R.G. 1 accounting for excisable goods requires entry once identifiable and market-ready; unaccounted goods may be confiscated.

Excisable writing and printing paper packed in the form ordinarily used for marketing had reached the R.G. 1 stage and was required to be entered in the R.G. 1 register as soon as it came into identifiable existence. Failure to account such manufactured goods in R.G. 1 amounted to contravention of the daily accounting requirement and justified confiscation of the unaccounted goods. However, in the absence of evidence of deliberate clandestine removal or wilful evasion of duty, the redemption fine required moderation and penalty was not warranted. The legal principle stated is that accounting obligations arise at the point goods become identifiable and marketable in the relevant packing form.

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Issues: (i) Whether the writing and printing paper had reached the R.G. 1 stage and was required to be entered in the R.G. 1 register; (ii) Whether confiscation of the goods and imposition of redemption fine and penalty were justified.

Issue (i): Whether the writing and printing paper had reached the R.G. 1 stage and was required to be entered in the R.G. 1 register.

Analysis: The trade notice issued by the Collector laid down that excisable goods are to be accounted for in R.G. 1 as soon as they come into existence in identifiable form, and that packed goods as well as goods in loose condition are to be entered. Paper and paper board were specifically shown as reaching the R.G. 1 point when they came out of the finishing room in unit packings normally used for marketing. The seized paper was found in fully packed bundles and packets, and there was no scope for treating it as still short of the R.G. 1 stage.

Conclusion: The paper had reached the R.G. 1 stage and ought to have been entered in the R.G. 1 register.

Issue (ii): Whether confiscation of the goods and imposition of redemption fine and penalty were justified.

Analysis: Non-accountal of manufactured goods in the R.G. 1 register amounted to contravention of the daily accounting requirement under the Central Excise Rules and attracted the confiscatory provision for unaccounted excisable goods. At the same time, the record did not establish a deliberate intention to clandestinely remove the goods without payment of duty. In that situation, confiscation could stand, but the redemption fine required reduction and penalty was not warranted.

Conclusion: Confiscation was upheld, the redemption fine was reduced, and the penalty was set aside.

Final Conclusion: The goods were rightly held liable to confiscation for failure to account them in R.G. 1, but the monetary consequences were moderated by reducing the fine and deleting the penalty.

Ratio Decidendi: Goods which have come into identifiable existence and are packed in the form ordinarily used for marketing must be entered in R.G. 1 without postponement, and failure to account such goods attracts confiscation though penalty depends on proof of deliberate evasion.

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