Unaccounted factory goods without proof of removal attract only the limited penalty under Rule 226.

Where goods remained within the factory and there was no evidence or recorded finding of attempted clandestine removal, non-accountal in the statutory records was treated as a limited procedural breach. The specific penal provision under Rule 226 of the Central Excise Rules, 1944 applied to that default, rather than any harsher consequence based on removal of goods. The penalty was therefore confined to the amount prescribed under Rule 226, with the assessee succeeding to that extent.

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Issues: Whether non-accountal of goods in the statutory records, without evidence of an attempt to remove the goods from the factory, attracted only the penalty prescribed under Rule 226 of the Central Excise Rules, 1944.

Analysis: The goods were found lying within the factory and had been provisionally released on payment of duty. No material evidence established an intention to remove the goods clandestinely, and no finding to that effect had been recorded. In such circumstances, the failure to account for the goods in the statutory register was treated as a breach attracting the specific penal provision applicable to such default.

Conclusion: The penalty was restricted to Rs. 2,000 under Rule 226 of the Central Excise Rules, 1944, and the assessee succeeded to that extent.

Ratio Decidendi: Where unaccounted goods remain in the factory and there is no evidence of attempted removal, the default is punishable only to the limited extent prescribed by Rule 226 of the Central Excise Rules, 1944.

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