Prior entry of raw materials required before manufacture; deliberate non-entry upheld confiscation under excise rules.

Raw materials had to be entered in the prescribed stock account before manufacture began under Rule 173-G(4), because the object of the rule was to prevent excise duty evasion. On the facts, manufacture had already started when the factory was inspected, yet the raw materials used for rolled circles and sheets had not been recorded; the omission was treated as deliberate and the explanation rejected. The Court held that this contravention justified confiscation under Rule 173-Q. The non-consumption of 189 billets did not change the result, as they were kept with other unrecorded raw materials during the same manufacturing activity and intent to evade duty could be inferred from the surrounding circumstances.

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Issues: Whether non-entry of raw materials in the stock account before commencement of manufacture constituted a breach of Rule 173-G(4) of the Central Excise Rules, 1944 so as to attract confiscation under Rule 173-Q, including in respect of billets not yet consumed.

Analysis: Rule 173-G(4) required every assessee to maintain accounts of raw materials received for manufacture, and the object of the rule was to prevent evasion of excise duty. On the facts found, manufacture had already begun when the preventive staff inspected the factory, yet the raw materials used for the rolled circles and sheets had not been entered in the stock register. The explanation for the omission was rejected by the excise authorities, and the omission was treated as deliberate. The Court held that the entry had to be made before manufacture commenced, because the statutory purpose could be achieved only if the raw materials were recorded in advance. As to the 189 billets, the Court held that their non-consumption did not alter the position, because they had been placed with the other raw materials in the course of the same unrecorded manufacture and the authorities could infer intent to evade duty from the surrounding circumstances.

Conclusion: The non-entry of raw materials before manufacture amounted to a contravention of Rule 173-G(4), and the goods were liable to confiscation under Rule 173-Q. The finding was against the assessee.

Final Conclusion: The statutory scheme was enforced to require prior accounting of raw materials before production begins, and the confiscation and penalty orders were upheld.

Ratio Decidendi: Under Rule 173-G(4), raw materials must be entered in the prescribed accounts before manufacture begins, and deliberate non-entry may justify confiscation under Rule 173-Q where intent to evade duty is inferable from the circumstances.

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