Clandestine removal not proved: mere non-accountal of factory goods was insufficient to sustain confiscation and penalties.

Goods found inside the factory but not entered in the RG-1 register could not be confiscated where there was no evidence of intended clandestine removal or clearance without payment of duty. Mere non-accountal, without proof of outward diversion, was insufficient to sustain confiscation. On the same factual basis, the reduced penalties also lacked support because the alleged breach did not establish a foundation for harsher penal consequences. The revenue's appeal therefore failed.

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Issues: Whether confiscation of excess finished goods found within the factory and the consequent penalties were sustainable in the absence of evidence of clandestine removal.

Analysis: The goods were found inside the factory premises and the dispute arose only from their non-entry in the RG-1 register. The order records that no allegation or evidence showed intended clandestine clearance or removal without payment of duty. On these facts, mere non-accountal, without proof of clandestine removal, was insufficient to sustain confiscation. The reduced penalties also stood on the same footing, as the foundational breach alleged did not establish a basis for harsher penal consequences.

Conclusion: Confiscation was not sustainable and the penalties did not call for interference. The revenue's appeal failed.

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