Confiscation of unaccounted goods requires proof of intended clandestine removal, not mere storage inside the factory.

Mere presence of unaccounted excisable goods inside the factory was held insufficient to justify confiscation and penalty where there was no evidence of intent or preparation for clandestine removal without payment of duty. The record showed only that the goods were found within the premises, not that they were kept for unauthorised clearance. In the absence of material proving intended removal, confiscation and the consequential penalty could not be sustained, and the Revenue's challenge failed.

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Issues: Whether confiscation and penalty were sustainable when excisable goods were found unaccounted within the factory but there was no evidence of intent to clear them clandestinely without payment of duty.

Analysis: The unaccounted telephone sets were found inside the factory premises. The finding recorded was that there was no evidence that the goods were kept for removal without payment of duty, and no material showed preparation for clandestine removal. In the absence of such intention, confiscation and the consequential penalty could not be justified. The reasoning accorded with the principle that mere presence of goods within the factory, without proof of intended unauthorized removal, is insufficient to sustain confiscation.

Conclusion: The demand-related confiscation and penalty were not sustainable, and the Revenue's challenge failed.

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