Confiscation under Central Excise law requires corroborated evidence; unverified statements and record omissions alone are insufficient.

Finished goods not entered in RG-I were treated as not liable to confiscation or penalty where they had undergone quality-control testing, the assessee offered a plausible explanation that packing and weighment were completed late the previous day, and the recorded statements did not establish clandestine removal or mala fide intent. Scrap lying in the factory was also held not confiscable merely for non-entry in records, as it was non-cenvatable raw material and invoices showed recent receipt without supplier verification. The operative principle is that confiscation and penalty under the Central Excise framework require corroborated evidence, not untested statements alone.

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Issues: (i) whether finished goods not entered in RG-I could be confiscated and penalty imposed under Rule 25 of the Central Excise Rules, 2002; (ii) whether scrap lying in the factory could be confiscated on the ground of non-entry in records.

Issue (i): whether finished goods not entered in RG-I could be confiscated and penalty imposed under Rule 25 of the Central Excise Rules, 2002

Analysis: The goods were subjected to multiple quality control tests before being treated as final products, and the assessee promptly explained that packing and weighment had been completed only late on the previous day. The statements recorded at the time of visit did not specifically negate this explanation, nor did they establish any mala fide intent to clear the goods clandestinely. Reliance on initial statements alone, without corroboration from surrounding circumstances, was held insufficient to sustain confiscation and penalty.

Conclusion: Confiscation of the finished goods and the penalty were not justified and were set aside in favour of the assessee.

Issue (ii): whether scrap lying in the factory could be confiscated on the ground of non-entry in records

Analysis: The scrap was found to be non-cenvatable raw material, and such material could not be confiscated merely because it was not entered in the records. The assessee also produced invoices indicating recent receipt of the scrap, and no verification was made from the alleged suppliers. In these circumstances, non-entry in the records early on the following morning did not support confiscation.

Conclusion: Confiscation of the scrap was not warranted and the Revenue's challenge failed.

Final Conclusion: The order confiscating the finished goods and imposing penalty was set aside, while the refusal to confiscate the scrap was sustained, resulting in relief to the assessee and rejection of the Revenue's appeal.

Ratio Decidendi: Confiscation and penalty under the Central Excise framework cannot be sustained on the basis of uncorroborated statements alone, particularly where the assessee's explanation of pending quality-control processing is plausible and there is no evidence of mala fide clandestine removal.

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