RG 1 register lapse sustains confiscation, but bona fide belief and no evasion justify deleting penalty and reducing fine.

Non-entry of goods in the RG 1 register while the goods were packed and awaiting final customer approval was treated as a substantive lapse, so confiscation was sustained. However, where the record showed no material indicating intent to evade duty and the omission was attributed to a bona fide belief about the timing of entry, the redemption fine was held excessive and the personal penalty was deleted. The monetary consequences were therefore moderated even though confiscation remained in force.

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Issues: (i) Whether non-entry of goods in the RG 1 register at the stage of awaiting final customer approval justified confiscation; (ii) whether the redemption fine and personal penalty required interference.

Issue (i): Whether non-entry of goods in the RG 1 register at the stage of awaiting final customer approval justified confiscation.

Analysis: The goods were found unaccounted in the pre-budget stock and had already been packed, awaiting final check by the customers. The non-entry in the RG 1 register at that stage was not treated as a mere technical lapse, and the confiscatory order was held to be sustainable.

Conclusion: Confiscation was upheld.

Issue (ii): Whether the redemption fine and personal penalty required interference.

Analysis: In view of the expected availment of modvat credit by the customers and the absence of material indicating an intention to evade duty, the redemption fine was considered excessive and the penalty was found unsustainable in the circumstances. The appellants were treated as having acted under a bona fide belief regarding the timing of entry in the RG 1 register.

Conclusion: The redemption fine was reduced and the personal penalty was remitted.

Final Conclusion: The confiscation was maintained, but the monetary consequences were substantially curtailed by reducing the redemption fine and deleting the penalty.

Ratio Decidendi: Where goods are found unaccounted at a stage when they await final approval and the conduct does not show an intent to evade duty, confiscation may be sustained, but penalty can be waived and the redemption fine moderated on the basis of bona fide belief and absence of mala fide intention.

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