Unaccounted stock can support confiscation and lesser penalty, but clandestine removal needs corroborative evidence.

Mere excess and unaccounted stock found in the factory justified confiscation and redemption fine because the goods were substantially over and above the recorded balance and the accounts were improperly maintained. However, clandestine removal was not established in the absence of direct, corroborative, or admitted evidence, so that finding was not sustained. The company's penalty could not stand on clandestine removal and was instead treated as a lesser penalty under Rule 27 for improper accounting, while the director's penalty was set aside because no specific personal role or contravention was recorded against him.

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Issues: (i) Whether confiscation of the excess stock and the redemption fine were sustainable when the goods were found unaccounted in the factory; (ii) Whether the penalty on the company and the penalty on the director were sustainable.

Issue (i): Whether confiscation of the excess stock and the redemption fine were sustainable when the goods were found unaccounted in the factory.

Analysis: The excess stock was substantial and the director could not explain the non-accountal. The goods were found in the factory in quantities far exceeding the recorded balance, showing improper maintenance of accounts. However, the record did not contain direct or corroborative evidence to establish intended clandestine removal, nor any admission or private record supporting such a finding.

Conclusion: Confiscation of the excess goods and the redemption fine were upheld, but the finding of clandestine removal was not sustained.

Issue (ii): Whether the penalty on the company and the penalty on the director were sustainable.

Analysis: Since clandestine removal was not established, the penalty imposed on the company could not be retained on that basis. At the same time, the admitted improper accounting justified penal consequence under the lesser provision. As regards the director, no specific allegation or finding of personal role or contravention was recorded against him.

Conclusion: The company's penalty was reduced and treated as a penalty under Rule 27, while the penalty on the director was set aside.

Final Conclusion: The confiscation and redemption fine were maintained, but the penal consequences were substantially reduced, with the director's penalty removed altogether.

Ratio Decidendi: Mere excess and unaccounted stock may justify confiscation and a penalty for improper accounting, but a finding of clandestine removal requires supporting evidence beyond absence of explanation.

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