Accounting for goods under Central Excise Rules requires a credible explanation; confiscation and penalty were set aside.

Confiscation and penalty under Rule 25(1)(b) of the Central Excise Rules, 2001 were found unsustainable because the goods discovered in the factory were explained as returned goods and that explanation was not shown to be false. The requirement to "account for" excisable goods was treated as satisfied by a credible explanation for their presence, and not necessarily by prior book entry. On that basis, the confiscation and penalty were set aside.

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Issues: Whether confiscation of goods and imposition of penalty under Rule 25 of the Central Excise Rules, 2001 were sustainable where the goods found in the factory were explained as returned goods and the explanation was not found false.

Analysis: Rule 25(1)(b) applies where a manufacturer does not account for excisable goods produced, manufactured or stored by him. On the facts, the goods found in possession were explained as returned goods, and the explanation was not recorded as incorrect or false. The requirement to "account for" goods was treated as meaning giving an explanation for their presence, not necessarily prior entry in the books of account.

Conclusion: The confiscation and penalty were held to be unsustainable and were set aside.

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