Confiscation of non-accounted goods in a 100% EOU upheld, but redemption fine and penalty reduced for no clandestine removal finding.

Non-accounted goods found in a 100% EOU's factory were held liable to confiscation because the unit was still required to maintain proper day-to-day private records of production and clearances, even if statutory registers were not mandated in the prescribed form. The goods were distinct from raw material and were not satisfactorily accounted for, so confiscation was sustained. However, in the absence of any allegation or finding of clandestine removal, the redemption fine and penalty were reduced on leniency grounds.

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Issues: Whether the non-accounted goods found in the factory of a 100% EOU were liable to confiscation and, if so, whether the redemption fine and penalty required reduction in the absence of any allegation or finding of clandestine removal.

Analysis: The goods found at the time of inspection were distinct from the raw material and were not satisfactorily accounted for. Even though a 100% EOU may not be required to maintain statutory registers in the prescribed form, it is still bound to keep proper day-to-day private records showing production and clearances. The finding that the goods were liable to confiscation was therefore sustained. At the same time, since no case of clandestine removal had been alleged or established, the matter warranted some leniency on the quantum of redemption fine and penalty.

Conclusion: The confiscation was upheld, but the redemption fine and penalty were reduced.

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