Non-entry in RG-1 register alone cannot justify confiscation or penalty when goods remained in the factory and were otherwise accounted for.

Confiscation of finished goods was unjustified where the goods remained physically within the factory, the department had been informed that they were stored outside the bonded store room, and there was no allegation of clandestine removal or disposal without duty payment. The only lapse was non-entry in the RG-1 daily production register, which amounted at most to a failure to maintain daily accounts and not to non-accountal of goods. On those facts, confiscation and penalty could not be sustained and were set aside.

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Issues: Whether confiscation of finished goods and penalty were justified where the goods were physically available in the factory, the department had been informed about storage outside the bonded store room, and the only lapse was non-entry in the RG-1 register.

Analysis: The goods were not alleged to have been removed clandestinely or disposed of without payment of duty. The entire stock remained within the factory and the assessee had explained why the goods were kept outside the bonded store room. On these facts, there was no real failure to account for the produce; at the highest, there was only a lapse in maintaining the daily production account in the RG-1 register. Such lapse could not sustain a charge of non-accountal of goods, and any punishment could only relate to violation of the rules governing daily accounts.

Conclusion: The confiscation and penalty were not justified and were set aside.

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