Technical excise record lapse without clandestine removal did not justify confiscation, redemption fine or penalty.

Confiscation of finished excisable goods, along with redemption fine and penalty under Rule 226, was found unjustified where the goods remained under physical control, production records were maintained, and the only defect was use of RG1 instead of the prescribed RG12 with departmental acquiescence. The Tribunal treated the irregularity as a technical and procedural lapse rather than evidence of evasion, especially since clandestine removal was not proved and substantial goods were still in the finishing room. The confiscation, redemption fine and penalty were therefore set aside.

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Issues: Whether the confiscation of finished excisable goods and the consequential redemption fine and penalty under Rule 226 of the Central Excise Rules were sustainable where the goods were partly entered in the statutory register, the records were maintained in the wrong form with departmental acquiescence, and no clandestine removal was proved.

Analysis: The goods were under physical control, and the assessee had been maintaining production records, though in RG1 instead of the prescribed RG12 form. The Tribunal treated the irregularity as a procedural defect shared by both sides and more a matter of form than substance. It also noted the Collector's own findings that clandestine removal was not established, that 15,000 bottles were still lying in the finishing room, and that in respect of a further quantity the defence had shown there was no removal. In these circumstances, the lapse was held to be technical, calling for rectification and caution rather than punitive action.

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

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