Confiscation of unaccounted excisable stock justified redemption fine imposed for excess factory goods

Excess excisable stock found in the factory and not accounted for in RG-1 was treated as liable to confiscation under Rule 173Q(1)(b), because unaccounted manufactured or stored goods fall within the confiscatory power. Section 34 of the Central Excise Act, 1944 was applied to support redemption of confiscated goods on payment of fine. The prior view that accepted the excess stock position but did not impose redemption fine was found unsustainable. The Tribunal followed authorities supporting confiscation of unaccounted stock and fixed the redemption fine at Rs. 40,000.

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Issues: Whether excess stock of excisable goods found in the factory and not accounted in RG-1 was liable to confiscation and whether redemption fine ought to have been imposed.

Analysis: Rule 173Q(1)(b) permits confiscation where manufactured, produced or stored excisable goods are not accounted for, and Section 34 of the Central Excise Act, 1944 enables redemption of confiscated goods on payment of fine. On the facts, the factory stock was found in excess over RG-1 and the circumstances justified confiscation. The earlier order of the Commissioner (Appeals), which upheld excess stock but did not confirm redemption fine, was found unsustainable. The Tribunal also distinguished the authorities relied on by the respondent and followed the line of cases supporting confiscation of unaccounted stock. Having regard to the value of the goods and the practice of the Tribunal, the redemption fine was fixed at Rs. 40,000/-.

Conclusion: The excess stock was held confiscable and redemption fine was required to be imposed. The Revenue's challenge succeeded and the redemption fine was enhanced to Rs. 40,000/-.

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