RG-1 register omission did not prove unaccounted goods where finished goods were awaiting final inspection.

Non-entry of finished goods in the RG-1 register did not justify confiscation or penalty where the goods were found in the inspection room awaiting final inspection and were contemporaneously explained as such. RG-1 entry was relevant to finished goods ready for disposal or warehousing, and the goods had not been shown to have crossed that stage. On those facts, the goods were sufficiently accounted for and there was no basis to treat them as clandestinely manufactured or unaccounted.

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Issues: Whether non-entry of finished goods in the RG-1 register, when the goods were kept in the inspection room awaiting final inspection, constituted failure to account for the goods so as to justify confiscation and penalty under the Central Excise Rules.

Analysis: The goods were found in the inspection room and the appellant's representative had contemporaneously explained that they were awaiting final inspection. In that factual setting, the omission to make an RG-1 entry did not indicate that the goods were unaccounted for or that they had been manufactured clandestinely. RG-1 entry is relevant to finished goods ready for disposal or warehousing, and goods at the inspection stage were not shown to have crossed that stage. The factual explanation given by the appellant sufficiently accounted for the goods.

Conclusion: The charge of failure to account for the goods was not sustainable and the confiscation and penalty were set aside in favour of the assessee.

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