Confiscation of unrecorded excisable goods upheld, redemption fine reduced, and composite penalty under excise law struck down.

Finished goods found in the factory but not entered in statutory records were held liable to confiscation because no private or other reliable record was produced to show that they were otherwise accounted for. Goods released on bond could still attract confiscation and redemption fine, and physical non-availability was not a bar where release had been sought by the assessee; however, the fine was reduced on the facts. A composite penalty imposed cumulatively under Section 11AC of the Central Excise Act and Rule 173Q of the Central Excise Rules was not sustainable and was set aside.

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Issues: (i) whether finished goods found in the factory but not entered in statutory records were liable to confiscation when no private record accounting for them was produced; (ii) whether goods released on bond and not physically available could still be subjected to confiscation and redemption fine; (iii) whether composite penalty under Section 11AC of the Central Excise Act and Rule 173Q of the Central Excise Rules was sustainable.

Issue (i): whether finished goods found in the factory but not entered in statutory records were liable to confiscation when no private record accounting for them was produced.

Analysis: Rule 173Q requires the goods to be accounted for in the sense of being properly explained and reflected in reliable records. Mere non-entry in the statutory register does not by itself attract confiscation if the assessee can show that the goods were otherwise duly accounted for. In the present case, no private or other reliable record was produced to show accounting for the goods found in the factory.

Conclusion: The goods found in the factory were liable to confiscation, and the assessee's challenge failed on this issue.

Issue (ii): whether goods released on bond and not physically available could still be subjected to confiscation and redemption fine.

Analysis: The fact that the goods were released on bond does not take away the power to impose redemption fine where confiscation is otherwise justified. The physical non-availability of the goods was not a bar to confiscation in the facts of the case, as the release was made on the assessee's request.

Conclusion: Confiscation and redemption fine were permissible on this issue, though the fine was liable to be reduced on the facts.

Issue (iii): whether composite penalty under Section 11AC of the Central Excise Act and Rule 173Q of the Central Excise Rules was sustainable.

Analysis: The composite penalty could not be sustained in the manner imposed. The penalty provisions were invoked cumulatively, and the Tribunal accepted the objection to that extent.

Conclusion: The composite penalty was set aside.

Final Conclusion: The order was sustained on confiscation, but the redemption fine was reduced and the composite penalty was annulled, resulting in only partial relief to the assessee.

Ratio Decidendi: Goods not entered in statutory records are not liable to confiscation if they are otherwise accounted for in reliable records, but where no such accounting is shown, confiscation and redemption fine may follow even if the goods are no longer physically available; composite penalty cannot be sustained where imposed cumulatively without proper basis.

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