Semi-finished goods and RG-1 entry requirements: contemporaneous records outweighed visual inspection, and confiscation failed.

MDF boards that had not undergone final sanding, size reduction and quality control testing were treated as semi-finished goods rather than fully manufactured final products. Contemporaneous statements and records showed the goods had remained in the factory for years after cancellation of export orders, and the Revenue did not dispute that position. A mere visual inspection could not override that evidence. The goods were therefore not required to be entered in RG-1, and confiscation and penalty were not sustainable. The order was set aside in favour of the assessee.

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Issues: Whether the MDF boards were fully finished final products liable to entry in the RG-1 register, or semi-finished goods not yet required to be so entered.

Analysis: The statements recorded from the company officials consistently stated that the boards were produced years earlier, had accumulated after cancellation of export orders, and still required sanding, size reduction, and quality control testing before being treated as finished goods. The Revenue did not dispute the long period over which the goods had remained in the factory. The finding of finished condition was based only on visual inspection, which could not outweigh the contemporaneous statements and records showing that the goods were still in process and had not reached the stage for RG-1 entry.

Conclusion: The goods were semi-finished and not liable to entry in RG-1; confiscation and penalty were not justified and were set aside in favour of the assessee.

Ratio Decidendi: Goods that remain in semi-finished condition and have not reached the stage of final manufacture are not required to be entered in RG-1, and confiscation cannot rest merely on visual inspection when the contemporaneous evidence shows they are still under process.

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