Confiscation of unaccounted factory goods rejected where no Cenvat credit and no evidence of clandestine removal were shown.

Unaccounted raw materials found in a factory were treated as not liable to confiscation where no Cenvat credit had been availed, consistent with earlier Central Excise decisions. The Tribunal also found no corroborative evidence of clandestine removal of finished goods, so the confiscation of those goods could not be sustained on the record. It accepted the Commissioner (Appeals)' distinction between raw materials and finished goods, and the reduced penalty for failure to maintain proper accountal was left undisturbed. On those facts, the confiscation and enhanced penalty were held unjustified, and the Revenue's challenge failed.

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Issues: Whether unaccounted raw materials and finished goods found in the factory were liable to confiscation, and whether the penalty imposed by the Commissioner (Appeals) called for interference.

Analysis: The Tribunal noted that the consistent view in earlier decisions was that raw materials not accounted for, particularly where no Cenvat credit had been availed, were not liable to confiscation under the Central Excise regime. It also observed that the record did not establish clandestine removal of the finished goods by corroborative evidence. The Commissioner (Appeals) had already distinguished between raw materials and finished goods, sustained only a reduced penalty for failure to maintain proper accountal, and set aside the confiscation and personal penalty. On the facts, no ground was found to disturb that reasoning.

Conclusion: The confiscation and enhanced penalty were not justified, and the Revenue's challenge failed.

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