Production record discrepancies in a 100% export unit could not justify confiscation without a prescribed statutory form.

Confiscation of yarn in a 100% export oriented unit was held unsustainable where the dispute arose from an alleged stock discrepancy and no statutory form had been prescribed for maintaining the production records required under the applicable rule. The unit had been maintaining production details up to 7 a.m. for the relevant day, while the visiting officer inspected the factory later in the afternoon. In the absence of a prescribed form for the production account, the mere difference noticed at inspection did not justify confiscation, and the redemption fine also could not be sustained.

---

---

Issues: Whether confiscation of yarn and imposition of redemption fine could be sustained against a 100% export oriented unit when no statutory form had been prescribed for maintenance of production records under the applicable rules.

Analysis: The appellant was a 100% export oriented unit and the dispute turned on alleged excess stock vis-a -vis the record maintained by the unit. The applicable rule required the Board to prescribe the form in which such units were to maintain production accounts. The record showed that the unit was maintaining production details up to 7 a.m. for the relevant day and the visiting officer inspected the factory in the afternoon. Since no statutory form had been prescribed under the rule for maintenance of the required production record, the mere difference found at the time of inspection could not justify confiscation.

Conclusion: Confiscation of the yarn was not sustainable and the redemption fine also could not be maintained; the appeal was allowed in favour of the assessee.

---