Ungraded fabrics and RG-1 entry: confiscation and penalty could not stand where grading was unfinished and goods were unsaleable.

Ungraded fabrics seized from the factory were held not to require entry in the RG-1 register because grading had not yet been completed and the goods were not in a condition for sale. Since the fabrics had not been finally classified as fresh, A grade, B grade, fents, rags or chindies, confiscation and penalty under Rule 25 of the Central Excise Rules, 2002 could not be sustained. The Revenue's appeal therefore failed.

---

---

Issues: Whether ungraded fabrics seized from the factory were required to be entered in the RG-1 register and whether confiscation and penalty could be sustained under Rule 25 of the Central Excise Rules, 2002.

Analysis: The fabrics were found at a stage where they had not yet been finally graded as fresh, A grade, B grade, fents, rags or chindies, since grading could take place only after checking and removal of defective portions. At that stage, the fabrics were not yet in a condition for sale and were therefore not required to be entered in the RG-1 register. On that footing, the order of confiscation and penalty lacked infirmity.

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

---