Confiscation for non-entry in RG 1 fails without evidence of clandestine removal or intent to clear goods illegally.

Confiscation of finished goods and raw material under Rule 25 was held unsustainable where the goods were found during a morning visit, part of the finished stock was still hot, and the record suggested recent production not yet entered in RG 1 during the day. Mere non-entry in the statutory register was not enough to establish clandestine removal or justify confiscation. The raw material also could not be confiscated solely because it was not reflected in the records, absent evidence of any intention to clear goods illicitly. On these facts, penalty was likewise not sustainable and was set aside.

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Issues: Whether confiscation of finished goods and raw material, together with penalty under Rule 25 of the Central Excise Rules, 2002, was justified when the goods were not entered in RG 1 and there was no evidence of clandestine removal.

Analysis: The goods were found during a morning visit and a part of the finished stock was still hot, supporting the explanation that it was recent production yet to be entered in the statutory register during the course of the day. Apart from non-entry in RG 1, there was no material indicating an intention to clear the goods clandestinely. The raw material could not be confiscated merely because it was not reflected in the records, in view of the settled legal position relied upon in the decision referred to by the appellant.

Conclusion: Confiscation and penalty were not sustainable and were set aside in favour of the assessee.

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