Confiscation for mere RG-1 non-entry fails where finished goods remain in factory and no intent to evade duty is shown.

Finished goods lying inside the factory could not be confiscated merely because they were not entered in RG-1, where the goods were manufactured from accounted raw materials and the dispute was limited to non-entry. Penal confiscation under the invoked excise rule required the statutory ingredients, including any necessary intention to evade duty, and that intent was not clearly found on the record. The distinction between mere non-entry in the register and non-accountal of goods in law was material, and the confiscation with redemption fine was set aside.

---

---

Issues: (i) Whether finished goods lying in the factory premises, but not entered in the RG-1 register, could be confiscated under Rule 173Q(1) of the Central Excise Rules, 1944. (ii) Whether confiscation could be sustained in the absence of a finding of intention to evade payment of duty and in the context of the applicable distinction between non-accountal and mere non-entry in the statutory register.

Issue (i): Whether finished goods lying in the factory premises, but not entered in the RG-1 register, could be confiscated under Rule 173Q(1) of the Central Excise Rules, 1944.

Analysis: The goods were found within the factory and the dispute was confined to non-entry in the RG-1 register. The record showed that the goods had been manufactured from accounted raw materials and that the earlier allegation of clandestine removal for the past period had already been set aside. In that background, mere omission to make an entry in RG-1 did not by itself justify confiscation of goods still lying in the factory. The reasoning also drew support from the settled distinction between not entering goods in the register and not accounting for goods in the legal sense.

Conclusion: Confiscation could not be sustained merely because the goods were not entered in RG-1.

Issue (ii): Whether confiscation could be sustained in the absence of a finding of intention to evade payment of duty and in the context of the applicable distinction between non-accountal and mere non-entry in the statutory register.

Analysis: Penal provisions must be strictly construed, and where the statutory clause invoked required intention to evade duty, that element had to be established. The adjudication did not record a clear finding of such intention, nor did it show that the appellant was unable to explain the presence of the goods. On the facts, the appropriate provision, if any, would have been one dealing with improper maintenance or non-entry, not confiscation under the invoked penal clause. The absence of the requisite intent and the failure to apply the remand direction on the industry practice issue reinforced the unsustainability of the confiscation order.

Conclusion: The confiscation order was unsustainable for want of the necessary legal foundation and intent to evade duty.

Final Conclusion: The appeal succeeded and the order of confiscation with redemption fine was set aside.

Ratio Decidendi: Goods found within the factory cannot be confiscated under a penal excise provision merely because they were not entered in RG-1, unless the statutory ingredients of the invoked clause, including any required intention to evade duty, are clearly established.

---