RG-1 register requirements for 100% EOUs: confiscation and penalty failed where record-keeping rules did not apply.

For a 100% Export Oriented Unit, Rule 100H(3) excluded the application of Rules 47 and 53 to excisable goods manufactured in the unit, so RG-1 maintenance was not required in the same manner as for a normal unit. On that basis, excess stock found during verification could not justify confiscation or penalty where the record-keeping obligation itself did not apply. The separate shortage objection concerning two moulds also failed because the moulds were produced later, removing any sustained basis for shortage or irregularity. The confiscation and penalty were therefore held unsustainable.

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Issues: Whether a 100% Export Oriented Unit was required to maintain RG-1 register and whether confiscation and penalty were justified for excess stock found during verification.

Analysis: The applicable excise record-keeping provisions showed that Rule 100H(3) for 100% EOUs excluded the application of Rules 47 and 53 to excisable goods produced or manufactured in such units. On that basis, and following the Board circular relied upon in the earlier Tribunal view, the unit was not bound to maintain RG-1 in the same manner as a normal unit. The separate objection regarding two moulds also failed because the moulds were produced subsequently, negating any sustained shortage allegation.

Conclusion: The confiscation and penalty were not sustainable, and the assessee succeeded.

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