Non-recording of finished excisable goods in RG 1 can justify confiscation and penalty without proof of clandestine removal.

Rule 173Q(1)(b) is attracted where a manufacturer fails to account for excisable goods manufactured, produced or stored in the prescribed register, and non-recording of fully finished goods in RG 1 is itself a breach. The presence of the goods inside the factory does not cure the default, and confiscation and penalty can follow without first proving intended clandestine removal. On that basis, finished goods found unentered in RG 1 were liable to confiscation and the manufacturer was liable to penalty, so the appellate order setting aside those consequences was unsustainable.

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Issues: Whether fully finished excisable goods found in the factory but not entered in RG 1 were liable to confiscation and penalty under Rule 173Q(1)(b) of the Central Excise Rules, 1944, even without proof of intended clandestine removal.

Analysis: Rule 173Q(1)(b) is attracted when a manufacturer does not account for excisable goods manufactured, produced or stored by him. The obligation to record production in the prescribed register is mandatory, and non-recording of finished goods without satisfactory explanation constitutes a violation in itself. The presence of the goods in the factory does not cure the default, and it is unnecessary to first establish a likelihood or attempt of clandestine removal before applying the penal and confiscatory consequence under the rule.

Conclusion: The goods were liable to confiscation and the manufacturer was liable to penalty under Rule 173Q(1)(b); the order-in-appeal setting aside those consequences was not sustainable.

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