Manufacture complete on finishing process, and register discrepancies alone cannot prove clandestine removal without corroboration.

Wire mesh rolls found wrapped, marked and finished were treated as fully manufactured goods because manufacture was complete when the process ended, even though buyer testing and approval were pending, so they had to be entered in RG-1. A charge of clandestine removal could not be sustained on discrepancies between the bank pledge register and RG-1 alone, since no independent direct or circumstantial evidence showed fresh manufacture or secret clearance and the release-repledge explanation remained plausible. Goods were liable to confiscation for non-accountal, but the absence of proof of duty evasion justified moderation of the redemption fine and personal penalty, while confiscation of plant and machinery was not warranted.

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Issues: (i) Whether the wire mesh rolls found in the factory premises and the bank-controlled room were fully manufactured goods and therefore liable to entry in the RG-1 register; (ii) whether clandestine removal of goods without payment of duty was established; (iii) whether confiscation, redemption fine, and personal penalty were sustainable.

Issue (i): Whether the wire mesh rolls found in the factory premises and the bank-controlled room were fully manufactured goods and therefore liable to entry in the RG-1 register.

Analysis: The goods were found duly wrapped and marked, and the only basis advanced to deny completed manufacture was that they awaited purchaser testing and approval. The contract conditions did not show that manufacture itself was contingent upon such approval. A distinction was drawn between goods manufactured to a specific design for a particular buyer and goods manufactured by the assessee and sold subject to buyer inspection. On the facts, the products fell in the latter category, so manufacture was complete when the manufacturing process ended. Once complete, the goods were required to be entered in RG-1.

Conclusion: The goods were fully manufactured and the omission to enter them in RG-1 was not justified.

Issue (ii): Whether clandestine removal of goods without payment of duty was established.

Analysis: The allegation rested mainly on discrepancies between the bank pledge register and RG-1 entries. The bank pledge register itself was not disputed, but no independent direct or circumstantial evidence was produced to show repeated fresh manufacture or clandestine clearance. The possibility that the same pledged goods were released and re-pledged for fresh finance was considered probable. Mere discrepancy in the pledge register, without corroboration, was insufficient to prove clandestine removal or suppression.

Conclusion: Clandestine removal was not proved and the duty demand founded on that allegation could not stand.

Issue (iii): Whether confiscation, redemption fine, and personal penalty were sustainable.

Analysis: The goods were liable to confiscation for non-accountal in RG-1, but the absence of proof of clandestine removal substantially reduced the gravity of the breach. The redemption fine fixed by the adjudicating authority was considered excessive in the circumstances. Since the more serious allegation of duty evasion failed, the personal penalty also required reduction. Confiscation of plant and machinery was not warranted on the proved breach.

Conclusion: Confiscation of the goods was sustained, the redemption fine and personal penalty were reduced, and confiscation of plant and machinery was set aside.

Final Conclusion: The appeal succeeded in part: the finding of non-accountal was upheld, the charge of clandestine removal failed, the duty-related consequences were set aside, and the punitive consequences were moderated.

Ratio Decidendi: Goods are treated as manufactured, and must be accounted for in the statutory records, once the manufacturing process is complete; a charge of clandestine removal cannot be sustained on register discrepancies alone without corroborative evidence.

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