Rule 173Q confiscation and penalty upheld where excess finished goods, input shortage, and unexplained stock discrepancies showed violation.

Rule 173Q permits confiscation and penalty where the prescribed conditions are met. Excess finished goods found in the factory, coupled with shortage of inputs and no acceptable clerical or other reasonable explanation, supported the finding of non-maintenance of accounts under Rule 173Q(1)(b). Although excess stock alone may not always prove intent to evade duty, the surrounding circumstances justified the departmental conclusion of violation. Confiscation, redemption fine and penalty were therefore upheld against the assessee.

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Issues: Whether excess finished goods found in the factory, together with shortage of inputs and the surrounding circumstances, justified confiscation, redemption fine and penalty under Rule 173Q of the Central Excise Rules.

Analysis: Rule 173Q authorises confiscation and penalty where the conditions specified in the rule are satisfied. In the present case, finished goods were found in excess of the recorded stock, which showed non-maintenance of accounts as required by Rule 173Q(1)(b). Although excess stock by itself may not always establish an intention to evade duty, the excess finished goods were accompanied by shortage of inputs and there was no acceptable clerical or other reasonable explanation. The circumstances therefore supported the departmental finding of violation of the rule.

Conclusion: The confiscation, redemption fine and penalty were justified and the finding was against the assessee.

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