Analysis: The goods were found within the factory while the RG-I register had been written only up to an earlier date, although production and clearances had continued. The plea that entries could not be made because the clerk was unwell was rejected as untenable, since the factory operations, production records and clearances were all being maintained. Daily entry in the statutory stock account was a mandatory requirement. Goods not entered in the prescribed records were therefore treated as offending goods, and liability to confiscation and penalty followed under the relevant excise rules. The redemption fine, however, was considered excessive.

Conclusion: The goods were liable to confiscation and penalty, but the redemption fine was reduced.

Issue (ii): whether duty demand and penalty could be sustained on inputs sent for job work on the ground that they were not received back within 60 days.

Analysis: The rule governing removal of inputs for processing outside the factory permitted such removal subject to conditions imposed by the Collector. Although the departmental case proceeded on a 60-day return condition and relied on the circular instructions, the appellants asserted that the inputs had in fact been received back and used in manufacture, and this was not controverted by the Revenue. In that situation, the demand of duty on the inputs could not be sustained. Penalty, however, remained attracted because of the contravention relating to delayed return and the separate lapse in statutory compliance.

Conclusion: The duty demand was set aside, while penalty was sustained but reduced.

Final Conclusion: The appeal succeeded only to the extent of deletion of the duty demand and reduction of the monetary consequences; the confiscation finding and liability to penalty were otherwise maintained.

Ratio Decidendi: Finished excisable goods not entered in the statutory stock register are liable to confiscation and penalty, while duty cannot be demanded on inputs sent for job work if their return is shown to have been effected, even though procedural contravention may still justify penalty.

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