Unrecorded trading goods with no credit evidence were not liable to confiscation or penalty.

Unrecorded trading goods found in the premises of a first stage dealer were not liable to confiscation where there was no evidence of availment or passing on of credit, and no material suggesting clandestine removal or improper transfer of credit. Mere non-entry of such goods in stock records was insufficient, by itself, to sustain confiscation or penalty. The Commissioner (Appeals) therefore correctly granted relief, and the no-penalty, no-confiscation result was upheld.

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Issues: Whether goods found unrecorded in the premises of a first stage dealer were liable to confiscation and whether penalty could be imposed.

Analysis: The goods were found in excess of the recorded stock, but the dealer was only a first stage dealer and not a manufacturer. There was no evidence that the dealer had taken or passed on credit in respect of those goods, and no material to show intended clandestine removal or passing on of unwanted credit to buyers. In such circumstances, mere non-entry of trading goods in the records could not by itself justify confiscation or penalty.

Conclusion: The goods were not liable to confiscation and no penalty was sustainable; the relief granted by the Commissioner (Appeals) was upheld.

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