Production register omission does not justify confiscation where finished goods and raw materials are duly accounted for.

Mere non-entry of finished goods in the production register did not justify confiscation or penalty where the finished products were found in the factory and the raw material used was duly accounted for in the statutory records. On those facts, Rule 173Q(1)(b) of the Central Excise Rules, 1944 was treated as inapplicable because the admitted omission did not establish grounds for confiscatory action. The confiscation and penalty were therefore held unsustainable and set aside in favour of the assessee, with consequential relief.

---

---

Issues: Whether confiscation and penalty were sustainable where the manufactured goods were not entered in the production register, but the finished goods were found in the factory and the raw material stood accounted in the raw material register.

Analysis: The only substantive issue was the applicability of Rule 173Q(1)(b) of the Central Excise Rules, 1944 to the admitted non-entry of part of the production. The factual position accepted was that the finished products were available in the factory itself and the raw material had been duly recorded in the statutory records. On those facts, the omission to enter the finished goods in the production register did not justify invocation of the confiscation and penalty provision. The rule was therefore held to be inapplicable.

Conclusion: The confiscation and penalty were not sustainable and were set aside in favour of the assessee.

Final Conclusion: The appeal succeeded and the impugned penalty and confiscation order was annulled, with consequential relief.

Ratio Decidendi: Where finished goods are found in the factory and the raw materials used in their production are duly accounted for, mere non-entry of the finished goods in the production register does not attract Rule 173Q(1)(b) of the Central Excise Rules, 1944.

---