RG-1 register compliance: finished goods not entered on manufacture were treated as unaccounted and confiscable

Complete manufactured goods in a factory had to be entered in the RG-1 register on manufacture. Marking them only as "H" or "R" and deferring entry until quality control testing was impermissible, because the goods were otherwise marketable and the testing step was only subsequent. Their presence within the factory did not prevent treatment as unaccounted goods, so confiscation and penalty were upheld against the assessee.

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Issues: Whether goods manufactured in the factory but not entered in the RG-1 register could be treated as unaccounted goods and confiscated, with penalty imposed on the assessee.

Analysis: The goods found in the factory were complete manufactured goods and were required to be entered in the RG-1 register upon manufacture. The assessee's practice of merely marking goods as "H" or "R" and withholding entry until quality control test was held to be impermissible, because the goods could otherwise be marketed and the quality-control process was only a subsequent step. The absence of entry in the statutory register justified confiscation. The reliance on the fact that the goods were lying within the factory was rejected, as confiscation and penalty could still follow in such circumstances.

Conclusion: The confiscation of the goods and the penalty were upheld, and the assessee's challenge failed.

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