Clandestine removal must be proved by independent evidence; mere stock-register non-entry was insufficient to sustain confiscation and penalty.

Confiscation of excess finished goods and penalty under Rule 173Q of the Central Excise Rules, 1944 require independent evidence of clandestine removal and intent to evade duty; mere non-entry of finished goods in the RG1 register for about a month was held insufficient by itself. The record did not show any attempt to clandestinely clear the seized goods, and the challenged statement did not support the Revenue's case. On that basis, confiscation was found unwarranted and the reduced penalty was upheld, with relief to the assessee maintained.

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Issues: Whether confiscation of excess finished goods and penalty under Rule 173Q of the Central Excise Rules, 1944 were justified in the absence of independent evidence of clandestine removal or intent to evade duty.

Analysis: The finding sustained by the appellate authority was that mere non-entry of finished goods in the RG1 register for about a month did not by itself establish an intention to remove the goods clandestinely without payment of duty. It was noticed that the relevant statement had been challenged and that the record did not show any attempt to clandestinely clear the seized goods. In the absence of independent evidence proving intent to evade duty, the material relied upon by the Revenue was insufficient to justify confiscation. The penalty was also reduced on the ground of non-maintenance of correct stock records.

Conclusion: The confiscation was not warranted and the reduced penalty was upheld.

Final Conclusion: The Revenue's challenge failed, and the order of the Commissioner (Appeals) granting relief to the assessee was affirmed.

Ratio Decidendi: Confiscation and penal consequences for unrecorded excisable goods require independent evidence of clandestine removal and intent to evade duty; mere non-entry in stock records, without more, is insufficient.

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