Finished goods and clandestine removal require cogent proof before RG-1 liability and duty demand can be sustained.

Finished goods become liable for RG-1 entry only when they are shown to have reached a marketable stage. On the facts discussed, the transformers were under manufacture against contracts for State power organisations, required inspection before dispatch, and the evidence did not prove that they were complete finished goods or that excess stock had been clandestinely removed. The Revenue also failed to produce cogent material rebutting the factual findings or proving clandestine clearance, so duty demand, confiscation and penalty were not sustainable and the assessee's position remained undisturbed.

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Issues: Whether the transformers were shown to have reached the stage of finished and marketable goods so as to require entry in the RG-1 register and whether the Revenue had established clandestine removal warranting duty demand, confiscation and penalty.

Analysis: The factual findings of the lower authorities were that there was no reliable evidence to show that the seized transformers were complete finished goods or that the alleged excess stock and the 951 transformers had been removed clandestinely. The transformers were being manufactured against contracts for State power organisations, required inspection before dispatch, and the evidence of the Chartered Engineer supported the view that further processes were still necessary to make the goods marketable. The Revenue failed to rebut these findings or to produce material proving clandestine clearance.

Conclusion: The transformers were not proved to be finished goods liable for RG-1 entry and clandestine removal was not established; the Revenue's challenge failed.

Final Conclusion: The impugned order was sustained and the Revenue's appeal stood rejected, leaving the assessee's claim undisturbed.

Ratio Decidendi: Clandestine removal and duty liability cannot be presumed in the absence of cogent evidence, and goods are not exigible on the basis of RG-1 non-entry unless they are shown to have reached the stage of finished and marketable products.

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