Non-entry of same-day production in stock register does not justify confiscation or penalty absent clandestine removal or mala fide intent.

Mere non-entry of same-day production in the RG-1 register does not, by itself, justify confiscation of finished goods or penalty under the Central Excise Rules, 2002 where the stock was found on the day of visit, the daily stock account was otherwise maintained, and there was no evidence of clandestine removal, attempted removal, or mala fide intent. On those facts, the excess stock was treated as same-day production yet to be recorded, so confiscation was unsustainable and the penalty on the partner could not survive. The departmental challenge therefore failed.

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Issues: Whether finished goods found excess during a stock verification were liable to confiscation and whether penalties under the Central Excise Rules, 2002 could be sustained when the goods represented same-day production not yet entered in RG-1 register and there was no evidence of clandestine removal or mala fide intent.

Analysis: The goods were found during the officers' visit on the same day and the record showed that the daily stock account had otherwise been maintained up to that date. The excess stock was explained as production of the day of visit, yet to be entered in the register. No evidence showed removal or attempted removal without payment of duty, nor was there material to establish mala fide intent or clandestine clearance. In such circumstances, mere non-entry of same-day production in RG-1, by itself, did not justify confiscation. The penalty on the partner also could not survive once confiscation was held unsustainable.

Conclusion: Confiscation was not sustainable and the penalty on the partner was correctly set aside. The revenue appeal failed.

Final Conclusion: The impugned order was sustained in substance and the departmental challenge was rejected.

Ratio Decidendi: Mere non-entry of same-day production in the stock register, without evidence of clandestine removal or mala fide intent, does not justify confiscation or penalty under the Central Excise Rules, 2002.

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