Relaxed accounting regime limits penalty where no clandestine removal is proved, though technical stock-record lapses may justify confiscation.

A small scale unit operating under a relaxed accounting regime could still face confiscation where its stock register was not updated for about two months, because the omission technically rendered the goods liable to confiscation; however, the absence of material showing clandestine removal meant penalty was not justified. The tribunal accepted that private records and sales invoices broadly reflected the clearances, treated the lapse as a minor accounting defect, and moderated the monetary sanction by reducing the redemption fine. The confiscatory order was therefore sustained in principle, but the penalty was set aside for want of proof of clandestine removal.

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Issues: Whether goods found unaccounted in the records of a small scale unit were liable to confiscation with redemption fine, and whether penalty was justified in the absence of proof of clandestine removal.

Analysis: The unit claimed the benefit of the relaxed accounting regime available to small scale industries under the relevant trade notice, under which statutory excise records were not required if private records contained sufficient information for central excise purposes. The evidence showed that the unit maintained cash, purchase, sales and stock records, and the clearances were reflected in sales invoices. However, the stock register had not been updated for about two months, and that omission technically rendered the goods liable to confiscation. At the same time, the relaxation meant that a minor accounting lapse had to be viewed with leniency. No material was found to establish any intention of clandestine removal.

Conclusion: The confiscation and redemption fine were sustained in principle, but the redemption fine was reduced. The penalty was set aside for want of proof of clandestine removal.

Final Conclusion: The appeal succeeded only to the extent of relief from penalty and reduction of the redemption fine, while the confiscatory order was otherwise maintained.

Ratio Decidendi: Where a small scale unit is operating under a relaxed accounting regime and the materials do not establish clandestine removal, a technical defect in record maintenance may justify confiscation but does not by itself warrant penalty, and the monetary sanction should be moderated.

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