Job work records and RG-1 accounting governed duty demand and confiscation on HDPE goods, waste and granules.

Job work clearances supported by challans and related records could not be rejected summarily, so the duty demand, interest and equal penalty on alleged clandestine clearances of HDPE caps were set aside and the matter remanded for de novo adjudication. Exempt HDPE waste meant for recycling and unaccounted HDPE granules, as raw material, were held not liable to confiscation merely for non-entry in the RG-1 register. Confiscation was, however, sustained for fully finished HDPE containers and caps found unaccounted in RG-1, with consequential reduction of redemption fine and penalty.

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Issues: (i) Whether the duty demand on alleged clearances of HDPE caps without payment of duty was sustainable; (ii) whether confiscation of unaccounted HDPE waste, raw material and finished goods was justified and what relief should follow.

Issue (i): Whether the duty demand on alleged clearances of HDPE caps without payment of duty was sustainable.

Analysis: The clearances were identified from information furnished by the assessee, but the assessee claimed that the caps were manufactured on job work basis from raw material supplied by principal manufacturers and were returned under job work challans. Since the challans and related records had been produced, the claim required proper examination and could not be rejected summarily. The demand was therefore not capable of confirmation on the existing record.

Conclusion: The duty demand, interest and equal penalty were set aside and the matter was remanded for de novo adjudication on this issue.

Issue (ii): Whether confiscation of unaccounted HDPE waste, raw material and finished goods was justified and what relief should follow.

Analysis: HDPE waste meant for recycling and exempt under Notification No. 67/95-CE was held not liable to confiscation. The unaccounted HDPE granules, being raw material, were also held not confiscable under Rule 25(1). However, the 7408 pieces of HDPE containers and 7670 pieces of HDPE caps were found to be fully finished goods not accounted for in the RG-1 register and their confiscation was upheld. In the circumstances, the redemption fine and penalty required reduction.

Conclusion: Confiscation of HDPE waste and granules was set aside, confiscation of the finished goods was upheld, and the redemption fine and penalty were reduced.

Final Conclusion: The appeal succeeded only in part, with monetary demands remanded for fresh adjudication and confiscation sustained only for the finished goods.

Ratio Decidendi: A claim of job work clearance supported by challans and records cannot be summarily rejected without examination, and unaccounted raw material or exempt recyclable waste is not liable to confiscation merely for non-entry in the RG-1 register.

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