Excess finished stock during factory inspection does not justify confiscation absent proof of clandestine removal.

Mere excess finished stock found during a factory visit did not justify confiscation where the unit was in continuous production and the statutory records had been updated only up to the previous day. The contemporaneous RG-1 and RG 23A Part I entries supported the explanation that the apparent variation reflected ongoing manufacture rather than suppression or clandestine removal. On those facts, the allegation of unauthorised removal was not established, and confiscation was held unsustainable in favour of the assessee.

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Issues: Whether excess finished goods found during the factory visit were liable to confiscation on the ground of non-accountal and alleged clandestine removal.

Analysis: The factory was in continuous production, and the RG-1 account had been written only up to the previous day when the officers visited. In such circumstances, some variation between actual stock and the written finished goods register was expected. The excess goods were also shown to have been produced from raw materials already entered in the RG 23A Part I register, which supported the explanation that there was no intention to suppress production or remove goods clandestinely. The charge of clandestine activity was therefore not sustainable on the facts, and the cited precedent supporting confiscation for unauthorised removal did not apply.

Conclusion: The confiscation could not be sustained and the issue was decided in favour of the assessee.

Ratio Decidendi: Mere excess stock of finished goods, by itself, does not justify confiscation where the factory is in continuous production, the statutory accounts are contemporaneously maintained, and the facts do not establish clandestine removal.

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