Contemporaneous stock documentation defeats confiscation where returned goods and excess yarn are otherwise satisfactorily accounted for.

Contemporaneous return documentation and accepted D-3 particulars supported the explanation that goods found on the first floor were rejected material received back from another buyer, so confiscation and redemption fine were not sustainable. The excess twisted yarn found in the approved godown was also not liable to confiscation merely because it was omitted from the RG 1 Register, since the notice acknowledged entries in a private register and the stock was otherwise accounted for. On that footing, the related duty demand also did not survive.

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Issues: (i) Whether the goods found on the first floor, stated to be returned/rejected goods supported by D-3 documentation, were liable to confiscation and redemption fine; (ii) Whether the excess twisted yarn found in the approved godown, though not entered in the RG 1 Register, was liable to confiscation and duty demand.

Issue (i): Whether the goods found on the first floor, stated to be returned/rejected goods supported by D-3 documentation, were liable to confiscation and redemption fine.

Analysis: The quantity reflected in the challan, the D-3 and the show cause notice tallied. The accepted D-3 and supporting documents showed that the goods had been received back from the other buyer as rejected material. On that basis, the explanation was accepted and was not treated as an afterthought.

Conclusion: The said goods were not liable to confiscation, and the redemption fine on them could not be sustained.

Issue (ii): Whether the excess twisted yarn found in the approved godown, though not entered in the RG 1 Register, was liable to confiscation and duty demand.

Analysis: The show cause notice itself accepted that the quantity was recorded in some private register. The goods were therefore not wholly unaccounted for, and the absence of entry in the statutory stock register was not treated as sufficient, by itself, to justify confiscation. As regards duty, the demand was held unsustainable to the extent it related to the returned goods, and no separate sustainable demand survived on the excess stock explained by the assessee.

Conclusion: Confiscation and redemption fine on the excess stock were set aside, and the related duty demand did not survive.

Final Conclusion: The appeal succeeded in full, with relief granted against confiscation, redemption fine, and the disputed duty demand.

Ratio Decidendi: Where goods are supported by contemporaneous return documentation and accepted D-3 particulars, or are otherwise accounted for in a private register and satisfactorily explained, confiscation and consequential duty demand cannot be sustained merely for want of entry in the statutory register.

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