Confiscation of excess excisable goods upheld, with manufacturer penalty sustained and separate Rule 26 liability confirmed for the Director.

Excess excisable goods found loaded in a truck beyond the invoiced quantity, without a corresponding RG-1 entry at interception, were treated as cleared without duty on the relevant date; later payment of duty did not remove the basis for confiscation, redemption fine, and penalty on the manufacturer. A separate penalty under Rule 26 was also held sustainable against the Director because liability depends on dealing with goods knowing, or having reason to believe, that they were liable to confiscation, and is distinct from the manufacturer's penalty.

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Issues: (i) Whether confiscation of the excess quantity of bars, together with redemption fine and penalty on the manufacturer, was justified where the goods loaded in the truck exceeded the invoiced quantity and no corresponding RG-1 entry existed on the date of interception; (ii) Whether penalty on the Director was liable to be imposed under Rule 26 for dealing with excisable goods knowing, or having reason to believe, that they were liable to confiscation.

Issue (i): Whether confiscation of the excess quantity of bars, together with redemption fine and penalty on the manufacturer, was justified where the goods loaded in the truck exceeded the invoiced quantity and no corresponding RG-1 entry existed on the date of interception.

Analysis: The invoiced quantity was lower than the quantity actually found loaded in the truck, and the excess quantity was not supported by an entry in the RG-1 register at the time of interception. Payment of duty made later did not erase the fact that clearance had taken place without payment of duty on the relevant date. The confiscation and consequential redemption fine and penalty on the manufacturer were therefore sustained.

Conclusion: The confiscation of the goods, the redemption fine, and the penalty on the manufacturer were upheld.

Issue (ii): Whether penalty on the Director was liable to be imposed under Rule 26 for dealing with excisable goods knowing, or having reason to believe, that they were liable to confiscation.

Analysis: Liability under Rule 26 is distinct from the manufacturer's penalty and can be attracted where a person deals with excisable goods with the requisite knowledge or belief. The setting aside of the Director's penalty merely because the manufacturer had already been penalized was held to be unsustainable.

Conclusion: The penalty on the Director was restored.

Final Conclusion: The manufacturer's challenge failed, while the Revenue succeeded in restoring the Director's penalty, leaving the adjudication substantially in favour of the Revenue.

Ratio Decidendi: Where excess excisable goods are found cleared without supporting statutory records, confiscation and penalty on the manufacturer are sustainable, and a separate penalty may also be imposed on a person who deals with such goods with knowledge of their confiscable character.

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